The Art Of Skim Trading

Before trying to implement this strategy I highly recommend that you check out my other articles and doing some research. There, I warned you.

Skim trading is making profit from the movement of cents on a dollar. That might not seem like a lot but if a stock moves 20 cents and its a 20 dollar stock that’s 1 percent. If you profit 1% daily for a year you can become a millionaire with a starting investment of $10,000 in 2 trading years. Sounds easy right? That is where you are very wrong. Any trading strategy is very hard to implement and greed can overcome us quite badly.

Goal Setting

The goal for Skim investors is to make a profit and leave as quickly as possible. IT IS NOT A LONG TERM INVESTMENT STRATEGY. If you make more than you wanted, great! Specifically your goals can be from 1%-10% weekly (pending experience). I would suggest, if you are a new trader, to set your goal to 1%weekly. If you lose you can set yourself back a couple days so this should be factored in to your strategy. The fact is in any investing strategy you will lose sometimes so limiting your losses is the only way to become victorious. The goal is that if you lose 2/5 times you still win 3/5.

Set Up

To set up I highly recommend opening a paper trading account but if not you should definitely at least open a brokerage, as without one you cannot trade.

The second thing you should do is get a notebook or if you are savvy with Excel then that. This will be used to measure your trades. Just as anything in life, you cannot progress if you have no idea how well you are performing. You should have at least 10 columns for every trade, with the columns being: Ticker, Company, Price expected to enter, price expected to exit, price entered, price exited, profit loss/gain, signs to trade 1, signs to trade 2, signs to trade 3, notes, market that day, sector you traded in that day. You can add as many as you want but I highly recommend those.

The third thing you should do is set up your trade station. Do not trade from your phone unless it is all you have. Your trade station is your brokerage website, a news website like MSNBC business or Yahoo business, a stock scanning site or 2, a stock social media site and a foreign markets site.

The fourth and final thing you need is your mental capability. Do not trade when you are stressed out or emotions are high. This can cause you to make mistakes, make bad decisions and cost you thousands over time or in the moment. Trust me, I have been there.

Implementation

To implement this strategy I will give you a minute by minute playbook that I do every day. I wake up and hit the gym to maintain my mental clarity. Past that it is highly important to start your process. Whatever the process is, you have to implement it. For me that is making coffee, eating my post workout, setting up scanners on sites like FINVIZ and checking the news. I also start my side hustles before this but I suggest you stick to this sector if you’re going to do it. After this I check all my individual stocks for trading and my retirement account to see how that bad boy is pushing :). 30 minutes prior I am looking for a good momentum trade, a swing trade or day trades. For you focus on whatever strategy you are implementing, however, I would suggest you look into momentum or swing trades unless this is a 1 or 2 time thing you do a week. Once the bell rings the first 30 minutes is the most volatile the stock market is throughout the week. This is where most money is made. Past that I either exit or loosely monitor it(if its a swing trade). You might think, that’s it? Kind of. Unless there is more volatility at lunch(power hour) or the closing hours I do not bother. I can get more into this in other explanations but for now know that the market is extremely momentous right now(reddit and younger traders. By that I mean, analytics and charts mean close to nothing for half the stocks worth investing in. Get in early and get out fast.

Quick Tips

1.) Make sure when entering a skim trade that you either take profits at your designated percentage or set a trailing stop

2.) Always set a stop loss. You don’t want to blink and lose 15,000$ because that has happened (unfortunately).

3.) Always make sure your risk to reward is double. If the stock is already up 200% on the day that is not a momentum trade unless you are shorting a stock.

4.) DO YOUR RESEARCH. DO YOUR RESEARCH. DO YOUR RESEARCH. DO YOUR RESEARCH. Did I say to do your research? Yeah, it is important. Whether you are deciding on using analytics, fundamentals, Charts or momentum/news ensure you have all knowledge to profit or you will get burnt.

5.) Do not believe all the hype. If you are just hearing about a stock from aunt Beth it is too late. I have 2-3 guys that work professionally with clients and they bring in good returns and even sometimes they are a tad late but not too late. If I make over 5k from any of their trade ideas or setups 10% of my profits go to them.

6.) Know this, bulls and bears fight and pigs get slaughtered. Essentially that just means that if you get greedy you will lose. Day-dreaming is ok but do not act on it.

7.) Skim trading is for people who take this job seriously not for some kid treating it like a casino. It can be used like a lotto ticket but it isn’t.

8.) Do not bet all your Chuck-E-Cheese coins on one game. In other words, do not pull all your assets on one trade. I do a lot of risky prospective trades but I never risk more than I can manage. Specifically, you will be risking no more than 20% per trade. So if you have 10,000$ you should not risk more than 2,000$ on one trade. This helps keep your assets afloat as well as your stop losses

9.) If you lose, learn from it. Do not get back into the trade ASAP, you will likely lose. This is why having your notebook or trading journal is important. It gives you the ability to learn what you did right and wrong and what is working and what is not working.

10.) Enjoy your family and friends. Money is worth nothing without people to spend it with or save it with. Embrace your life.

Conclusion

This is a very broad approach to trading but if you want more info you can message me and I can show you some of my more complex strategies and how to scan or find good set ups. Message me at jessypadgett@thefinancialfoundry.com . Let us kill it this week!

-Jessy

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