Trading With A Full-Time Job

These past few months, I've been trading while working a full time job. I quickly realized that my undiluted penny stock trading strategy would be too dangerous to use in the workplace. The very thing that makes penny stocks so attractive, their volatility, necessitates constant monitoring while trading them. That just wasn't possible for me, and I suspect the same would be true of anyone else with a full-time job.

Reducing my risk back down to tolerable levels was actually fairly easy. In a way, I just became much more picky. I asked myself several questions:

• What major factors are influencing the stock price? (e.g. promotions, CNBC feature, forums, news, etc.)
• What are the chances something happens that will drastically drop the price while I'm holding it?
• How much do I expect the price to change? Why? Will that change make me enough money for the risk to be worth it?

For the most part, these questions shouldn't be new to you at all. You want to know the answers to questions like these for every trade that you make. The difference though is that I want there to be almost no chance of something unexpected happening, since my ability to react to it will be drastically reduced or eliminated.

I also only want to be trading stocks that I expect to change quite a bit. While I would normally trade something and aim for a 10% gain, but take 3-5%, the revised strategy aims for closer to 15% gains. While I probably won't hit that goal, it means that I only trade stocks with something significant happening. It's a practice of discipline that will force you to sit and watch many opportunities pass you by. You'll be rewarded of course by a much higher win rate.

As an example, we'll look at Google (GOOG):

Google isn't a stock I would normally trade. It's complex, expensive, and traded by thousands of people who are much smarter than me. The good news though is that all those traders means it follows trading patterns since most of them are self-fulfilling prophecies. It also isn't in any major danger of dropping like a rock so long as you watch the SPY. That means I can hold the stock at work without constantly fearing for my wallet in the back of my mind.

My analysis wasn't complicated, since complexity isn't my cup of tea. Instead I happened to catch the stock while it was approaching a major support level, represented by the blue line. I didn't quite get the bottom but waited for a solid green day to buy after bouncing off the support level. My aim was around $900, which I also didn't quite get but I did manage to make an easy 3+% gain on a ~$17k investment. It may not be much, but it was low-risk which is what I wanted.

I'm also waiting patiently for Pacific Clean Water Technologies, Inc. (PCWT) to get high enough to short. The higher it gets, the less risky it is. Unfortunately, as you probably know, shares will also become more difficult to borrow. I'll probably start looking for shares around the 50 cent range, assuming it can even make it that high.