So you wanna trade… Step 3

Step 3 is all about taking your first steps to trade based on my moves. This is practice, keep in mind you will make mistakes. Hell, I still make plenty of mistakes. It should be more fun to learn trading if you’re actively trading. Also keep in mind there may be days when nothing is traded. Patience can be a big task sometimes. Either way, step 3 is my hope to get you moving on making trades, keeping this a little more fun while learning.

Right now there are two ways to do this. Follow me on twitter and when you see me post a trade, you can do the same in your paper account… The second method I’ve come up with are the morning updates. These are really for people who are a little more familiar with what’s going on and would like to make their own choices. That being said, I’ll generally give a pretty good idea of what I’m thinking each morning.

The above tweet means i bought UNG with 7.5% of the money that is in my account. You now have a one million dollar account in Webull. 7.5% of that is $75000. If you follow me implicitly, you would take 75000 divided by the price of UNG (at the time was $21.8). So 75000/21.8 = 3440. I would round this to 3400 and buy 3400 shares in my paper account.

7.5% of funds will always be 7.5% of my account balance when buying. Your paper account balance starts at $1,000,000. I always use percentage so if someone is using a $10,000 paper account, they can’t possibly buy 3400 shares of UNG, but 34 shares would be closer to 7.5% of their account balance.

The reason for only spending a portion of your money is because we are never 100% sure the price is going to go up after we buy. So we do what I call layering in. Layering in would be to buy a small amount of say UNG, if it falls further, add to the position. This is not so common a method of trading Natural gas, and may label me an idiot. Welcome to the club, moving on.

From now on I’m going to include the price at which I buy so you know it. The tweet may say “bought $UNG with 7.5% of funds at $21.8” I hope this is very straight forward.

Next I add to the position. Remember, your position is what you are currently holding. I’m going to skip forward in time with the next tweet.

Again, I’m going to start including the price, on the day of this tweet, the price would have been about $19.5. So I bought more UNG with 3% of my account value, $30,000 at $19.5. 30,000/19.5=1538. I would round this to 1500 and buy 1500 shares. Now 7.5% plus 3% is not 30%. I skipped some tweets and jumped forward in time. I’ll try to use the word position, sometimes the word holdings may slip out. If I’m “holding a position” then my holdings… I hope you get the picture. The tweet may read “adding to $UNG with 3% of funds at $19.5, my position is now 30% total”. We’re learning here and you’re doing great if you’re still with me. If not, ask questions.

Just like layering in, I may layer out. I may not want to sell the entire position.

So above I’m layering out of my position. I’m holding 7% of DGAZ and I want to sell half. Well I goofed, half of 7 is 3.5, not 4.5. The point here is I sold 40% of my position and held the other 50%. A few days later DGAZ went up another $10 and I sold the rest of the position.

The reason for selling only a portion is the same reason for buying a portion. I was not certain the price of DGAZ would keep going up. So I hold on to some of the position so if it goes up further, then we will sell more. We are doing what is called managing risk by selling a portion right away. When I buy, I’ll will speak in terms of account balance, when I sell I will speak in terms of position. So when buying say 7%, that’s 70,000 of 1,000,000, my account balance. When selling if I sold 50%, and I’m holding 3000 shares, I’m selling 1500 shares.

There is actually a slider bar on the mobile app in Webull. When you buy it shows the % down there on the slider bar. The 7% shown in the image below is 7% of your account balance. And if you are selling say 50%, that same slider bar is also referencing your position, just like I’m referencing it. If this is a little fuzzy, give it a while and try to get used to it. If you can remember buying=% of account balance, and selling=% of position you are all set.

There may be some other crazy stuff I say, just ask. If I say I’m all out, that means I sold everything. All out means you aren’t holding a position.

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