Core Position Trading

How to make $1,000,000

Want to know how to make a million dollars? It’s easy: invest $100 million in US Treasury notes then wait 4 months.

I kid, I kid.

For too many people a million dollars seems an insurmountable amount of money. The reality is that anyone can get there using core position trading.

Core Position Trading

Markets are uncertain. It’s impossible to know whether they’ll go up or down in any given month or year. Core position trading takes advantage of that uncertainty by trading the ups and downs. Core position trading allows you to profit from market declines. More importantly, it changes your mindset and causes you to look forward to market declines because you now have a systemic approach and dry powder ready and waiting to put to work.

Core Position Trading – a Recent Example

One of the best recent examples of profiting from core position trading over the last year is VNQ. VNQ bounced up and down repeatedly between $78 and $84 before dropping down to $73 at the beginning of 2018.

VNQ.png

If all you did was buy and hold it for the past year you collected a couple bucks in dividend income and are sitting on a 9% loss. But if you bought more and then lightened up as price bounced around over the past year then your loss is much smaller or you might even have a small profit.

But the difference between a pure chartist and core position trading is that a chartist only looks at price and doesn’t consider the economic and fundamental backdrop. A core position trader will add to and lighten up his core position, but at lower prices she might be perfectly happy to sit on the position and do nothing knowing that it represents a good value at the lower price point.

Core Position Trading – Grind it out

Besides the behavioral improvements from being able to profit from market drops, core position trading also removes FOMO. Instead of trying to chase the hot new investment trend for the big score, which often ends in a most spectacular fashion, someone who uses core position trading grinds it out.

How can you use Signalee to get better at core position trading?

Ideas and opportunities are posted on a regular basis. Some of them involve long-term core positions and some of them highlight short-term trading opportunities around a core position. Other updates are general market or trading musings, hopefully most of which are educational.