5-step setup that could double your account in 60 days (begins on Tuesday)

October 22, 2022 The 5-Step Setup That Could Double Your Account in 60 Days (Begins on Tuesday) Bob Keppel here. You should always remember two rules when putting your money in the stock market. They’re Buffett’s mantras, and they’re particularly relevant today. All told, our swing-trading expert here at Money Morning, Chris Johnson, believes that following them in five specific steps could double your money within the next 60 days. To skip to his “challenge,” [click here](. But let’s talk about the rules and the steps first… Rule 1: Never lose money Rule 2: Never forget Rule 1 Sounds simple. But there are thousands of traders with hundreds of ideas of how to accomplish them. Trailing stops, profit targets, allocations, holding periods… no one trader is the same. So, let’s get to the five that you should be focusing on now. Always Begin with Allocation Before you even begin creating a small portfolio to double, you need to do some thinking before your first investment. Figure out… How much money you want to work with... And how much you want to devote to different types of positions... Classical portfolio thinking is the 60% stocks, 40% bonds, and those stocks are allocated in different ways. For example, you may want to hold hard assets with a given portion, speculative choices for another, growth with one, and on and on. For this, don’t focus so much on allocation per sector. It won’t matter whether 50% of your holdings are in energy because the economic climate is uncertain right now. Do focus on individual positions. You don’t want to be overexposed for any downside, but you also don’t want to be underexposed for upside. Make yourself nimble - which is our major theme here - with a 10% portfolio allocationper position. If your play is more speculative, allocate 5%. This means, at maximum, you want around 10 positions. This allows you to refresh and stay flexible enough to capture upside and reduce downside. Hold Them Through Thick-and-Thin - Wrong Chris recommends holding them for 10 days maximum. Sure, this isn’t a hard-and-fast rule, you don’t need to sell after every 10 days (if you haven’t already - see the next rule), but you should consider the economic environment and understand how quickly events are moving. We’re bullish on energy. But many energy firms’ price performance are correlated with oil prices. So, what happens when oil is up one day because OPEC+ is cutting production, but then it falls 10% because the Biden Administration announced its tapping into the U.S.’s strategic petroleum reserves (SPR)? Point is, market and sector moves right now are headline and sentiment driven. There’s very little fundamental about it, so it’ll pay to be as nimble as this allows. If One Goes South, Stop it Here Stops should be on most positions. Not every position, but most. If you’re looking to double your account within two months, nimble is best exemplified in stops. Cut your losses without a second thought. And because we aren’t thinking about the long-term here, we’re talking about a hard, 30% stop for each position. This allows you to lower any loss if the stock does have upward movement, and it also lets you get rid of deadweight within the portfolio. A hard stop means you buy at one price, and the stop stays at a percentage or dollar amount below purchase. A trailing stop is a percentage below the high of that day. So, it moves with your investment if it goes up. When to Take Profits One of the most important steps to take when capturing profits in markets like today is scaling out using profit targets. That’s the source of a “free trade,” selling half of your position when it doubles so that you have your investment back and the remaining portion is basically risk-free. The position could go to zero and you’d still breakeven. Chris suggests not selling half at 100%, though. That might be too long a wait within a short period. You want your window to be smaller. Capture gains when they come. Sell the first half at 25% to 50%, then you’ll want to sell the next at 50% to 75% (or more). This continues with the nimble theme we’ve been talking about. Now, we get to the most essential step yet… The Positions to Buy With the four previous steps, you’re positioning yourself to double your money within 60 days. But, that’s a challenge no matter how you cut it. I haven’t gotten into actual trading strategies or positions to take. That’s what Chris is getting into on Tuesday at 8 p.m. ET. [Click here to sign up for the “Double Your Account” challenge](. The size of your account doesn’t matter. You can start with $100, $1,000, or $10,000. What’s more important is that he says he can show you how to double it within 60 days. Just make sure to reread this piece beforehand - make sure you’re aware of his rules because we’re going to hit the ground running in a few days. 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