Trading Like 007

If you remember THIS post, you know I'm intrigued by the spy genre (borderline 'obsessed' around the time a new Bond film releases). While watching the newest 007 installment, Quantum of Solace (for the second night in a row...really, what's wrong with me?), I couldn't help thinking about how his life relates to stock trading. In almost every adrenaline-filled, pulse-accelerating situation, his training seems to summon 3 distinct reactions: He looks before he leaps, takes calculated risks, and always protects his assets.

Look Before You Leap

There are countless scenes, especially with the new, physical Daniel Craig, where Bond has to make a split decision. The consequence of that decision could prove fatal, had he not been

trained by MI6 (British Secret Service) to react quickly and decisively in life threatening situations. Any Bond/Bourne fan can recall countless times where a jump from a window, dive into/onto a moving vehicle, etc., was made only a spilt second after the protagonist saw his opportunity. Keep in mind, it's part training, part instinct (Not everyone can be trained to be an effective assassin).

There is a direct correlation to trading stocks. In the heat of the moment, it's all too easy to jump on board a skyrocketing ticker or hit the buy button in order to catch a falling knife without really knowing what you're getting yourself/money into. This is happening all too often, now that some trading platforms allow traders to (almost blindly) follow the trades of others. There are known traders such as Timothy Sykes, Investors Underground, and now Reaper, who have many followers/leapers/minions doing just that- following their trades without looking. While they may be lucky enough to begin that bonehead practice with some gains, it just doesn't work long term. They must know what they're looking at/for in order for their leaps not to completely ruin them.

Take Calculated Risks

Bond learned a hard lesson in Casino Royale when he was wiped out during a game of Texas Hold 'Em-style poker. LeChefre, the film's main antagonist, had fooled 007 by faking a tell (Manuerism that let's your opponent know whether or not your bluffing). Bond in turn goes all in, and subsequently loses his entire bankroll (To be accurate- the UK's bankroll).

Being able to properly manage your trading account's risk, or % of your total assets you trade with in a given order, is a make-or-break ability- which can and most certainly should be learned. I can't tell you how many times I've heard (and let's be honest, I'm guilty of this myself) someone say this type of sentence, "That one trade wiped out my entire week's/month's gains". Knowing how much you're willing to lose before ever leaping into a trade is a calculation every trader must know for himself/herself. Furthermore, one must be willing and able to execute an exit order if that threshold/risk level is reached.

Protect Your Assets

No matter what situation Bond finds himself in, he always manages to protect his most sacred assets: loyalty to her majesty, and himself. At times, he's forced to leave women, friends, Astin Martins, etc. behind so he can live to fight another day. Also, he seldom allows

himself to lose sight of his exit strategy simply because he's in the heat of battle.

With stocks, it's important to stick to your trading plan unless outside forces put your assets at risk. As you've probably noticed by now, the 3 qualities of a good secret agent and stock trader are virtually interchangeable. By looking before you leap, you're calculating your risk and protecting your assets. By protecting your assets, you are assuring your ability to take the next leap, and so on and so forth. Learn from the qualities that have kept James Bond from succumbing to the 90% mortality rate of other 00's.

Never wanting to be among the 90% of traders that lose money,

Evan (aka Island Minister)

Don't Fear the Reaper

As most of you know, I've been following Timothy Syke's trading style for almost two years. I first saw him on Wall Street Warriors (Mojo HD network show about various traders/investors) a few years back, and enjoyed his brutal honesty and knack for profiting from penny stocks. Here's a pic of me reading his first book, An American hedge Fund, while on a mission trip to the Amazon region of Brazil last summer. His trading abilities are only trumped by his business saavy (as he's currently growing an empire built on stock alerts, DVD and book sales, and even a publishing company called Bullship Press, LLC). Needless to say, his ship has sailed and, to most penny stock pros, needs no introduction. As for the title of this post, I introduce you to Michael Goode (aka Reaper), a padawan/apprentice of Master Sykes. I began shadowing Reaper on various trading sites such as Tim's and Investor's Underground. He always posted intelligent questions and comments, and his increasing profits could not be ignored (he's even been featured in some of Tim's posts like THIS ONE).

I'm pleased to say that Reaper himself has built a very nice looking website (Pallian would be proud ;-), and posts a well researched watchlist and ongoing video teaching series. Lucky for us, it's FREE (well, for now at least). below is a video from just a few days ago where he not only confidently explains the technicals of VG (Vonage), but also correctly predicts the following day's price action. He was dead on, and I'm excited to continue my own apprenticeship under this up and coming Master Trader. Enjoy the embedded video (very informative once you get passed his music preferences), or click HERE to check out his site (and don't forget to buy him a cup of coffee using the link on the right-hand sidebar of his homepage).


Successfully merging Blue Oyster Cult and Star Wars references,

Evan (aka Island Minister)

How Do You Eat An Elephant?

One Bite at a Time! I know it can be extremely hard sometimes to stay content with small gains, especially when the market is as volatile as it's been the past few months. The tendency to feel like you're a: leaving profits on the table with every trade or b: not being aggressive enough with your account size and/or # of shares, can and will lead to bad trades if you let those 'hindsight' emotions get a hold of you.

If you've been following my blog, you know from my last post that I was extremely bearish after last Monday's 500 pt. Dow run. There are many technical reasons for that (ie. Elliot Wave Theory, market in overbought territory, etc.). There are also plenty of blogs that go into much greater detail in regard to these types of technical analyses and/or fundamentals (ie. Government involvement like the Obama/GM situation, possible war with N. Korea, etc.) I just want to share my thoughts and trade executions as transparently as possible (in true Timmay form). I'll leave the 'professional trader speak' to those more capable.

Having said that, my latest bit of elephant was TCK- a stock that pretty much fit my strategy perfectly (except for the market cap). Props to Investors Live for find. You'll notice (in the chart above) that when TCK reached $6, the RSI (top of chart) read 'overbought', not to mention it had come from the $2 range- where I like these runs to have originated. Below is the chart that helps illustrate my entry/exit:

Did I leave a ton of profits on the table with this trade? Yes. Did I read the technicals right and trade my plan? Yes. I guess tie goes to the runner (with a little extra money for his pants).

On a side note, as you'll see tomorrow on Covestor, my account (at least at this moment) closed at an all-time high since it began being tracked in early '09. If I'm correct, I should be in the rankings somewhere starting tomorrow (my 2 month Covestor anniversary). I believe the 'Pride comes before a fall' Scripture would be appropriate to reflect on at this juncture (No worries Eric and Charlie).

Remembering that the market will humble you at will,

Evan

ps- Yes, I'm still short Maxy and Palm. I'm still long Faz.

pps- I shaved some profits from my last buy of FAZ @ $18ish, and some from my PALM short @ $8.72ish (all this can be found either on my Covestor or twitter pages).