The Compounding Effect of Success

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I would like to offer a brief explanation of the compounding effect of successful trading.  My hope is that you will find this post psychologically helpful, encouraging and maybe even influential on your current trading practices.
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The most important foundation for achieving an incredible trading record, and the most difficult period of time, is the beginning time period of your track record.  If one can carefully manage their initial trade profitability, it gets much easier to be 'wildly successful' thereafter.  Let me show you how this is true.
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Let's say you begin your annual trading record with $1,000 and a goal of achieving a 400% return for the year.  The goal then is to turn $1,000 into $5,000 in 12 months.  A couple of years ago I began, more or less, this very way and what I learned and experienced taught me an important lesson I hope to make your lesson, as well.
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If you are absolutely committed to this goal, you will be ruthless about accepting large losses.  Either you decide with yourself that you will get out of a position once it begins to go against you, so as to minimize your loss, or you decide that you will not accept a loss and commit yourself to patiently wait to take a gain.  In the beginning, there are no other options that will result in your success.
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Getting from $1,000 to $1,100 - the first 10% portfolio gain - is the most difficult 10% of the entire 400% goal.  Whether it takes you a day, a week, a month or several months to achieve this, you must get this first 10% and guard it with jealousy.  Do NOT allow it to be taken away from you.  It is, after all, the precious foundation of your trading record.
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Assuming you make it to $1100, now it only takes a 9% gain on $1100 to reach the next benchmark - a 20% gain on $1,000, or $1,200.
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You have heard the old saying, 'it takes money, to make money'.  Well, it is true!  That is because the compounding effect of success makes it increasingly easier to make more money. As you break each little milestone - the first 10%, the second 10%, the third 10% and so on - you do so having more money - each step of the way - to make money.  In reality, it get's easier to make more money as you succeed.
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To carry this just a bit further, let's say it takes you 6 months to achieve a 50% gain in your portfolio value...... i.e. you now have an account value of $1,500.  To reach a $2,000 portfolio value it will take a gain of $500 additional.  But now you are in the market using $1,500, instead of the $1,000 as when you began.  Instead of needing a second 50% gain, you just need a 33% gain of $1,500 to make it to the $2,000 mark.
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Once you achieve a 100% portfolio gain, the next 100% - making it to 200% - is twice as easy as in the beginning because you work with twice as much money.  The next 100%, bringing you to 300% is easier yet, and finally the last 100% taking you to 400% is the easiest 100% of them all.  
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To apply all this to my personal current situation, here is what my trading record is on pace to achieve since beginning my trading record and this blog on June 11th, 2010:
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3 months - 50% gain in portfolio account balance
4.5 months - 100% gain
6.25 months - 200% gain
9 months - 400% gain
12 months - 600+ % gain (June 11th, 2011)
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Whether I achieve this or not is not particularly important to me.  I have made this 600% gain in as little as 7 months before, so making it in 12 months would be nice but not a personal milestone.  What is important to me is that I do my best with the opportunity I have.  And as I have mentioned before, I compete with myself, no one else.  
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If you have read this far, I hope you leave this discussion with a new appreciation for how important it is to appreciate the smallest of your successes.  I sincerely believe that a carefully constructed foundation is what you need to build your success upon - and that you can do it - if only you will patiently honor its critical importance and nurture it with great care.

SOLD TNA $41.00 Bought CGC $3.35 PZG $1.34

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I set a limit order today to sell my remaining position in Direxion Small Cap Bull 3X Shares (TNA) at $41.00.  I continue to believe that the stock market is going to trade higher, perhaps much higher, but was happy to take a profitable trade off the table and look for another one.
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Click on the charts to ENLARGE

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This is Capital Gold Corporation (CGC) which I was able to buy at nearly the same price as yesterday.  The same technical BUY signals are still in place - trend line break of both the True Strength Index (TSI) and Money Flow Index (MFI) indicators, as well as a huge positive divergence and a ZERO crossover.
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This is Paramount Gold Mining Corp (PZG).  I liked the technical setup with breakouts of the TSI and MFI indicators and the ZERO crossover.
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My TSI trading record has been updated.

SOLD BRD $1.27 BUY CGC $3.34

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I really mistimed the purchase of Apollo Gold Corp (BRD) five weeks ago.  Almost from the day I bought it I was in the red.  But, I hung in there - believing in the gold secular bull - and today pitched that position for a miniscule 1.6% gain.  The price is now up in the Upper Bollinger Band and I figured I could find something else to buy with a more ideal setup.
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Click on the chart to ENLARGE

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This is Capital Gold Corporation (CGC) on a daily chart.  Now this is what I call an ideal setup.  We have breakouts of both the True Strength Index (TSI) and Money Flow Index (MFI) indicators, as well as a huge positive divergence and a near ZERO crossover.  Doesn't come much better than this - at least so I think.  Oh forgot to mention the significant insider buying 2 days ago.
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My TSI trading record has been updated.

Incredible Sentiment Data - BULLISH!!!

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Today's sentiment data from Investor's Intelligence is simply mind boggling to me.  I knew sentiment was bad.  And I was relying on that to help my TNA position sooner or later.  But I had no idea sentiment is THIS bad.  Geez, people are so scared right now that the only recent time that compares was the March '09 low - right when the S&P 500 bottomed at 666 and began a 12 month breakneck speed 80% advance to top at 1204.
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Do you realize just how bullish the current sentiment data is?  I do.
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Click on the chart to ENLARGE

BOUGHT DROOY - $4.10

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I bought DRD Gold Ltd Adr (DROOY) three times today for an average price per share of $4.10.  I bought DROOY yesterday at $4.20 and when I saw the price going on sale today I could not resist, so I loaded up.  
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This daily chart shows that the True Strength Index (TSI) and Money Flow Index (MFI) indicators are being narrowed by a wedge that really cannot go on much longer.  Either the stock breaks to the upside or it breaks to the downside, and soon.
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Here is a tid-bit of current data I came across at Motley Fool today regarding DROOY.   Also here.
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My TSI trading record has been updated.
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Click on the chart to ENLARGE

Bye-Bye US Dollar - Hello Stock Market + TNA

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This 4 hour chart of the US Dollar is playing out just as I thought it would.  Price has formed a bearish head & shoulders pattern with the right shoulder now descending to attempt a break of the neck line..  Meanwhile, the momentum indicator is simultaneously rolling over into the BEAR country of negative territory below the ZERO crossover.
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As best I can tell, the recent 3 week counter trend rally in the US Dollar is over.  And by implication, the bottom in the stock market (at $SPX 1040) is in.  As such, the cyclical bull of the stock market is kept alive now with a continuation of the higher high and higher low requirement.  Sentiment is absolutely scared witless and that is perfect.  TNA, time to rock and roll!
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Click on the chart to ENLARGE

SOLD CDY - $1.22 + BAA - $1.80 BOUGHT DROOY $4.20 + CLHRF $.329

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Geez, it's not even September and look at those precious metal miners go!  Before we get into the details of what I sold and bought today, let's take a fast look at the 10 stocks I claimed Sunday evening (2 days ago) were on the rocket launch pad are ready to head for outer space.  I own(ed) the first four.
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In just two days:
1.  ANO was $.88 and closed today $.92  Total gain = +4.54%
2.  BAA was $1.70 and closed today $1.84  Total gain = +8.23%
3.  BRD was $1.18 and closed today $1.19  Total gain = +0.85%
4.  CDY was $1.11 and closed today $1.28  Total gain = +15.32%
5.  CMIN was $.74 and closed today $.72  Total loss = -2.70%
6.  NAK was $6.71 and closed today $6.81  Total gain = +1.64%
7.  PAL was $3.19 and closed today $3.14  Total loss = -1.57%
8.  RVMIF was $.285 and closed today $.285 No Change = 0%
9.  SCCO was $30.09 and closed today $30.23 Total gain = +0.46%
10. TCK was $33.43 and closed today $33.38.  Total loss = 0.15%

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This is Cardero Resource Corp (CDY).  I sold another position today at $1.22 and have just one purchase remaining to sell sometime in the future.  

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This is Banro Corporation (BAA).  I set a limit order to sell BAA while I was off busy at work, but inadvertently had the mouse trap set to go off at $1.80, rather than the $1.90 price where I thought I had left the cheese.  My bad.  Oh, well.  It's just money, after all.  :)  I easily forgive myself because I fully expect these kind of snafus to appear once in while now that I am back to work full-time and cannot see a computer the first 2.5 hours of the trading session.

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I bought some shares of DRD Gold Ltd Adr (DROOY) at $4.20 today.  It has a trend line breakout of both the True Strength Index (TSI) and Money Flow Index (MFI) indicator.  Also, the TSI as made the bullish ZERO crossover and volume looks like it is waking up.  
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I really do not know a lot about the company other than it trades at a low PE of 5.5, pays a 1.63% DIVIDEND,  selling at just less that .75X Book Value and has a float of only 38M shares.  Those kind of numbers always get my attention and combined with the technical analysis, I hope this one is another winner.

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My other purchase today was of Coral Gold Resources (CLHRF) at $0.329.  At the time I bought this, the TSI had broken out to the upside of the trend line - but by the close the turtle had put its head back inside the shell.  First time I've ever seen that.  Ha Ha.
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Again, some of the fundamentals about this company caught my eye.  It closed today at 30 cents per share, but has a tangible Book Value of 57 cents per share.  Small float of 32.5M, PE of 3.4, no debt, mining operation in California and Nevada.  Between CLHRF and DROOY I've got to wonder if they remain "undiscovered" and "out of favor" when the gold bull takes off in September.  I kinda doubt it.  :)
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My TSI trading record has surpassed 200% in less than 3 months and has been updated.