Controlling your Future with your 401K

For those of you that follow me in the USA and have a 401K you should know that you more than likely have the ability to control the growth yourself. I had a request from Wavey Crocket to talk about 401k trading.

Mine is with Fidelity from my former years working with USAirways. I was able to open a self directly account with Fidelity. I was able to convert the money from Mutual funds and use the funds to trade with stocks for myself. In your 401k you can make trades only to the long side. When you go long or buy a stock the maximum loss you can have is what you invest. I don’t know of any brokerage house that will let you short in your 401K because the loss potential is unlimited and then you would have to contribute more to your 401K.

Trading in your 401K account when managed by yourself can be as aggressive or conservative as you like. I tend to pick longer term stocks that I think will be growing in months to years. I have been trading a fair amount of UWTI and DWTI as the price of oil oscillates and I take my profit with limit orders. The downside to the 401K trading for me is the fact that I have to wait the 3 days for the funds to clear after the trade. There is no margin trading that I know of for 401k so you have to wait your trade to settle in the account before you can go into another trade. For that reason I don’t tend to trade my faster paced day trades more longer term. For today I sold my position in UWTI that I entered around 19.50 and sold at 28.25.  I will wait until it settles and assess whether DWTI or UWTI would be better to enter. Looking at after-hours I see that UWTI is up .99  from close to 29.23. As with all my trades taking a profit is always better than a loss.

Which brings me to one of my trades today that I was trying to protect my little profit with a hard stop on ENDP and it executed immediately at 29.32 and then the stock proceeded in the afternoon of 30. I was way to conservative in trying to protect my profit. I was being conservative because I did not feel I had the best entry here as after I bought the stock at 29.22 dropped 80 cents  down to 28.40 and I did not want it to go against me again. I was trying to let the trade have legs with a hard stop. Yet I don’t like hard stops because I always find my stops execute right after I put them in.  I’m almost convinced the market makers see them and manipulate the price to execute them. However when life happens and I’m in a business meeting for 2 hours I want to protect profits I use them.  It is always great to protect them.

Just like at open today, I had my limit order in from yesterday and when ENDP spiked at open it locked in a small .17 cent profit at 30.54. If I had not had my limit order in there was the potential for me to forget about the stock and take a loss. I like setting an exit right after I enter in case the stock spikes like crazy with a squeeze or I am pulled away from my desk for some reason.

My biggest wins of the day were on CWEI. One trade that I swung overnight from the trade of the week idea from Trade Ideas. I entered in at 17.15 and then the stock sold off to 16.57 and I added more for an average entry of 16.95. I had a target exit of close to 18 but I saw the initial spike this morning was up in the 17.60’s and knowing the trends of a reversal typically around 950~10am I seized the profit and sold at 17.57.  Also my position size on this stock was fairly large in relation to the volume so I had to plan my exit accordingly.  I in fact tried to go back in when it was down at 16.80’s but I made the mistake of hitting market and I had an average entry of 17.15 a big 30 cent spread from 16.80. A  lesson I learned about sizing and setting a limit so as not to really get burned on entry. A partial lower is always better than a bad entry.

My real pleasure is in seeing STX finally having the upward momentum the past two days. I had a bad entry seeing that the stock dropped 2 dollars from when I went long. I really hope you were more patient and have already made money on this $2 gain that has happened over the last week. After reading the article about the company announcing their new 10TB storage drives for cloud storage companies the viability of the company as a value stock is reiterated. I think this stock will recover more of the bid drop it had two weeks ago from 33 but how quickly I’m not sure. My ideal target is up between 28-29 however I will trade it based on price action. The fact that they are announcing before the market on Friday leads me to believe they will meet their estimate. We shall see…In the mean time I’m looking for that price target and will enjoy this week’s momentum.

I hope you have had a profitable week and keeping those profits protected. It’s always nice to end the day green. I have felt that I have been just ok with my trades the past two days getting back into the swing of things. I feel like my timing was off and I need to wait for my 3 greens for entry. I mean the real move on ENDP was from 28.40 to 30 and somehow I only locked 10 cents of that 1.60 Not the best, yet a profit. When you find that you have a trade that did not work out like you expected. Swallow you pride analyze it and figure out what went wrong so you can try to prevent it from happening the next time.

Day trading for me is being present in the price action and not acting fearfully or emotionally with excitement. The best trades are simply watching level 2, RSI and time of day. When you track your trades and study your weaknesses you can improve.

Enjoy your trading day tomorrow I will be back on Twitter on Thursday. Tomorrow is a day filled with meetings.

As always shoot me comments, Tweets or messages on Facebook, Instagram and Profitly. I’m happy to help where I can.

This blog is for information purposes I am not a registered securities broker-dealer or an investment advisor. The information here is not intended as securities brokerage, investment or as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund.


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