Cashflow Report: Paper Income during March 2011

One word describes this months profit report: SUCCESS!

As if I needed a reminder, March again let me know not to fight the market.

What happened in March?
Here’s where we ended February; yours truly wrote the following:

This month has reinforced the saying “Don’t fight the market”. While the general market seems to have stalled, DRN continues its march higher (reached $70).

Subsequently, DRN kicked off the month by reversing the February uptrend with a 10% drop. After another 8% or so, DRN tested the longer term, July 2010 uptrend (which started with a low of ~$30!) and has ended March on an upswing.

I went on to write:

On the other side, EDC has been moving sideways, but appears to be in a longer term downtrend. With the state of unrest and uncertainty internationally, it doesn’t appear that there is fundamental support for a rally.

EDC was a little more merciful…after a brief stint around $38 to start the month, it headed south again, in line with the short term downtrend. EDC found support at the same time DRN did, but there was not a solid technical reason. I’m assuming the overall market decided it was time to rally, and EDC went along for the ride. Today, EDC sits at its 52 week high (could be a double top, could be a W-base).

At least I got the final comment right: It doesn’t matter what I think. Regardless of whether I am right or wrong, I want to make money.

What I learned in March?
I learned that keeping your inner voice quiet is very hard.

I think investing and trading are a lot like skiing; you continually get better, refine your technique, learn how to use new tools, skills, etc. And for more than a decade, I’ve been doing just that.

I’ve spent countless hours researching market behavior, learning technical and fundamental analysis techniques, studying the mechanics of trading and investing, and even developed my own mechanical trading system. And even with all of that, I STILL had to fight the urge to enter a trade before my tools and rules told me to do so.

March was winding down, and I was SO close to my goal. I tried to convince myself that violating my rules was justified because I would achieve my goal. I mean, that is what this blog is about, right? Half the trading period was already over, and I wouldn’t be exposed for too long (It would be so easy…just…a few…clicks…).

I even tried to use circular logic to convince myself that violating my rules was okay because: 1) The position I needed to buy to meet my goal was a small percentage of my overall portfolio size, and 2) A small position size meant that I was actually following my rules for money management! (WIN-WIN! do it, do it, do it!)

In the end, I was saved by job of all things…didn’t get any time on the computer. When I was finally able to log in to my trading account, my rules said to place and order. So I was able to enter a second position for EDC without breaking my rules AND meet my income goal for March.

Lesson learned – Trading rules do exactly what they are supposed to do…save you from yourself! That’s why you create them before you trade, when you’re thinking rationally.

Cashflow Breakdown:

DRN-Direxion Daily Real Estate Bull 3X (ETF)

Premiums = $2250
Dividends = $0.00
Commissions/Fees = ($13.95)

EDC-Direxion Daily Emerging Markets Bull 3X (ETF)

Premiums = $800.00
Dividends = $130.49
Commissions/Fees = ($17.53)

Net Cashflow – Mar 2011 = $3149.01

SUCCESS! I exceeded my cashflow goal by ~$150! Granted, almost all of that is from the EDC dividend, and I can’t count on that every month. But my monthly cashflows have slowly increased, which is a good sign and gives me confidence for April. The real success will come when I can attain the same cashflow rate regardless of market conditions, but I am thankful nonetheless!

Paper Income from Covered Calls

Investing for Cashflow - Performance - 2011-03

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About T. Knight
Blogging about my journey to financial independence via investing for cashflow.

2 Responses to Cashflow Report: Paper Income during March 2011

  1. InvestSafely says:

    Way to go Troy! Keep it up.

  2. Laslow says:

    Congratulations Troy! It is hard to find people REALLY making money from their investing. Not to mention sharing the how. Would love to see your program, and more about how you selected DRN/EDC, etc.

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