[Airelon]

Originally Posted by Jerklian

That's interesting, Airelon. Hopefully you will go into this further...I have had a difficult time organizing my plans for my investment account mainly due to the discrepancy b/t the two practices.

Now, you have this totally separate account (if I remember correctly) for investments. Do you then take a position just as you would with a trade, based on percent of capital risked?

Precisely.

por ejemplo:

Your $600 dollar investment would be 2% risked of a $30,000. You would then have a target, or some exit strategy where you (initially at least) risk the whole position.

Precisely. If I have a $30,000 account, I actually risk 3% on investments. So $900.00.

So let's take EXAMPLE company. I make sure they line up to what I want in an investment (DRIP's, good and healthy dividend paid quarterly for many years, etc), and then I spend all $900.00 on the investment. My risk - is $900.00

Can you clarify and take me through your exit? Do you pick a strict target or do you finally have some exit strategy once the position is profitable?

Even better question. For investments? It really does depend. My bare minimum in the above example would be a return of $2700 (3x's the risk). But that's bare minimum. But I monitor my investments, and make sure that things are remaining healthy for long-term prospects. The nice thing about DRIP investing, is that it's not unreasonable to expect returns in terms of hundreds of percentage. You just have to be patient enough to wait. I know a guy who bought $300 worth of GIS back in the 1960's. He never again added any capital to the purchase.

That $300, through splits and DRIP's? Is now worth $180,000.00. Now imagine if he had added capital throughout the years. The other kicker when it comes to DRIP investing, is that taxes can be a pain, as far as the record keeping, where you're cost basis is, and for how many lots.

Also, as to DCA of a position...you would only do this if your (let's say) 2% risked is on a $60,000 account where you would have a further $600 to add to the position?

Well, usually? Usually I turn off my DRIP in the summer time, when the markets are peaking. I'm not doing it this year, due to the bear market. I want to pick up more shares at low prices. But many times, I have 20 stocks that are paying me cash in the summer time. In addition, I add money to the investment account from my trading account profits so I have more to invest. So I'm moving money from A to B, so that I have more to invest.

I consider DCA'ing based on fundamentals. If the company still looks strong, I'll DCA. Generally - I add any amount under 3% of available cash to a position.

Hope this helps mate!