A WOMAN’S IMPRESSIVE TRADING JOURNEY

 

[Today’s guest post is from Angela Zhou.  I have watched Angela for years; she is one of the best traders I have ever seen and is the “axe” when it comes to trading $AAPL.  She takes a very “zen” like approach to the markets that is at the same time engaged and emotionally detached.  Learning to trade changed her life as she says, “Things happen for a reason! Stock trading happened to be one of many good things in my life.”]

 

 

 

 

How I Got Interested

In July of 1998 I finished college in South Florida with a Business major. I kept thinking about what I would like to do next; meanwhile I was working as a waitress in a Sushi restaurant to support myself.

The old Chinese traditions taught me to work hard and save for rainy days and I had managed to put an initial investment of $15,000 into a mutual fund.  One day, I received my statement and was surprised to see a 12% return for the year; an $1,800 gain.  With great joy I told my best friend about it. He answered unemotionally – “Do you know you could have made 5-10 times that if you invested in stocks instead?”

What?  Really? I suddenly became curious about this new discovery. The next day, my friend started showing me reams of paperwork from his seventeen different subscriptions, pointing out that Investor’s Business Daily was his favorite among all of them.

He also showed me a financial TV channel called “CNBC’ that he watched daily.

As I looked at the comparison of the historic returns of $CSCO, $INTL, $MSFT, $KO and $DELL with the best performing mutual funds, I was stunned by the huge difference in their performances.

New-born Calves are not afraid of Tigers aka My Trading Started Nicely

I started following CNBC and I learned about stock symbols and what their businesses were about. This was during the internet bubble when all stocks related to networking, Semi’s, Chips, computers, fiber optics, online brokers and the Internet were HOT..!!!

I eagerly opened an online brokerage account with an initial deposit of $2,000.  One day, I saw that a stock called “The Sharper Image” had moved in one day from $8 to 20 on the news that it would open online stores. I wrote down its ticker and kept this price move in mind. A few days later it went back down to $9.00 so I immediately bought 200 shares. A couple of days after that it shot up to $21 on the same news. I sold it and doubled my initial $2,000 investment.

Unbelievable..!!! I had made a 100% profit in a few days; it was much better and much easier than having my money in a slow-growing mutual fund. The next day, I got out of my mutual fund and sent all the money into my E*TRADE account, which then totaled about $20,000.

(Ironically, The Sharper Image filled bankruptcy and closed down in 2008.)

I began to buy every trading book out there and read them over and over. I followed IBD diligently, learning about stocks’ fundamentals, and I traded most of high flyers of the day, mainly based on my gut feeling and instinct.  This included $AOL, $QCOM, $AMZN, $YHOO, and many others.

Then something strange happened.  The price behavior of most stocks began to change.

I remember holding 100 shares of $NSOL with a 70 point gain at one time. Two days later, I came back to my desk after having lunch; $NSOL started tanking like a falling knife on some negative news.

My heart stopped beating and my hands were shaking and sweating. I was freezing, and I couldn’t move my fingers as I watched it rapidly slice down below my buy point. Luckily it opened up 20 points the next day, so I sold immediately for a $2k gain. But something wasn’t right.

Another morning, as soon as CNBC announced $MSTR had accounting issues, the stock dropped 100 points in ten minutes and I dumped my 200 shares for a huge loss. Those wild days taught me to be able to endure big time volatility and also made me mentally tough.

Similar incidents with extremely volatile price moves started happening a lot by late 1999. This was a time when everyone was talking about stocks and acting like experts, which caused me to become alert and cautious about being long stocks. I started shorting some high flyers.

I shorted $YHOO at its exact all-time time high of $500 or $125 post split adjusted price ( it dropped as low as $4 later ); I shorted $CMGI at exactly it’s all time high of $300 ( it hit below $1 a year later ). But although my entries were good, I only caught partial gains on those shorts.

From mid 1998 to the end of 2000 despite a roller coaster ride, my initial trading funds went up over 800% for a $150k gain. Being a young female immigrant who used to make only $25k a year working part-time while studying for school, I was very happy with the profit.

Finding a Mentor and Learning Technical Analysis

Like life, my trading journey was not all smooth sailing. A bear market started from September of 2000 to March of 2003 when I found that trading old leaders were not working well. I made money, and then gave it back, and repeated the process. It became evident that I needed to improve my trading skills and to find a mentor if I wanted to be successful in trading.

I paid $1,800 for course materials about day trading from a website, but it didn’t work for me at all. I had to work other jobs outside of trading to make some income, but I didn’t give up my passion for trading.

Then one day in 2004, I was browsing through a trading magazine at the book store and I read an amazing successful story about a former pool contractor who became a multi-millionaire by turning $11k into $42 million in 18 months.  His name was Dan Zanger. Learning about his astonishing story made me so inspired and excited, as if I found the miracle, and I knew he would be my mentor!

I started subscribing to his newsletter and tried to learn about his stock picks, technical analysis, chart patterns, and his trading style. I studied hard and asked him all the silly questions I could in his chat room. I attended his seminar a few times in a row, and garnered as much knowledge as I could. I found his trading style amazing.

During good times Dan would hold his winning positions as long as he could, but during choppy markets he would reduce long position and change his stance accordingly. Dan taught me something important: be flexible, never argue with market, and never give up.

Achievement and More Challenges Ahead

I started trading full-time again in 2006. By going through that learning curve of losing and winning repeatedly, my trades finally became more consistent and more profitable. I combined Dan’s trading method with my own style, one which fit my personality. By 2008, the hard work paid off.  I turned my $50,000 trading fund into well over one million dollars in profit by trading leaders such as $AAPL, $AMZN, $BIDU, $CF, $POT, $MOS, $WYNN, $LVS.  Some of my best trades were even shorts which I took in the fertilizers into 2008′s deep decline.

Over the years my trading journey has had many ups and downs. But I am a trader who likes to pick myself up after a fall, who aims high after winning, who loves to keep learning, and who always strives to get better. Trading is my career now and my passion in life, there are two quotes that I always remember that keep me focused and grounded…

Patience, persistence and perspiration make an unbeatable combination for success. – Napoleon Hill

The more I learn, the more I learn how little I know. – Socrates

Follow Angela Zhou on StockTwits and Twitter.

 

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