Velocity Trading: What I'm Doing With It!
Velocity Trading
According to Google, Velocity Trading is defined as "Measuring the speed and direction of a price trend, analyzing how quickly an assets price changes over time, and using this to identify momentum, with high velocity indicating rapid , significant price moves."
This is not exactly what I'll be doing, but it is kinda close.
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The amount of technical analysis I've done on the the ETF's I'll be using is the amount they have moved up in the past years, whether they are still moving up, and that's about it. I'm simply trying to take some of the difficulty out of trading. There is so much "stuff" online about how to trade, that most people who would actually do well at it end up getting discouraged and quit.
I don't believe it has to be that way. I'm going to show you what I do, and maybe this will be beneficial to someone who is discouraged and wanting to quit. I call it Velocity trading, and no, it is not exactly what the common definition is, but it is similar.
In my prior post I let A.I. describe for you the type of trading I'm doing, but please allow me to give a bit more detail.
I'm simply going to take you through the steps I'll be taking, along with the amounts of money I'm starting with and how I intend to scale up from here. There is other money in the Robinhood account I'm using but as those trades close I will be placing that money into this loop type system. I will let you know when that happens.
For now I am starting with $379.73. This is cash I have in the account as well as some partial shares i have in the four ETF's I'll be using in this system. Those ETF's are going to change from time to time, and I will likely sell what I have invested in them soon, just to get a clean starting place. Here is how the account currently looks:
1. $313.95 Cash
2. $25.22 in XMMO
3. $10.08 in SCHG
4. $15.16 in XSMO
5. $15.32 in FFLC
for a total of $379.73
Keep in mind that this is not a get rich quick deal. I don't have anything to sell you, no books or courses. This is slow and steady wins the race. This may actually earn a bit more that the yearly average return of the stock market. This is not something I know. Just a maybe. So without anymore preliminary chat, lets get on with the program.
First of all, I am starting with XMMO. You can either choose to follow me, or find one you are comfortable with. I also use and promote Robinhood. Again, you choose and use what you like. On Robinhood I am using the recurring buy feature, and I currently have it set to buy $10 worth of XMMO each trading day of the week. Once the cash in my account is 100% invested into XMMO I will turn off the recurring buy on XMMO and then turn it on on SCHG with a daily buy in of $11. This is how I plan to scale up from this point on, however, I don't want this go for an extended period of time. In other words, if it looks like a $1 increase in the purchase price is going to go past two months worth of purchasing I may need to make adjustments.
My main goal is to have most all of my cash invested so that I am able to collect dividends. I will collect dividends as cash in order to build the amount of cash I have to invest.
Once all my cash is invested in XMMO and my SCHG daily buy is set to go, I will then begin selling the tax lots I created in XMMO by buying the $10 a day increments. Here is how this works on Robinhood. Open the app. It should open to your home page.scroll down to your XMMO holdings. Tap on XMMO. Tap trade. Tap sell. In the top right hand corner tap shares or dollars, then it'll open to a page that will show a "sell in tax lots" option. Tap it. Then it'll open a "Sell XMMO" page, and on that page you will see "select lots". Tap it. On the next page you will get a list of every tax lot you own. From here, what I will do is each day I will find a tax lot that is up 5%. With a $10 tax lot that will be $10.50. I will tap the box all the way to the right and hit done at the bottom of the page, then sell or review at the bottom of the next page. WARNING: This needs to be done WHILE THE MARKET IS FULLY OPEN. Prior to 3pm central time. If not, your order could go through during the next trading with a very different price. Possibly one that you never wanted.
If you do this and the price drops below your ability to sell at a profit, I simply hold until the price recovers. I do not sell at a loss. There are some positives to buying when the market is dropping, like buying at a discount and then selling when it recovers. Also, if the downturn is for an extended period of time, your dividends will continue to come in, possibly triggering a new buy at a lower price. Once to market returns I wait until my tax lots hit 5% profit then proceed as usual.
Keep in mind that this is a flexible plan. You are in control. You need a plan because if you don't have a plan you have effectively made a plan to be a failure. Adjust this plan to fit you, but have a plan eventually.
I plan to update my results on this page occasionally.
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