Welcome back for episode two of notes from a newbie. If you are reading this then I must have shined some wisdom on you in my first edition, that or you are purely entertained by an expensive strategy to becoming a better trader. Either way, here we are so let’s get down to business.

I wanted to start this blog by taking a short trip down memory lane so that I can put a little context into how I got here and why education really is the foundation for success. It all started for me about 2 years ago when I was convinced by a good friend of mine to read a book called “Rich Dad Poor Dad.” Now I have never been much of a reading man, but for the sake of finally doing something with my financial life, I decided to get the audiobook. I can honestly say that my outlook on life hasn’t been the same since. If you have not read that book, stop reading this and get to reading that. You will not be disappointed. Anyways, what I took away from the story was to learn to build passive income through the acquisition of assets. See assets are considered things that put money IN YOUR POCKET. And do not purchase liabilities, which are things that take money OUT OF YOUR POCKET. When your assets out-weigh your liabilities, only then are you on your way to financial freedom. I specifically remember one question from the story that has really stuck with me. If you quit your “job” today, how long could you financially survive? Well for me that answer was about 17 minutes, give or take a minute or two. See there is a reason the rich get richer, the answer: PASSIVE INCOME through asset investment!

Sounds easy right? I thought so too! So I immediately went and dumped most of my savings into a brokerage account, clueless as to what I was doing and away I went. I had never even really seen a stock chart before, looked intimidating, but hey how hard can it be. So I dove into the market head first and to this day I still haven’t found the bottom. But what I have done is started learning how to get a little lighter so I don’t fall as fast. And falling slower buys time, and time buys education, and education buys money. Oh, by the way, the first stock I ever bought was DRYS! That should tell you all you need to know!

So about a year and a half later along came an opportunity. I was invited to attend a Rich Dad education investing class taught by none other than Mr. Matt Justice. It was an opportunity that no doubt has and will continue to change the course of my future as I am sure it has already done for you. So I decided from that point forward I was going to devote everything I had to become successful in this business, MY BUSINESS! But I can’t do it alone, and neither can you. So let’s do the damn thing together!

So now that you are all caught up, let’s talk portfolio management and trading strategy. Going into my new found business I struggled a little with how I wanted to manage what money I had and what my trading strategy was going to be. I look at strategy like an identity. So I asked myself: Who am I? What kind of trader do I want to be? What kind of risk tolerance do I have? Am I an offensive team or a defensive team? What are my ROI expectations? What exactly is my business model?

What I have found is all of the answers to these questions have changed multiple times during my first 90 days. My initial answers where that I wanted 6% monthly ROI, through cash flow systems (specifically covered calls) and I would risk no more than a 3% loss. I would devote 80% of my portfolio (which was not a lot) to cash flow and I would appease my appetite for speculation to 20% (on swing trades). Now I realized this was going against what I was taught that only 10% of your portfolio should be used for speculation but with the portfolio size that I had I didn’t want to limit myself to penny stocks. Sounds good right? At least it did for me.

So I went out and did just that, I made my first trade. I took the first step up that mountain to financial freedom, oblivious to the hard lessons that I was about to learn. Lessons that I will no doubt share with you.

I want you to ask yourself these questions. Or maybe you already have. What are your trading strategies? Do you have one? What is your business model? Have your strategies or your identity changed since you first started? I know mine have, when they probably shouldn’t have. What were the factors that led to the change?

Next week, I will break down how I applied this strategy and take a deep dive into my first few trades to take a look at how this played out and drove my identity crisis. Hope you will join me!

“Don’t Let your Struggle Become Your Identity”

See you all next time,

Randal Edmondson