Swing Trading $5K (How to lose most of your cash)

[daivey]

The "swing trade" is now at 4.67 -- $5,500 is now worth $3,959.50 -- I'll give the OP until the end of the week to respond with his strategy moving forward. If no response comes, Ill close the thread. As I mentioned when this started, I'm not big on these trading threads as they all start and finish the same: Post winners, when losers come, disappear.

it's always like that in real life too.

 

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[MJ DeMarco]

So this dog is now at 3.89 and still nothing but crickets. OP has lost nearly 1/2 his cash. Titled changed.

I was also gonna lock the thread since it was nothing but a "post my winners" thread-- but hey, why not-- lets let it ride.

In any event, my constant beration on this thread is not to rub-in a bad trade. All of us suffer through mistakes, including me. (See my PS below on one of my latest)

However, trading (and entrepreneurship) is a serious game with ups and downs. It's not something you "try" or "take a shot at" because these kinds of missteps are inevitable. Have wrong expectations and that very first speed bump turns into a brick wall. Darn, time to quit and try something new. Hmmm, let me look on Alibaba! Or maybe I can start a blog? What's this thing called Forex?

What separates those who thrive and those who don't is acknowledging the process and the expectation of the substantial learning curve that's ahead-- on whatever vocation/path you choose. I wonder, did the OP *think* he would win every trade? On his very first foray into the market? And what was the plan once a trade went south?

We may never know.



---------
PS: Just before Google's earnings I tried to sell naked calls against the stock. For some reason I didn't get filled and the market bell hit. (I offered mid-market). The orders expired. Google's earning report was good and the stock rocketed up... I would have lost about 6K per contract in a matter of seconds... but thankfully the order never filled. Sometimes we make bad trades. And sometimes we're lucky they aren't filled. Nonetheless, I learned from this potential disaster and continued forward...

 

[loop101]

The OP's method was to "buy and hope", not a great strategy. This method usually involves a lot of research to come up with the "perfect" stock to "take a shot" with, and then they "buy and hope" the trade works out. The opposite of this approach, is trade management, specifically (IMHO), trading with random entries. In this method, high quality stocks are used, but the up-vs-down bet is random. The strategy is to manage your trade to profitability, or cut it early as a loss.

You have to have a lot of confidence to trade real money with random entries. I've never heard of anyone doing it with more than 1% of their money. If you could reliably trade random-entries, I think just knowing you could do it, would eliminate a lot of the stress in trading. Your confidence in your ability to deal with shit would eliminate the desire to pick the perfect price and time to purchase. Your work doesn't end when the position has been taken, it begins when the position has been taken.

Here is an example of random-entry trading: http://intel.harriman-house.com/trading/testing-random-entries

"Technical analysts spend many an hour agonising over the best entry techniques and the best systems for trend following. But, frankly, is all the effort worth it? My testing proves not; random entries are as good as any."

 

[Rawr]

"You have to learn how to make small swings hit, and know how to do that over and over. Then you can step up to bigger hits" Best advice on trading I've received. If I listened, I wouldn't have lost a lot of money.

 

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[MJ DeMarco]

Now we're at 2.67 on this stock... "Swing trading $5,500" is now "Swing trading $2,261". At a 60% loss, he now, just to "break even", needs more than a 100% gain.

SPX is up 2% on the year.

 

[DeletedUser394]

Now we're at 2.67 on this stock... "Swing trading $5,500" is now "Swing trading $2,261". At a 60% loss, he now, just to "break even", needs more than a 100% gain.

SPX is up 2% on the year.

you're loving this aren't you? OP ain't ever coming back lol.

got to love these trading threads.

 

[Bellini]

What's the plan Stan?

Looks like he slipped out the back, Jack

Hopped on the bus, Gus

Didn't wanna discuss much....haha


Sorry, couldn't help it.

 

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[billyray]

I found this thread interesting because the majority of people assume that there is some secret, some magic, some method that if they follow it will ALWAYS result in a positive trade. The reality is that is just impossible. Trading is a numbers game. In fact there are a lot of other types of businesses that are much easier that result in higher returns.

Trading without using risk management is like sex without protection, sure you might get lucky a few times, might even feel good. But if you keep playing you are bound to loose everything eventually.

I once had a friend who told me that they never used stops, hedging, or options to reduce risk. You know what I told them, "You don't use stops because you feel that you must always be right". She turned to me and said "I am always right". You see Trading is all about your state of mind, your current belief system. She and many others can't be successful until they learn and fully understand themselves.

There is also a false image of how people make money in the markets. The majority of people who really made it big did so by managing other peoples money and thus providing value. They make money even if the portfolio doesn't do well. My opinion is that if you learn to manage risk (or even better if you learn how to design an algo that can systematically manage risk) there is a huge opportunity to add value. But most traders are in it for themselves, and you know the saying "pigs get slaughtered"

 

[Unknown]

Thanks gents.

I just hope the OP posts his losses. So far, he's only posted winners. I will assume if he suddenly *disappears* and the thread goes dead, we will know what that means.

Can you tell me the next set of Powerball numbers?

 

[MJ DeMarco]

Stock is now at $1.50 ...

 

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[daivey]

Stock is now at $1.50 ...

u mean he isn't a millionaire?

 

[ThinkDifferent]

It depends on how much time your spending and how much you value your time. You can expect a return of about 10% per year (historically). Much less than 1% chance you will get greater than 40% for a year (no matter how many individual trades you make over any given timeline). If you're in the top 2% of traders in the world you will make 20% per year. That would be $1100, which is approximately 100 hours of work if you think you're worth $11 an hour.

But it's not realistic to think you can be in the top 2% of traders in the WORLD by working 100 hours per year. The top 2% of traders are working 100 hours per week and they are constantly looking for an edge that isn't considered INSIDERS trading and they have years of built up networks that allow them this advantage, which is why they have billion dollar portfolios.

I'm not trying to discourage you from reaching some potential. You could very well be the prodigy trader that consistently gets higher than average returns. But you're only going to get there if you have an deep ability and understanding in mathematics. Right now, you are completely ignoring statistics (see my posts above).

I don't know what you should do with 5500 bucks. But if you're hell bent on investing it in the stock market, I would suggest a low-fee ETF. Boring, I know, but historically higher returns than the average of all mutual funds (i.e., people who do this professionally for many years).

As a side note, I have a small piece of my overall portfolio that I dabble in individual trades for fun. But I recognize it for what it is, gambling, and that's why it's limited to about 1% of my total. FWIW, I was down 25% in that portion last year...

I agree with you completely. The problem is that there are millions of traders and almost all of them think they are making very smart decisions. Logically a % of them make money for a while, but instead of realising their luck they think they are geniuses. And many people believe them because they made money.
Couple of months ago I had a discussion with this wantrepreneur who wanted to invest 25k of the money he made working the year before in this stock. He said it was 100% sure that it would go up in the long run and argued that it grew by a huge amount for the past 15 years. When I told him the past doesnt say anything about the future he became very defensive and came up with more flawed theories. I, when realising it wasnt beneficial to continue, stopped talking. 2 months later 50% of the money he worked so hard for was gone, he said he was very unlucky and that he now doesnt want to pull the money out.

Another story is the guy on youtube who made couple million and came on television to teach people about his methods. He only did 8 trades in total and based his trades on what he would see around him and hear in conversations with people. He said "for example if you think that a Harry Potter book will become huge then buy shares". When I wrote a comment about how it was pure luck, lots of people attacked me and were oblivious to logic or reason.

 

[bringitnow28329]

A trading system is essential to success in the market. NOBODY makes consistent profits without a system. But a system is not magic. It is merely a statistical edge. If you win 60% of the time and lose the other 40%, but your winning trades are 3 or more times greater than losers you come out ahead. If you trade on margin, or an asset with inherent margin (futures, options, forex) you can win much less than 50% and still make money.

The market is rigged for the average person that thinks the market is linear. For example people think you make money in the market by finding an unknown company that either has a product or is designing one that is gonna revolutionize. Everyone talks about how they know someone that told them about XYZ which does ABC and is gonna sky rocket soon. This is gambling. You either find a company that's earning a lot of money (revenues or ideally profits) but has a stock that's trading at a discount to it's intrinisc value (the true value of the stock calculated by it's earning), and hope that over time the market brings it back to it's fair value (equilibrium). This is investing based on the fundamentals. There's no guarantee the stock every rises back to where it should. You can only cut your risk by investing in basket of different asset classes with inverse correlations (move opposite of each other), and hope that history continues to repeat itself. Some assets will do poorly, some may go bankrupt, but overall if the market continues it's average historic 8-10% compounded return, you will make money slowly. The downside is this takes 10+ years and if you start with only a small amount you won't make much.

Otherwise you forget entirely about what a company says they do, whether a company makes money, or any thing else fundamental in nature and focus only on the statistics. The fact is stocks are priced based on future expected earnings but earnings are only release quarterly so the rest of the time it's all just speculation. This technical or quantitative trading. Trading and investing are not the same. In trading you are capitalizing off the miss pricing of securities which comes from the lack of knowledge and understanding by uninformed market participants. It's more about human psychology than anything else. You find opportunities where the odds of success of a stock doing what you expect are in your favor, and only then do you put your money at risk. The rest of the time you do nothing and stay in cash. The financial markets are inherently risky and are set up in a way every single last penny of foolish and uninformed peoples money. You can be like everyone else and try to do the obvious.

Most people fail because:

1. They treat trading like a casino and just gamble.

2. They don't have a systematic approach.

3. They trade based on emotions and gut feelings or stock tips and picks, instead of sound research.

4. They over trade causing excessive commissions which reduces or eliminates their profits.

5. They chase stocks past their ideal entries resulting in near guaranteed losses.


6. They think the stock market is a hobby when in fact it is a business.

7. They don't realize they are up against a person like myself that has been trading full time for 12 years who lives and breaths the market 14-16 hours a day.

8. They think it's possible to jump into the market and instantly begin making money when in fact it takes years to learn how to trade profitably.

9. They don't manage risk and instead just "let it ride."

10. They think luck pays a part in trading when in fact trading has very little to do with luck and everything to do with preparation and having a better understanding than your competition.

11. They think you can start trading with a few hundred or a couple $1000 and somehow come out ahead???

12. They focus of trading obscure OTCBB penny stocks or other illiquid stocks which barely move. Traders make money by finding stocks which have enough volatility to cause a stock to move towards a traders target.



MJ mentioned contemplating trading on earnings. Most traders do not hold stocks through earnings. Big traders will trade off the reaction or anticipated moves which lead up to earns and then exit the stock into the overs of the uninformed gamblers that get an adrenaline rush from rolling the dice. The traders that are profiting off earnings are using high frequency trading algo's and spend millions of dollars on getting near instant trade executions and automated systems which read the news and trade based on the news. The average person has 0.0% of a chance to compete with these people. Even professionals with less than a million account can't compete with these big institutional traders. Trading earnings unhedged is the fastest way to lose all your money very quickly.

 

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[MJ DeMarco]

And I will post my losses.

Famous last words...

Stock is now at .91 cents.

"Swing trading $5,500" is now "Swing Trading $770" -- 86% loss. And remember, the mainstream wants you to believe that starting a business is risky.

 

[mws87]

...86% loss.

Ouch... Wait, so you mean to tell me financial success isn't that simple!? Who'da thought..

 

[daivey]

Famous last words...

Stock is now at .91 cents.

"Swing trading $5,500" is now "Swing Trading $770" -- 86% loss. And remember, the mainstream wants you to believe that starting a business is risky.

DAMN The naysayers.. HE KNEW WHAT HE WAS DOING THOUGH!! This time it was going to be different..

 

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[devine]

This thread is beyond hilarious.

 

[RHL]

I'm not big on these trading threads as they all start and finish the same: Post winners, when losers come, disappear.

*cough cough* peoplewhoboughtbitcoinat$850 *cough*

 

[devine]

*cough cough* peoplewhoboughtbitcoinat$850 *cough*

Meanwhile, people who started mining bitcoins in 2013 are now millionaires, or even billionaires.
I still regret I didn't start mining business when there was opportunity.

 

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[Almantas]

It seems that OP used forum to feed his ego, otherwise why not post his loses? I don't want to sound disrespectful, but he's a coward. Case closed.

 

[Almantas]

Meanwhile, people who started mining bitcoins in 2013 are now millionaires, or even billionaires.
I still regret I didn't start mining business when there was opportunity.

This principle applies to many business opportunities.

5 years from now, many entrepreneurs will regret not starting a business someone in the next year will start. That business will be sold for millions of dollars and the guy behind the wheel will become a millionaire. That millionaire could be you, if you see the same opportunity and act on it.

As someone mentioned before, we are living on a gold-mine. You just have to know where to mine and have balls to do so.

 

[devine]

This principle applies to many business opportunities.

5 years from now, many entrepreneurs will regret not starting a business someone in the next year will start. That business will be sold for millions of dollars and the guy behind the wheel will become a millionaire. That millionaire could be you, if you see the same opportunity and act on it.

As someone mentioned before, we are living on a gold-mine. You just have to know where to mine and have balls to do so.

Yes.
And no.

Business = execution.
Bitcoins were: "buy PC, start mining today, become millionaire a year later gauranteed". Everybody saw it, but not everyone was dare enough.
There will be an opportunity with bitcoins, before they get completely mainstream. It's just cost of entrance will be different.

Actually, this thread got me thinking as I have zero interest in paying a single dollar of taxes, I think integrating bitcoins is a good idea.
I wasn't bothered so much until now only because my country is perfect for grey type of income. If I would live in US, taxes would be a serious pain in the a$$.

 

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[Almantas]

Yes.
And no.

Business = execution.
Bitcoins were: "buy PC, start mining today, become millionaire a year later gauranteed". Everybody saw it, but not everyone was dare enough.
There will be an opportunity with bitcoins, before they get completely mainstream. It's just cost of entrance will be different.

Actually, this thread got me thinking as I have zero interest in paying a single dollar of taxes, I think integrating bitcoins is a good idea.
I wasn't bothered so much until now only because my country is perfect for grey type of income. If I would live in US, taxes would be a serious pain in the a$$.

I see your point and agree that execution is everything and trading bitcoins was more about just being informed and brave enough to take an action, which is different in methodology but same in principle to starting any business.

 

[RHL]

Meanwhile, people who started mining bitcoins in 2013 are now millionaires, or even billionaires.

Your timetable and valuations are off the mark a little bit there.

 

[devine]

Your timetable and valuations are off the mark a little bit there.

Not really much I think, RHL. Bitcoin skyrocketed from <100$ in 2013 to 1000$ in 2014 and mining was pretty efficient. It was easily scalable to about a million of dollars per day. Can't remember if scaling was necessary at all, because mining was so much more efficient.

 

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[fhs8]

Meanwhile, people who started mining bitcoins in 2013 are now millionaires, or even billionaires.
I still regret I didn't start mining business when there was opportunity.

It's easy to think that in hindsight. What if you had money in MT. Gox? They were the largest exchange that got hacked and everyone lost all of their money when BTC was over $1,000.

Bottom line is that BTC has no intrinsic value which means other coins can take up market cap and lower the value of BTC. If BTC isn't used more in commerce in the future then it really is all a bubble.

 

[devine]

It's easy to think that in hindsight. What if you had money in MT. Gox? They were the largest exchange that got hacked and everyone lost all of their money when BTC was over $1,000.

Bottom line is that BTC has no intrinsic value which means other coins can take up market cap and lower the value of BTC. If BTC isn't used more in commerce in the future then it really is all a bubble.

Agree with everything actually.

And what do you think dollar currency is?
It's the same bubble, but less safe, less flexible and more obligating. Bureaucracy at its finest.
I'll pick $100k worth of BTC over actual $100k on any given day.

 

[fhs8]

Agree with everything actually.

And what do you think dollar currency is?
It's the same bubble, but less safe, less flexible and more obligating. Bureaucracy at its finest.
I'll pick $100k worth of BTC over actual $100k on any given day.

BTC does have some issues with reversing transactions and the consumer able to chargeback a transaction if they get scammed. So it does have disadvantages over money.

I do agree having lots of dollars is a terrible strategy. So why not convert those dollars to shares of stock or a business? Even if BTC was viable it would eventually just track inflation which has terrible returns. You could buy gold and do the same thing.

Dollar is not a bubble because it's backed by jail time. If you don't pay your employees or pay taxes in dollars for example then you'd run into this problem.

 

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[devine]

BTC does have some issues with reversing transactions and the consumer able to chargeback a transaction if they get scammed. So it does have disadvantages over money.

I do agree having lots of dollars is a terrible strategy. So why not convert those dollars to shares of stock or a business? Even if BTC was viable it would eventually just track inflation which has terrible returns. You could buy gold and do the same thing.

Dollar is not a bubble because it's backed by jail time. If you don't pay your employees or pay taxes in dollars for example then you'd run into this problem.

Well, paying 20%+ worth of taxes is worse than handling any sort of issues with bitcoins. Especially considering that all these taxes are spent on private interests of people in government.

I actually have traded RUR for USD when it was 36-to-1, started selling at 71 and got out at 77, later purchasing a whole lot of stuff for pennies, from previously expensive equipment, to labour. That's a kind of opportunity that is not available to American or British people though.

Investing in business is the best idea, that's absolutely right. My business just didn't depend on monetary investment at that time and it was not cost-effective to look at other opportunities.
I'm not into gold or stocks, and I don't consider it until I have at least a few millions, because right now I need to learn how to make these figures in no time - I don't have 10 years to wait and I'm not interested in pennies.

That's exactly my point, bitcoin is backed by exactly this: with dollars you have to do what with BTC you don't.
I'm by any means not into screwing people, I just don't see a single reason why I should play by the rules imposed on us by the system that is to the core corrupted.
Even temporary opportunity here is worth more than what I could probably lose if another currency will be introduced. I'll make more.

 

[TonyStark]

Nowhere but the FLF can you find a real time example of a slowlane failure.