So here are some preliminary stuff you need to know to advance your Trading skills.
These were the primary steps I did when I started trading on my own.
I opened an INVESTOR’S EDGE ACCOUNT with CIBC, because they gave me a preferential buy and sell rate of $7.00US only as I have my house mortgage with them. This was the first one I ever did opening
1. RRSP - Registered Retirement Savings Plan. (With this account you can buy and sell shares without being taxed for any capital gains, except when you have to withdraw the amount)
2. TFSA - Tax Free Savings Account. (With this account you can buy and sell stocks without being tax for any capital gains even if you have to withdraw them. This is an awesome account.
3. MARGIN account (Used for shorting stocks, since registered accounts are not allowed to short stocks.)
4. LIRA (This is my Locked-in retirement Fund Account. Usually when you work with a certain company who contributed for your retirement matching up every dollar amount you also contributed by yourself, the account is locked into a certain fund. This fund can never be withdrawn except by the time you retire.)
As soon as I was able to create all those accounts I asked Investor's Edge to facilitate the transfer of my funds from the Mutual Fund companies I used to have all those accounts. It was a seamless transfer of funds institution to institution.
You can do this with Questrade. Do an inventory of your RRSP and TFSA or even LIRA if you have and send a fax or letter to the institution telling them to transfer the funds to your newly created trading accounts. Transaction can only go through if the account you opened is the same. RRSP to RRSP, LIRA to LIRA, TFSA to TFSA.
Things I included in the account.
1. Option Trading (Writing Call and Put. Although, not really used it and did not bother using it.)
2. Access on US and Canadian Equities
3. Dividend Reinvestment is setup on all accounts.
4. A single sign-in account to log-on to all accounts.
Resources I used to get information about stocks.
Add-on Apps to install in Iphone/Ipad and other stuff to use.
1. Bloomberg to monitor your positions and to check for latest news.
2. Overdrive (sign-up with adobe for free account to sign-in to overdrive) to connect to Library Card. You can borrow electronic books and audios from the library through overdrive.
3. Candlestick Master. This app helps you master the different kinds of candlestick formation. It has also a game for investing, where in, you will identify if you are going to be long or short of a chosen ticker based on the candlestick formation of the day. You can play this one while you are probably waiting for someone.
4. The Motley Fool. I do not believe all they say. I signed-up up only to get some clues for companies I am monitoring.
5. Sign-up with BetterInvesting.org ($25.00/year) This will give you insights, graphs and statistical data of companies that are good candidate for investing. I did this on the first year, but I stopped using this, since I have other resources I could use. This company though, has a good track record already of their investments. This can also be a good source for possible companies that are watched closely by investors.
6. TMXMoney.com to check for Charts, Statements, News, and trends. What I used more of this site is to look for top 50 TSX Ventures company. This was the one that helped me found IPLAYCO, a company that set-up playgrounds. I got in at .75 and sold it at 1.50 when they received a huge contract in Saudi Arabia.
7. StockCharts.com. I use this site for its free tools especially the candle glance of the different Market Indexes. I use this one too for doing a comparison of a certain stock against its index. This will help you identify possible divergence and strength.
8. Finviz.com for confirming possible targets, combination strength of technical and fundamentals. For example, if a a stock had just gone New 20 days high or New 50 Days High, or New 78 days high with high volume and I would like to make sure that the move is also sustained with good fundamentals like High percentage EPS and high percentage sales, then the stock is a good candidate for trading especially if it had passed already some of my criteria like breakout from a Volatility Contraction Pattern.
9. Stockfetcher.com. This is the site that I subscribed to. This is where I created my own script to get me possible listings of stocks I need to watch out, especially those breaking out of New 20 days high, New 50 days high and New 78 days high. If they show the pattern I am looking for I take the list and use it with finviz.com to confirm with other indicators. If I have a good candidate and a good set-up then I will trade with it.
10. yahoo finance. This is where I check the news of why a certain stock is rocketing or plunging.
11. otcmarkets.com. This is where I double check the financial statements filed by the companies, News about the company like new CEO or CFO that could make a stock to propel ahead due to insider buying of huge shares. This is also where you can find out if companies have been approved on FDA for their drugs and other related product releases that will usually bring stock surging higher. You can also find out here reports of acquisitions or issuance of dividends that may also fire the move of the stock higher.
12. Edgar filings in sec.gov is another very important resource for knowing a company. As long as you avoid Over the counter (OTTC) stocks, filings for a company is always up to date in edgar, except for foreign companies whose filings are allowed every six months.
13. stockspinoffs.com. This is where I get listings for spin-off companies like ARNC and AA. When ALCOA (AA) had been spun-off from its mother company ARNC (Arconic) it started with around $22.00 last Nov. 1, 2016 having a candle breaking the 200SMA with a volume of 30M shares and breaking out of previous high when it was ARNC it became a launched pad for it to soar up to $60.00 in 2 years. I rode up to $40.00 and cashed out. The philosophy of spin-off is that the a huge company has a department or division that is growing so fast and in order for it to be able to magnify its growth they have to take it away from the mother company providing good management that had proven track record but just couldn't grow or expand more due to the cap of the mother company. When this division gets spun-off as another new company, it will rocket itself into a huge winner. If you can capture one of this. It will surely grow your portfolio exponentially.
When a company has a good product, you know it, it has good management, good financial statement and is loved by the people, like people are talking about it. You can ride with its trend. This was what happened with FB, SQ, MOMO, AMD, NVDA and NFLX.
Must Read Books:
1. The Lazy Investor by Derek Foster (Chapters) talking about Dividend Stocks. This guy was my first mentor in deciding to handle everything on my own. I started following his advice on taking into dividend stocks. I still held some stocks with dividends but currently I invested heavily on tech stocks that I knew pretty well.
2. How I made $2 Million in Stock Market by Nicolas Darvas (Amazon) talking about the now known Darvas Box. If you will learn his theory you could follow him also by using the box method in assessing your positions of the stocks.
3. The little book that beats the market by Joel Greenblatt (Amazon) . Greenblatt talked about owning shares of high profile companies that have capitalization of more than 50million. His method was simple. Own at least 5 stocks every month on these companies until you end up with 20 to 30 companies on your portfolio in a year. For those stocks showing losses sell them few days before it hits its one year holding period. For those stocks that are winning, sell them few days after its one year holding period. Keep repeating this magic formula every year and keep maintaining that 25 to 30 stocks per year. You keep replacing those that you had sold. I followed this strategy although I deviated a bit on the stocks I am looking forward of holding on longer than 1 year or perhaps stocks that I am looking of profiting only for few days or months.
4. The Winning Investment Habits of Warren Buffett & George Soros by Mark Tier (Calgary Public Library). This is an exciting read especially with these two stalwarts in investing.
5. The Warren Buffett Way (Calgary Public Library).
6. Japanese Candlestick Charting Techniques by Steve Nison or alternate from the Library
7. Trade like a market Wizzard by Mark Minervini. This is my second mentor in trading. His Volatility Contraction Pattern and other screening tool became my core content of the script I made with stockfetcher of which I added with my own twist, strategies from William O'neil and Larry Williams.
8. You can be a stock market Genius by Joel Greenblatt talking about making money on Spin-Off companies. Sometimes in the last months of 2016 I used this strategy of putting money into spin-off companies like AA and CNDT. I made a mistake actually in my investing rule with CNDT. I placed my money with XRX (Xerox), the mother company instead of CNDT (Conduent Incorporated), the spun-off company. XRX just never took off. It just kept on trending sideways pulling back and forth between high and low 34 and 24, while CNDT took off from $15.00 to $23.00 in less than 2 years.
9. A complete guide to volume price analysis by Anna Coulling talking about how to decipher a true move and a false move based on the volume strength and the candle's body.
10. Trade like an O'neil disciple by Chris Cacher talking about stocks breaking up from a sound base and pulling off a trade from an undercut against 10 day moving average on fast moving stock and 50 day moving average on slow moving stock. Added to this is the golden rule of short selling.
I have a lot more books to share. But for now I think you have more than enough for the time being. I will share with you later on the chart patterns.
There is another platform that you can sign-up with of which I used for my other RRSP and RESP of my kids. This is the one I mentioned above as questrade.com. you pay only $5.00US for trading buy and sell. So the total you pay round trip is only $10.00. There is just one drawback. When you want to invest on Toronto stocks with shares more than 500 shares you should use a different platform. The reason is. Once you buy Canadian stocks if it is more than 500 shares, the trading fees goes higher up to the max of $13.00 based on the number of shares you buy. Only with Canadian stocks though. In my case, if I want to buy Canadian stocks I use the investors edge of CIBC if I need to position more than 500 shares. But if you trade US stocks there should be no problem at all, only $10.00 round trip.
So far, you have a lot of things to assimilate here. I will just go over with you later on each one of them, so it will be easier to understand.
Cheers.
