Hello r/investing!
So here's the deal. My net worth is currently around $40,000 (I just paid bills so probably a bit less) and I am trying to invest/trade as much as i possibly can, rather than spending money on stupid things. I have revolving debt that I pay off every couple weeks or so, but no long term debt that I'm paying interest on.
I am intending to purchase a rental property out of state. I will hire a property manager to manage it for me. I'm planning on using $23,000 for the down payment.
I also currently have ~$4045 in my prosper P2P lending account. I've had it only for 3 months, so I haven't collected that much interest on it, and I have been adding more money into it over that time as well. I have this set up to be "less" risky. The credit ratings for the notes are as follows;
AA- 32% A- 20% B- 18% C- 11% D- 11% E- 5% HR- 3%
I would like to eventually put more money into this, but I am limited by the stupid rules of not being allowed to invest more than 10% of my net worth into debt notes.
Currently I have 2 brokerage accounts, a total worth at this very moment around $6,200.
I have been trading stocks for the past 10 months, and have been feeling more confident about formulating a strategy using basic concepts that I think are intelligent at the moment. I will plan on depositing $23,000 into my trading account if I cannot find a good home to purchase.
If it comes down to that, I have a few ideas of how I would go about trading/speculating;
-Invest no more than 5% of my account size into one stock/option -Set a stop loss of 5% or less for every position (except options) -I will not sell short. That is just something I haven't done yet, and I'm not totally comfortable with doing that. I am currently shorting TSLA through buying a put option. If I am bearish on a certain stock, I plan on buying put options to bet against it, instead of selling short. I just feel better knowing that my risk is defined, in the worst possible case scenario I can only lose the amount of money I spent on the option.
-With options, I feel more confident using the longer term contracts. I know the tastytrade method goes for 25-45 day expirations IIRC, but I'm not totally comfortable with that. The current put I have for TSLA had around 4 months to expiration when I bought it.
-Biotech stocks. I'm still kicking myself for getting out too early on AKAO, and got greedy with another biotech company (VCEL) and suffered a huge loss because of it. Something I noticed, is that as it gets closer to the end of the FDA phase trial, the stock picks up momentum, maybe 5-10% as the market anticipates results. And then the results are obviously either positive or negative, and well, you know what happens next.
With AKAO, I purchased stock at $4.85 maybe a month before the FDA announced the phase III results. I sold my position a few weeks later at $5.90 a share. A week later, you know what happened next. I haven't touched it since.
Same thing with CDTX. I bought in at $9.60 a share, and as it got closer to announcing results, it went up above $11. I was totally lucky, because I closed my position for a nice profit due to unforeseen circumstances, and a period of time later it crashed.
So what I'm thinking is possibly using this strategy to play the small biotech companies. Research when they are expecting results, and get in hopefully before it starts to pick up hype, and get out BEFORE results are announced to lock in profit. Trying to play the hard results are a bit too much of a gamble for me. I wouldn't use my whole trading account for this, possibly just 50% of it. The rest will be for options trading, and long term momentum trading. Maybe ETF's as well.
Thoughts on this? The reason I ask is because I don't really have anyone I can go to for solid advice when it comes to stuff like this. Literally everything I learned about trading/investing came from YouTube, investopedia, reddit, and maybe a book or two. Thank you for taking the time to read this.
Submitted March 05, 2017 at 04:27PM by DotsnDashes http://ift.tt/2mIsSAO
