So how did you do last week?

So how much money did you make off the three names I gave you in last weeks’ game?

If you followed the rules I’ve long preached — you should have some nice pocket change right now.

Did you follow rule number one — don’t be greedy — take some off the table whenever there’s a pop?

Or did you ignore the rules, ignore doing any due dilgience and just cross your fingers, hope for the best, and let the traders’ slaughter you?

If nothing else, I’m hoping this 30-day game, where you don’t actually invest any real money into any of these names, helps you develop a stronger gut for what a traders’ market this truly is — and how you have to keep taking profits the moment they present themselves, because those of us who cover ourselves with puts and calls, will end up running right over those who aren’t, and who are still trading like it is still their daddy’s market of yesteryear.

Enough cheap-talk — let’$ talk money.

Let’s start with our 1,000 “make-believe” shares in Celgene:

On Tuesday it was 44.28.

With a nice pop on Tuesday, it closed at $45.28.

That should have automatically triggered bells.

What did your due diligence tell you:

If it told you Celgene had a nice way to go — then you still should have taken some off the top — and let the rest ride.

If it told you that some fundamentals of why you may have owned it in the first place may have changed — then you had a nice exit point.

Personally, I see Celgene as the spec play of the group, one that hasn’t been on the due diligence list that long.

I would have taken the nice $1 profit, cashed out 50 percent of my position, and let the rest remain, while I still kept a close eye on the fundamentals.

That means I would have walked away with $22,640 cash, and with the stock closing at 44.35 on Friday, I would still have 500 shares in play, currently valued at $22,175 — making it an overall profit of $535 for the week..

Next-up is McDonald’s, a long-stay on my due diligence list for those who are longtime readers here.

So with our 1,000 “make-believe” shares in McDonald’s, let’s see how the week worked out:

On Tuesday it was at $60.38 a share.

With a little pop on Wednesday to $60.99, I wouldn’t be able to resist cashing out the full 1,000 shares, with my due diligence telling me the pop was part of an overall pop in the market, meaning the likelihood that it would tread lower soon-after would be a no-brainer, and I could then reclaim my 1,000-share position the next time it dropped.

That means I would have cashed-out for $60,990.

When MCD came back to a nice low of $59.87 on Friday, I would have reclaimed a 250-share position, beginning another cost-leveraging over a period of time into a lower entry position in MCD.

Remember another of my golden rules that I often preach — you are never married to a stock — and you can take a separation and get back together as often as you wish, with no hard feelings.

That means I would have ended the week from my initial position in McDonald’s of 1,000 shares worth $60,380 — with now having 250 shares still in MCD at an entry cost of $14,967.50, and I would still have $46,022.50 in cash on the sidelines from the sale — a profit of $609.50

Next is Walmart, another long-stay on my due diligence list.

On Tuesday it closed at $49.33 a share.

On Wednesday it enjoyed a nice little pop to $50.88 a share.

But while this pop had some tailwind due to a pop in the overall market, it also was moving up on fundamentals.

This meant I still had to follow my golden rule to almost always take some off the table every time there is a nice pop — but I wasn’t going to completely cash-out the way I did with MCD, because there was a chance this baby still had some more room to rise.

Therefore, I would have cashed-out 25 percent — just to make sure I enjoyed some profit.

At $50.88 a share, this would have placed $$12,720 in my pocket.

On Wednesday, with the stock pretty much holding steady at its previous closing price of $50.87, I would have been forced to take another 25 percent off the table, to make sure I didn’t lose out on any more profit.

This would have placed $12,717.50 in my pocket, with 500 shares still in play in Walmart.

And when WMT did as the due diligence expected and kept treading higher on Friday, I would have taken off another 25 percent of the shares.

With it’s closing price of $51.07, this would have placed $12,767.50 in my pocket.

That means I would have finished the week from Walmart stocks with $38,205 in cash and 250 shares still in play worth $12,767.50.

From my initial stake on Tuesday with 1,000 shares in play worth $49,330, I would have closed the week with $50,972.50 — a profit of $1,642 in Walmart.

Overall, I would have ended the week with a nice profit of $2,786.

Now, keep in mind, in this market I am a firm believer in using options, but I save most of my options talk for the more advanced traders on my EAM site.

This market is most definitely a dream for options traders and day traders, as due to the bid/ask scenario, it can be difficult for a straight investor with no cover to make some quick and easy trades.

But that’s where you should go back and read my advice about not using market trades, and always placing limits on your transactions to protect both your entry points and your winnings, as Wall Street loves nothing better than a sucker who will buy at market price and sell at market price.

I’m hoping everyone learns from this experiment not to be afraid to actually look at a stock price of a position they own — or are contemplating owning — several times a day.

Now, I don’t expect — nor do I encourage — newbies to start moving in and out of positions the way I outlined above. Rather, I want you to see the thinking style of a trader, so you can understand the strategy behind buying low and selling high — not being greedy, and take profits when they present themselves — and always keeping money on the sidelines, so you can snap-up more of a position in a company when it takes a dip unrelated to its fundamentals.

Using this strategy and “play” Monopoly money not really vested in the market, let’s see how you perform in the market next week — with my tip for the week being to not be afraid to dump any position in a company that doesn’t feel right to you — and snap up a brand new name on your own that you’re doing your own due diligence on.

Just remember my usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence, or at least enough research to pick the right professional to do it for you.


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