Introduction of this Trading Blog

*I also made an Introduction YouTube video

I decided to write this blog to provide a trade diary so I can review my mutual fund trades for my 401K and Roth accounts.  I also wanted to educate others like my younger self about trading and market behavior.  When I started to investigate trading, I read all the books from William O'Neal of Investor Business Daily, Nicholas Darvas, etc and subscribed to trading services like Dan Zanger.  I traded stocks, options, wrote covered call options (basically renting out stocks), and traded mutual funds.  Over last two decades, I slowly changed my focus to building wealth with my 401K and Roth portfolios rather than try to generate income like a job.  This philosophy has simplified and optimized my trading based on my own risk tolerance, lack of time, and the need not to continuously monitor The Market.  As I blog my trades, I will try to write in plain language.  However, I will not explain fundamental trading terms and concepts like how to read candlesticks, chart patterns, and their merits.  There are a lot of info on the web to familiarize the readers.

"I have made many trading mistakes in the past and will make new mistakes in the future."

The main reasons I traded mutual funds for my retirement accounts instead of holding them until my retirement are the infrequent market crashes and opportunity cost.  The first reason will be evident to you if you review the lower chart.  There was no market gain over 12.5 years from September 1996 to March 2009.  Yes, there were significant gains before and after this period.  If someone traded market based on chart patterns and behaviors, they would profited from this period.  No, they would not have sold at the top or reenter at the bottom.  But, they would have profited with the rebound noted in green arrows.

Trading based on chart patterns and behaviors definitely have its drawbacks as traders overtrade or inherent difficulties in volatile markets.  It is not my intention to convince anyone the merit of trading based on chart patterns.  This is simply my reason and strategy to fund my retirement.  Lastly,  if you can generate an annual return of 14.1%, you can double your account in 5 years.  For 2016 year, my return is 9.6% 
  

Above chart is my progress vs S&P500.  The advantage of my trading strategy is the stability during market correction.  I will exit all mutual funds if market condition is not favorable.  

2016 2nd trade on 7/8/16 (+1.1%) - Inverse Head and Shoulder liked pattern

• After 2016 1st trade, noticed S&P500 formed a consolidation.  Initially this pattern resembled an inverse head and shoulder pattern.  (Pattern below blue line) When pricing spiked down suddenly then recovered quickly, I was impressed with this strength
• On 7/8/16, I entered into S&P 500 funds when it broke above this consolidation (Blue callout).  Since this trading day ended near high of the day, it indicated strength

• On 8/1/16 sold about 50% shares for profit when trend stop rising.  I decided selling 50% since trend was weak.  Looking back, it was the correct decision.
• The rise was short

• On 9/9/16, there was a massive drop, I sold another 25% shares with 25% reminder left
• On 9/13/16, sold rest when the trend didn't recover or bounce up.  
• The pricing recovered briefly then had a massive drop before the 2016 election that setup for my 3rd trade (see lower chart). 

Overall, I think the entry had promise after the consolidation.  Trade didn't work out.  Let me know what you by commenting below:

2016 1st trade on 1/25/16 (+8%) - At Support Line

Latest video to this mutual fund trade

• At beginning of 2016, Market initially dropped to major support line, then started to bounce back up
• On 1/25/16, 1st entry for S&P500 funds for my 401K and Roth Accounts.  Note:  Not the best entry.  I will explain later

• On 2/1/16, 2nd entry into S&P500 Funds.  Note:  I thought we might get a fast bounce soon so I added here
• Stock market have a tendency to repeat same recent pattern.  Please note on the first chart double bottom. (two spike down formed near 8/25/15 and 9/29/15)  This exactly what happened next.

• The 2nd leg of double bottom pattern started to form in market
• This is a good place for initial entry to this trade.  Since I already added my entry trade, I could not add more here.  I have to add on confirmation of double bottom pattern that means above 2/1/16 price level.  If you don't know what this means, search on the web for double bottom pattern and entry 

• On 3/2/16, added 3rd entry with confirmation of double bottom pattern.  Note:   I waited for strong trading up date for this last entry.  I was definitely late
• After completion of double bottom pattern, pricing started to rise.

• Sold partial on 4/8/16, and 5/2/16.  My timing was off so didn't sell at rise.
• Sold last partial on 5/4/16 when pricing broke a major support line (orange line).  

Overall, I think trading off double bottom was a great idea.  However, my execution on entries and exits were off.  

Please comment below:

2016 3rd Trade on 11/9/16 (+2.9%) - After 2016 US Election

• Stock Market (S&P 500) Index started fall in early November '16 before election (I was out of market since 8/24/2016.  See 2nd trade for detail) 

• I noticed the significant rise on11/7/16 and 11/8/16 after election. 

• I decided to enter S&P 500 Index funds if pricing breaks above descending red trend line. This would be a key event to signal that market is changing direction.  

• On 11/9/16, I entered 50% of my 401K and Roth portfolios into S&P 500 funds.  The reason I used 50% of 401K and Roth fund is because I'm confident that the trend is strong on the breakout date.  However, I needed more evidence before I will commit more of my retirement funds

• Pennant pattern (between two green lines) was formed in following days to consolidate recent gains.  These tight daily candles where pricing do not vary higher or lower indicated buyers were holding on to their gains.  No selling :)
• On 11/15/16, I entered another 40% of my 401K and Roth sources into same S&P500 funds with breakout of Pennant pattern.  90% of my portfolio in S&P500 funds at this time.

• On11/22/16, I decided to sold 30% of S&P500 funds for profit.  I always take some profit on the way up.  
• Two days later, pricing temporary peak and consolidation took place where pricing drift down slightly.  This action is normal after run up in pricing.

• After consolidation, another massive run starts
• On 12/14/16, I sold another 16% S&P 500 funds for profit.  I have to admit that I got greedy and didn't sell one day sooner.  Note that previous day's closing pricing was above the Bollinger Bands where it measured 2 times standard deviation of pricing.  Just means pricing is really high compared to recent trading prices

• I started noticing the daily close is lower than the daily highest price, the wick on the daily candles.  This showed some weakness in the pattern.  
• On 12/16/16, I sold another 30% for profit.   14% of portfolio in S&P500 funds remained.  
• On 12/23/16, I decided to sell another 7% S&P500 funds since trading volume is usually thin near Christmas holidays.  This means very difficult to read chart pattern and trading behavior.  I usually would not sell unless chart indicates weakness.  Only have 7% in S&P 500 funds remained.
• On 12/28/16, sold remaining 7% S&P500 to end this trade.  I sold because on 12/27 the candle resembled a shooting star candle (prices can't hold near high of day) then following by sell off on this day.
• Overall, +2.9% on 401K & Roth accounts.

Let me what you think of this trade or have questions.