Day Trading

[Northern SoulParticipant 186]

Hi all

I want to learn day trading. Not giving up the day job anytime soon. This is long term goal, so slow and steady.

I want to read a lot around the subject – can anyone recommend good beginner books. Similarly advice on software (preferably with practice accounts) and recommended computer specifications ? It’s a bit of a minefield out there so any recommendations would be welcome.

[Northern SoulParticipant 186]

Thanks. That’s more a long term investment though with money tied up and no guarantee of the land being developable (i.e not getting planning). I would also need a large lump sum to make the land purchase which I don’t have.

The long term stuff is arguably easier – invest money into a passive investment fund and sit on it for 25 years. With reinvested dividends I could get a fairly healthy return.

But I would like to be able to give up the day job (eventually) and just rely on day trading for regular short term income. Start small and work up big.

[KeymasterKeymaster]

Day Trading

If you have enough capital (say $100K) and you day trade with that, in theory (and reality) you can catch a +1% swing between the opening bell and lunch time – maybe even twice – and pocket $1000. But you can also lose 1%. If you don’t have the stomach for that, day trading is not for you.

Northern Soul wrote:

good beginner books

Short or long, “Buy low & sell high” is all you need to know.

It’s like fishing,. You can have all the gear and not catch a thing. You can have all day-trading equipment, 5 monitors, 2 phones, 6 TVs all looping CNBC, analyst charts to death, and an IV hookup to an espresso machine… but it doesn’t mean jack if you don’t buy low and sell high.

Thats the #1 rule off the market.

Then you need to know your limits. Is 1% enough? If you lose 1% will you cut your loss and run? Or will you wait for it to bounce back? Likewise if you make 1% , will you click the “sell” button? or get greedy.

Greed will finish you off.
Understand fear and greed is what drives the market.

“They” want you to buy high and sell low. And they will attempt to scare you out of your shares and/or cash.

Then there is trading “on margin”. Very dangerous. You can use $10K to trade with $20K or $30K “fake money” that you dont’ own. If you lose, a 1% dip means +$2K loss out of your $10K. Likewise , a gain can mean a quick $2K before breakfast. Don’t be tempted to daytrade on margin. You may as well take your money to Vegas.

—

I don’t have books to recommend. But you can start by watching closely. Commodities (say oil and gas) are volatile and you can see big swings in one day. Watch them. Place a few dozen imaginary trades and see how well you will do. You don’t have to throw down your money to practice.

Be careful here, and DON’T listen to anyone else. Especially people like Jim Cramer. He’s one of the biggest contrarian indicators around. I f~~~ing hate that guy. For example, across more than 8 years, he “liked” Apple when it was high and recommended buying….. and then he “hated” Apple low and recommended selling. The investors who made money were the ones who just held it and sold high.

They even plant people on stock message boards to falsely influence you. Yes really.

So make NO trades based on what anyone else “says”.
And that means –>> don’t listen to me either.

If you keep doing what you've always done... you're gonna keep getting what you always got.

[Anonymous 0]

Just remember this:
You can make a small fortune day trading if you start with a large one. Just be careful. I have known guys that do that and make a comfortable living but the are not wealthy.

[Northern SoulParticipant 186]

Thanks guys – this is really helpful advice.

[BeerParticipant 11832]

Northern Soul wrote:

I would also need a large lump sum to make the land purchase which I don’t have.

Don’t bother trying to day trade either than. If you only have a small amount of money to play with you will not win day trading. Let’s just say you buy 3000 dollars worth of a stock, an hour later its up 1%, and you sell it…you made a whole 30 bucks.

Now that is a short term trade so you have to pay income tax rates on it, so let’s just say that is 30%, now you are left with 20 out of the 30…but you have to pay your broker to buy, and pay again to sell…so lets just say 8 bucks a trade each way…there goes 16 of that 20…you’d walk away with 4 dollars in your pocket.

What happens when you guess wrong…let’s say it dropped 1% and you sold at a 30 dollar loss…yeah you can write that off…so maybe you only lost 20 after the write off…but -16 for the buy and sell and you are out 36 dollars.

4 dollars when you win, -36 when you lose…do you think you are going to essentially win a coin flip 9 times for every one you lose just to break even? The broker fees just destroy you when you are dealing with small amounts of money. Also you have to wait about a week for funds to settle after selling a stock, so its not like you can buy a stock, skim a little money, sell it, then turn around and buy the stock back with the same money 10 minutes later. If you think your going to be consistently buying stocks you can catch a 5%+ swing on in a day or two you might as well just go to the casino and play roulette, the house is probably stacked against you less doing that.

My best advice is only buy companies you think will still be around and profitable in 50 years, and only buy companies that pay a dividend. What I did is I came up with a list of about 25 companies I track, and when I have a decent chunk of cash built up to invest I’ll look at where those companies are at compared to where they have been over the last year or two, and generally I’ll pick a few that are at the low end of their band and research them a bit further. Sometimes they haven’t had any bad reports or headlines…they just get beat up for no reason as people shuffled money around the market trying to make money. That is what I buy. I’ve had a few times where I just got lucky and over the next month or two the stock pops and I’ve made 10-15% and just sell it and walk away and look for my next buy, but even the stock goes nowhere, or drops a bit, its no big deal because like I said, I’m buying companies I think have a good long term outlook and even if I don’t make money over the next few months I’m still collecting dividends while I wait.

Just one example of a stock I will probably be picking up soon…check out Coke(KO). I could buy them feeling pretty confident that at some point in the next couple years they’ll be up 10% from where they are today, and while I wait I’ll be collecting a 3.5% dividend. I could also buy them feeling pretty confident that if I just bought some shares today and sat on them for 20 years and reinvested dividends that I would do well long term. In either of those examples if I pick up some KO at 41 a share and in a month from now its at 37 a share I’d be more likely to just shrug, buy more, and wait it out, then to panic and sell. What do you do as a day trader with limited funds in this case? You end up with your money locked up anyhow, or you eat the loss and flip the coin again next week when your funds settle.

[Anonymous 43]

There are websites you can use to practice day trading.

I can’t give you links, my computer refuses to let me be that insane…

I like total market mutual funds, and DRIPs
Slow and steady, no stress. No load is good load.

[Anonymous 43]

Best investment advice…

Be one of these dudes who will teach idiots how to day trade, and get a piece of their transaction.

Show them how easy it is, sell them instructional CDs for $499. More expensive is better advice.

I made millions off this easy to learn system, and you can too!

[KeymasterKeymaster]

Anonymous wrote:

I can’t give you links, my computer refuses to let me be that insane…

LOL!!

If you keep doing what you've always done... you're gonna keep getting what you always got.

[BeerParticipant 11832]

Keymaster wrote:

Then you need to know your limits. Is 1% enough? If you lose 1% will you cut your loss and run? Or will you wait for it to bounce back? Likewise if you make 1% , will you click the “sell” button? or get greedy.

This is why I don’t ever buy s~~~ thinking I can turn a quick profit in a couple hours. I hate losing money and if you do get lucky its easy to get caught up in the hype and end up in the hole. Its also easy to beat yourself up if you walk away with maybe 3% and an hour later you could have walked away with 6%. When I first started dabbling in the market I went at it with a day trader mentality with a relatively small amount which it seems like OP wants to do, and not only did I lose money overall, but every trade I made just felt like dealing with a used car dealer…like even if I did good I could have done better. I only tried that for a couple months before I gave it up, and since I’ve adopted more of a long term outlook I’ve been doing very well.

Like I talked about in my last post…I only buy stock I think will do well long term. If I lose short term its just not big deal because I bought long term, I’ll just wait. It makes it extremely easy to avoid foolish moves short term when you constantly remind yourself you are playing long, and with that being said if you bought a stock hoping to collect a 4% dividend and maybe watch share price go up another 4% a year for the next few years, and you find that 2 months later your up 15%…there is nothing wrong with pulling some profits off the table while taking your time and waiting for your next opportunity. The few times I’ve done this in the last couple years I always wait at least a month before reinvesting that money into something, because it seems to happen quite often that a stock will rise 10% in a month for no real reason, then drop 10% the next month for no real reason…its just the churn of the market and people moving money trying to skim profits here and there.

Keymaster wrote:

If you have enough capital (say $100K) and you day trade with that

I thought this way when I didn’t have a lot of money to play with, but once my nest egg started to grow I realized I don’t have to turn out ridiculous gains % wise to make good money. You could have an 8% year and walk away with 8000 dollars on a 100k investment. Really what’s required to average 8% years…you buy stocks that pay 3-5% dividends and the price per share keeps up with inflation and you are pretty much there. That is pretty sweet.

Its not like trying to day trade with 5k when even if you have an outstanding year and double your money you’ve only made 5000, and let’s be honest…if you have one 100%+ year once in a life time that is f~~~ing amazing…its not anything that anyone has ever been able to pull off consistently, and chasing after those big gains is also going to make you more vulnerable to suffering big losses. It all goes back to the greed thing though.

Of course its my ultimate goal to just accumulate 1.5-2m and just enjoy 60-80k a year in dividends, retire, and live off that without touching the principal. The idea that I can do it with a much smaller amount and count on consistent double digit gains by being a high frequency trader is just not something I’m going to try…especially if it boils down to me leaving my day job just to make day trading a full time job I might very well put a lot of time into and lose money regardless.

Keymaster wrote:

So make NO trades based on what anyone else “says”.
And that means –>> don’t listen to me either.

Yeah, I don’t ever listen to those talking head c~~~ suckers that are on the news all the time. They don’t know s~~~. They’ll make a dozen predictions a day and 6 months later brag about the couple they got right. I’ve got some buddies I’ll talk stocks with and I do on a few forums, but at the end of the day nobody can see the future. I might look into a company someone recommends, or maybe my strategy and outlook on the market has evolved over time and part of that has been due to talking with other people, but at the end of the day if you listen to someone else and lose money…its your money you lost and I can assure you, that person gives zero f~~~s about you losing your money, especially in cases when they just lost their own money as well.

Keymaster wrote:

Then there is trading “on margin”. Very dangerous.

Anyone who does this is nuts. If you are dealing with relatively small amounts you end up paying over 8% interest. Its one of the rules I strongly recommend to anyone getting into stocks…don’t gamble with what you can’t afford to lose…and if you are gambling with money you don’t even have you obviously can’t afford to lose it.

Only time I’d trade on margin is if I found out I had a terminal illness. I’d borrow all the money I could and put it into something super risky. If I made a few million I’d most certainly enjoy whatever time I had left…if I lost no big deal, the loss would be the banks once I passed.

[BeerParticipant 11832]

Anonymous wrote:

I made millions off this easy to learn system, and you can too!

Yeah I love these guys. I made millions for clicking my mouse a few times a day, its super easy, but now I’m wasting my time trying to con idiots into buying this s~~~ instead of just clicking my mouse a few more times and making millions more!

[Northern SoulParticipant 186]

crikey – I think you have all put me off for life – lol.

It’s really helpful though to get your thoughts on this. The risks seem to outweigh rewards so will prob avoid.

I did have a portfolio of well performing stocks but sold the lot to pay for my divorce. It’s territory I am more comfortable with anyhow so will just stick to long term investment opps and shall start building that portfolio again.

Beer – thanks for the Coke(KO) tip.

[WA4SWJParticipant 366]

TastyTrade.com

The guys are a bit weird at times but they are experts in options trading and it is all completely free.

Good luck. Start with paper trading until you get the hang of it. (monopoly money) Trade small, trade often. Do not bet the farm on one trade.

Ed

[AkhilleusParticipant 2486]

Northern Soul wrote:

Hi all

I want to learn day trading. Not giving up the day job anytime soon. This is long term goal, so slow and steady.

I want to read a lot around the subject – can anyone recommend good beginner books. Similarly advice on software (preferably with practice accounts) and recommended computer specifications ? It’s a bit of a minefield out there so any recommendations would be welcome.

Hey I don’t know your background so I’ll try to position it properly. Day trading (pro trading) your up against institutional traders who have huge resources and have macro advantages such has leverage (millions in portfolios) also the institutional guys have massive back office back up, traders assistants/analysts/risk desk/quants/research etc.

Real day trading all your positions need to closed off end of day due to intra-market risks (money never sleeps) example 100 shares at 10 bucks you go to sleep those shares can tank overnight and your position is wiped out. Also insider trading and other unfair practices are rampant, the examples are very long and the strategies are unfair for the average day trader. Also are you going to be systematic trader? (computer programed trading) how big is your starting portfolio? how much margin risk? are you gonna trade vanilla equity ? options? futures?

Best examples on how banks make the most money is leverage, just say trader has a book value portfolio with say 10 million dollars and your position is just say ABC stock 1 dollar per share so your book is 10 million shares. The institutional day traders trade on pennies so when a price ticks up? (long) or ticks down (short) they execute and make 1/2 cents per trade sounds like nothing right? 1 or 2 cents x 10 million shares….. per trade doing 100’s of trades per day.

Best advice would be look into leverage, close your position outs everyday, engage a stop loss (automatically sells your position so you don’t get wiped out when you taking a s~~~) dont get greedy, if you make 10% sell get your capital gains and bank it most people get greedy and ride that 10% higher and higher till it tanks and you make nothing.

If you’re in the US google series 7 and 57 if your in Canada CSC and CPH is a good start.
Also I would avoid margin positions don’t borrow to trade and only play with what you can lose don’t bet your rent monies.

Most trading programs are systematic trading, you have a lot to learn knowledge wise. Just be warned the game is tilted against you, for day trading at least. Safer bet is blue chip dividend stocks, these stocks cost more the returns are very small but are safe. Avoid mutual funds or anything with fees the fees over time will eat into your capital gains and your fund might even lose money and you’ll still get charged…..

I don’t wanna be negative just trying to give you a fair outlook and I don’t want you to get burned financially.

Links
http://www.investopedia.com/articles/trading/05/011705.asp
series 7 and 57
http://www.finra.org/industry/series7

Aloha means family you don't leave family behind. Who will be the next Draconarius for MGTOW? MGTOW = brothers = acceptance = belonging

[Anonymous 1]

I’ve been using a stock trading app here in the UK and in about 10 days I’ve turned my £15k into nearly £18k simply by looking at the “biggest losers” on the LSE and buying the penny stocks that looked like they’ll go up again – and tbh I know next to nothing about trading (i’m trying to learn). I’ve had about 14 wins and 2 losses, with the losses being smaller than the wins

while i’ve been writing this I opened up the app to have a look back at my transactions and I’ve actually just made £4000 on some stock I bought this morning for £0.0002 which is now worth £0.006 haha.

also the other day I did a little experiment when i saw the news about unilever and figured that if i had shorted £10k worth of their stock, i’d have made £2500 by breakfast the next day.

being a sensible person i know this all seems too good to be true – i assume with penny stocks if you buy these large volumes in real life then you will have an affect on the stock price and so on?

[RealityBitesParticipant 2198]

Once upon a time…I day traded until I lost my shirt.
Here is what I learned
Day Trading is very very difficult..much of it depends on Timing. And no matter how fast your Internet connection is..you will NEVER beat large financial institutions with their fast connections and very fast servers executing automatically trades.
The algorithms in the programs used by these institutions are fare more sophisticated than any strategy you or I will ever devise, the amount of research done by the institutions is truly herculian.
Since these institutions have LARGE amounts of money and can execute their trades lighting fast…your (and my) ability to time the market is futile.

What will happen…you will spend hours and days…doing nothing but day trading.
Sometimes you will get lucky and make a good chunk of money
But in the long run (like being at a table in Vegas) you will lose

Day Trading is gambling and like gambling it is addictive.

Don’t Day Trade.
Invest instead.

Warren Buffet made his money by Investing, not Day Trading.

[Author]

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