Trading Stocks to Build a Money Machine

Here's my basic strategy: Buy into a stock at 200-300 shares, and then wait a couple weeks. If the market drags everything down, let the security go down 15-20% and then buy another 100-200 shares. If it goes down another 20-30% after that then buy up to 200-300 shares. Even in volatile markets like the one we're in now you won't see many stocks going past these percentage swings unless they are looking at bankruptcy or something extreme like that. By doing this you are lowering your average price per share. For instance, you could buy in at $27/share, in a bearish market the security may tank down as far as $22. If you follow my advice, you're average cost per share will drop to around $25/share. On the rebound, the security only needs to rise 15% or so and then you're in the money to either break even or wait to about $3 a share above your break even point and then sell the position for about a $1000 profit. The more volatility there is in the stock market the faster this system generates profits for you. Remember to diversify, I'd recommend at least 5 stocks and as they go up and down you will begin cashing out every few weeks and making money this way. On occasion a stock will tank from bankruptcy or bad legal news and then you will sell at a loss after waiting for a small rebound from the bargain hunters, this is ok because most stock gains will make up for the loss over the tax year and you should hopefully get a minimum 20-30% return on the overall money you put into this stock trading system. Be sure to figure in the cost of your trades in your average cost to pinpoint your breakeven point.

If the stock just goes up after you buy, don't buy anymore, just sell when you've made the money you want. If you happen to get dividends using either strategy then all the better. Look below for a couple of stocks this works well with:

First is the Select Sector SPDR Financials ETF (XLF). It trades in the $20s a share but once the financial sector stabilizes and large banks get through the credit squeeze and CDOs get written down look for this security to rise up to the $30s a share range. It's been really volatile with large swings, but backed ultimately by the federal reserve the risk is mitigated with this one. Large trading volume ensures you'll have buyers when you want them.

Another good mid term buy is Peet's Coffee (PEET), traded on the NASDAQ. If you want to get in and make 5 or 6 dollars a share, buy Peet's at $20-22 and let it go up to $27 or $28. Even though it trades at a high P/E ratio, the company has plans to expand from 180 to 800 stores, and with Starbucks pulling back in the US, this premium roast company is going to sweep up market share. The company has a strong grocery store distribution business and its emphasis on quality coffee make it a famous brand among West Coast consumers.

You can set this technique on autopilot with good for 60-days limit orders, after 2-3 months of following it you will become more comfortable with this system and hopefully be close to getting your first payout by that time.