How To Actively Trade Your Retirement Account or IRA

Many of us have watched in shock as our retirement accounts have plummeted 30, 40 and even 50% over the last year. The debacle of the housing market caused by subprime mortgages and shenanigans on Wall Street (Credit Default Swaps) created a perfect storm that almost led to a collapse of the financial system and crippled our economy. The credit markets appears to be stabilizing but the aftermath of this “Perfect Storm” might be a deep recession lasting well in to 2009. Many investors have thrown up their hands and given up (capitulated), losing faith in our system and trust in our government. If the typical buy-and-hold strategies hasn’t gotten you anywhere over the last 10 years and you are one of the many who just want to throw in the towel, I can sympathize with you but now may be the best time to put your money to work. With the demise of many of the big brokers and the deceit being unveiled on Wall Street I believe individuals will be given much more control of their IRAs and 401ks to self-manage. It has worked well for me and it can work well for you too.

Over the years I have learned to apply the same strategies and disciplines that I use in day trading stocks to actively trade my SEP (Self Employed Retirement Account) for short term profits. Here are some ideas that you can use to beat Wall Street and get your retirement account heading in the right direction again.

• Don’t worry about commissions. If you have control of your IRA move it to an online broker where you can get trades for around $10/trade.
  
• Let the market take you out of bad trades. Immediately after buying a stock put a stop-order at a price you want to sell at if it goes against you. DON’T cancel it for any reason.
  
• Use a trailing stop on winning trades. It’s easy in this environment to have profitable trades turn into losers. As your winning trade moves higher so should your trailing stops.
  
• Obtain a basic knowledge of technical analysis (Japanese Candlestick Charting Techniques by Steve Nison is a good book). People lie but charts don’t (especially volume).
  
• Scale in and scale out. Probe your entries buying one-third of your desired position at a time and ring the bell (take some profits) as they go higher.
  
• Trade the synthetic short ETFs (SDS, QID, SKF, etc). Whether you want to short the market or hedge your longs they can be good instruments in today’s volatile market.
  

Don’t be afraid to actively trade your retirement account. Buy-and-hold is old school and quite frankly just hasn’t worked well lately. By applying some basic short-term trading strategies and sticking to your rules and discipline you can get your IRA heading in the right direction again even in what may be a sideways volatile market for a long time.

- Andy Lindloff