Welcome to my 6th stock trading update report!
After taking two years to build up a lump sum of $30,000, I put all this money (aka all our savings) into a trading account back in August. Now that doesn’t mean I’m a complete noob to trading. I originally started trading back in 2011 and it’s been a non-stop study of mine. Even during the years I was building up the $30k.
With this fresh capital, I started off hot with solid returns in August and September before drifting sideways for the past few months.
The tough part is that during those past three months, the market was on an absolute tear, going up and up while leaving me in the dust. For my style of trading, that was actually fully expected. I primarily look to buy low on beaten down stocks for swing trades. When the market is on an historical run like that, there aren’t many beaten down stocks!
If you want to see the previous stock reports, you can check them out here:
January Trading Summary
Here is my January Equity Summary directly from my TradeStation brokerage account:
I made $486.54.
For a solid monthly return of 1.55%.
That’s my 2nd best month of trading so far, narrowly beating out August 2017.
But when you look at what the market did in January, my performance is not that impressive. Right out of the new year gates, the market just took off. It’s even more amazing considering the market ended 2017 at the most overbought level in 22 years. The market started increasing at an increasing rate, which is called a parabolic move.
In January, the S&P 500 went up by 5.62%.
If the year were to end right there, January alone would beat 36% of the annual returns for the S&P!
My cumulative performance from August through January is 6.31% which annualizes at 13.24%.
In a vacuum, that’s a solid return. One of my goals is to deliver double digits returns each year so I’m currently on pace to reach that goal. Of course things can change very quickly in trading.
The other goal is outperform the S&P. The cumulative performance for the S&P during the same time period is 15.67% which annualizes at 32.87%.
Let’s just say I’ve got my work cut out for me.
On an after-tax basis, I’m lagging the market by 16.63%.
As you can see, my trading performance was already trailing the S&P before January. Once the new year hit, the market took it to another level until the last few days of January.
January Trade Detail
I entered January with no open positions from December. Throughout the month, I opened 7 new positions, all of which were closed out before month end.
I ended up with 4 winners, 2 losers, and 1 breakeven trades. It’s always great to see more winners than losers.
One of the losers (CHK) is not even a trade I wanted to make. TradeStation offers lower commissions than all the other stock brokerage firms because it offers per-share pricing, but you have to trade 5,000 shares in the month or get hit with a $100 fee. As a result, on the last day of the month I bought and immediately sold 1,020 of CHK just to hit that threshold. Better to lose $26 than $100.
Overall, I have more winners than losers and on average my winners are bigger than my losers.
My style of trading is not about hitting home runs. The goal is to consistently churn out little bits of profit. Right now the dollar amounts aren’t monumental but that will change as I build up my capital. If I were trading $500,000, that same 13% annual return would equal my annual salary!
That doesn’t mean I would quit my job right then. Stocks returns are never guaranteed so relying on them for living income would require a much larger cushion.
The market continued its incredible run in January, making it very difficult to keep pace in my personal trading. Especially considering the run that led up to January.
For the most part, my activity was very much like the previous couple months. Taking minimal trades due to not many attractive opportunities. At least the trades that I did take proved to be a little more fruitful this month.
For the most part, I’ve been patiently waiting on the sidelines. As I’ve said in each of these recent stock updates, eventually the market will come back to Earth. Due to the late publishing of this, we have a nice SPOILER ALERT for February 😉