SUPPLEMENTAL INCOME USING ONE TRADE PER DAY
I envisioned this strategy for a California friend who works each day from 9:00 a.m. until 6 p.m. (California time) and who desires to make around $2,000 per month supplemental income. He should have the first 1-2 hours available for trading purposes before leaving for work (one of the few blessings that comes with California Pacific Time living)? I even set up a separate account myself to try this method for a six-month trial period to see how well it might work?
This method should work using a cash account, or even a regular brokerage account, under the new FINRA guidelines that no longer require a $25K minimum balance for making day trades. My understanding is that Schwab has set their new level at $2,000 minimum for day trading purposes?
For my personal trial I am limiting this strategy to four trading charts: ALAB, SPY, MSTR, and COIN (any four charts of your choice should work). The charts I am using all have good intraday volatility of at least 5+ points movement.
The strategy is to make only one trade per day buying two contracts to start. My friend is in the process of opening a TOS account for $2,000 (or more) which is the new minimum for day trading with Schwab.
He will need to be very careful and selective for trades in order to maintain his account at, or above, the 2K level. As soon as his account is opened, I will help set up his charting using one of my AGAIG charts. I will teach him to enter his “ONE” day-trade buying ATM (At-The-Money) from one of these four charts using the SHORT BUBBLE and RED VERTICAL SQUARED HISTOGRAM as entry points (for short trades) and the LONG BUBBLE with GREEN VERTICAL SQUARED HISTOGRAM or GTC levels for exits (this can be used in the reverse for long trades as well).
He should hopefully be able to execute one good trade each morning before he leaves for work?
My further instructions are as follows:
Buy two contracts each trade until you account reaches $3,000. At three thousand begin trading three contracts; at $4,000 begin trading four contracts and when your account reaches $5,000 begin trading five contracts (and so forth up the line as your account increases in value).
Now, remember my friend is trying to generate an extra $2,000 per month. Since there are approximately twenty trading days per month and these stocks are volatile, he should try to make at least $100 per contract/per day. This requires only a 2-point move ATM to generate that amount per contract.
This is also the method I would recommend to any individual using a small account (or any size) wishing to grow it.
Happy trading!
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