A personal message from Dan Dana, founder and principal of HRD200 ...
TO: mediators, educators, healthcare professionals, social service workers, scientists, social liberals, secular humanists, and others who share my humanitarian values
RE: a system for achieving financial security/independence* (free, no strings attached ... nothing is being sold here)
* "financial security" = being free from worry about having sufficient financial resources to maintain your life style until end of life, which is primarily a concern of late-career and retired persons
* "financial independence" = not needing to consider salary/compensation as a significant factor in making employment/career decisions, which is primarily a concern of early-/mid-career persons
- My original purpose in articulating this trading system was to ensure that my grandchildren (and their parents) will be able to use it to provide financial security after my wife and I are deceased, at which time they will inherit a portion of our estate. I seek to apply the maxim "Give a man/woman a fish and he/she will eat for a day; teach him/her to fish and he/she will eat for a lifetime." That is, their inheritance will not be simply a sum of money to eventually deplete, but a body of working capital that they can use and grow for their lifetimes, and their children's lifetimes. I intend to provide hands-on training (and a seed account) once my grandchildren (current ages 10 and 13) are old enough to personally appreciate the benefits of financial independence. Meanwhile, this document and its attachments may suffice to pass on the essential method and tools for their future "if my plane goes down."
- My purpose in publishing this system on the HRD200 website is to offer it to people who seek security/independence (especially members of the groups named above), and who may in a spirit of reciprocity contribute a self-determined portion of their net gains to the Dan Dana Charitable Fund (the "DanaCF"). I offer the trading system at no cost with the good-faith understanding that those who produce profits by using this system, or a variant, will voluntarily donate a small percentage of their gains to the Micro-lending Project of the DanaCF to benefit underprivileged entrepreneurs around the world. I do NOT need to produce revenue for myself by "selling" the system in any way — my and my wife's financial security is achieved by actually USING the system to grow our retirement accounts and for current income.
- As effective as the system has proven to be to date, it is certainly not yet perfected — I continue to tweak it regularly. Hence, a third purpose is to invite new users of the system to provide critical feedback, suggestions, insights, and other inputs to improve it further. Together, we can act as a virtual "learning community" for mutual benefit.
- At my present stage of life (age 68), I have no appetite for writing a book or building a business around this system, although it is perhaps the most financially promising item in the store of intellectual property I have produced over my 40-year career. Although I don't require additional wealth to live in modest comfort the remainder of my years, a commercial product/service that would contribute to the financial well-being of my children and further descendants would be of interest (hence the copyright statement below). So, if a user of the system who possesses the youthful energy, talent, and ambition necessary to partner in such a venture, I welcome his/her expression of interest — my fourth purpose.
This short-term active trading system has evolved through my own trial-and-error trading over the past several years. It is distinctly different from the standard "entry-exit-stop" method that most short-term and day traders use, and which I learned during a one-week course conducted by the Online Trading Academy in 2010. (I do not necessarily recommend the OTA course, although it did familiarize me with the world of online trading, which turned out to be quite valuable despite my not using their trading system. There are other ways to accomplish the same outcome.) My system relies on daily/weekly volatility to produce gains — the more volatility, the more gains (it's hard to surf on a windless lake). It is currently producing gains (increase in account net worth) of slightly over 35% annually with little risk. That percentage has gradually increased as I have continually improved the system.
The effectiveness of this system is based on three primary assumptions:
- The stock market (price per share of broad-based indexes of American companies) will eventually be higher than it is today. This has been continuously true since the inception of the New York Stock Exchange in 1792. And, it is also true of high-volatility, triple-leveraged ETF's (see next paragraph), which are often called "dangerous" in trading advice newsletters due to their "decay" and other valid reasons for not holding as long-term investments.
- You will not need to withdraw more than 50% of the cash value of your trading account for at least one year. During the past twenty years, the longest period between suspension and resumption of trading, following the conservative (risk-averse) rules in my system, was about five months, from August 2011 to January 2012.
- You have adequate funds to enable the system to work (it takes money to make money). These funds are preferably in tax-deferred accounts, since tax reporting of active trading in taxable accounts gets complicated. Each bought position may be from 1% to 5% (or more) of total account value, depending on your risk tolerance. So, assuming an account of $100,000, a 3% position size, and share price of $50, each position would be 60 shares, totalling $3000. The gain per in/out trade at a profit target of 3% would yield $90. (You may expect roughly between 5 and 20 completed trades weekly, depending on volatility and market trend.) Accepting greater risk, say by raising position cost to 4%, can yield more gain. It is for you to judge whether "the juice is worth the squeeze" if you have less than $100,000 in your trading account. Several risk-adjustment mechanisms are included in the system.
Your "TNA shop"
To receive the system . . .
It is instructive to think of one's trading account as a retail shop in which you sell shares of TNA (click for info), a highly volatile "exchange traded fund" (ETF) based on the Russell 2000 index — more about this later. Your shop's customers are other traders/investors who think the price of TNA will go up when you think it will go down (or when you have reached your profit target and wish to recover liquidity to fund another trade. This rapid turnover enables you to use over fifteen times your account value as working capital, without borrowing, while safely staying largely in cash — more about this later.) In order to sell shares of TNA, you must first buy them. Of course, you want to sell them for more than you paid for them (your sales revenue must exceed your costs, as in any business). Shares that you have purchased, but not yet sold, are your inventory. Without inventory, you have nothing on your "shelves" to sell. So, it is necessary to buy shares at a price that you reasonably expect to increase in the (near) future, so that your shop's shelves are stocked with shares to sell when the price is higher. One of the safeguards of the system is to avoid investing more than 50% of your account net worth in inventory, so you have the remaining 50% to work with when the market begins to recover following any deep plunge/correction.
Send an email to dts AT hrd200 DOT com. You will receive a reply email within 60 seconds containing a link to detailed instructions for using the system and an Excel spreadsheet providing:
Now, before you leave this page, I ask that you review and bookmark this website and commit to making a donation by check payable to "Dan Dana Charitable Fund" AFTER you realize gains from use of this trading system or some variant of it. (This is an "honor system" — I do not attempt to enforce this expectation.)
- Detailed instructions for use of the system
- Trading log template
- An adjustable position calculator defining buy and sell prices in any range
- A "safety net" calculator to limit temporary loss (stranding of funds) and preserve working capital
- TNA history and analysis tool (optional, not required for the basic system)
Dan Dana is not a Certified Financial Planner, does not provide investment advice, and does not manage investments for anyone other than himself and his wife. The information contained in this website is provided free of charge for educational purposes only, and with the understanding that the recipient takes full responsibility for all consequences of acting on this information.