My lucrative stock market investment with little capital

[dknise]

Off topic, but i know almost nothing about stocks other than a simulation in my 10th grade economics class. Can anyone point me to some recommened resources to help me start learning?

The "Market Wizards" series has some gems and some duds.

Amazon.com: stock market wizards

 

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[Rawr]

It's been said here and you need to look at it before every trade - learn position sizing.

You have to learn to make little wins before going to bigger ones, otherwise you are gambling and will lose your a$$.

stay away from penny stocks unless you know something others don't. I was heavy in that game, frontloading is what the name of it is, if you aren't frontloaded you are a scalper. If you are a scalper you better be happy with your 10-20% flip and walk away.

People are full of shit, and no one can tell the future. I saw a guy who could read the market astonishingly well lose his a$$ on a bad call on another company.. we are one trade away from humility - hence manage your risk. Will be hard to do since at your level putting 5-10% of the portfolio is negligible, you are getting eaten by fees - and when your account gets bigger you'll be putting even less on each bet if you are disciplined.

 

[Rickson9]

Unless you're really getting in on an IPO... you're not an investor. You're a glorified baseball card trader. Warren Buffet is an investor, the sharks on Shark Tank are investors. Your dad's stock account through e-trade is not investing haha.

Don't mess with gamblers like Billy Walters tho!

https://www.thefastlaneforum.com/fastlane/29440-gambler-makes-hundreds-millions-dollars.html

You can make millions of dollars a million different ways... you really can...

 

[The-J]

Unless you're really getting in on an IPO... you're not an investor. You're a glorified baseball card trader. Warren Buffet is an investor, the sharks on Shark Tank are investors. Your dad's stock account through e-trade is not investing haha.

Day trading really isn't investing, is it?

It's an arbitrage game, playing on probabilities.

Care to speak more on your experiences with day trading? I'm interested to hear about em.

 

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[dknise]

People are full of shit, and no one can tell the future. I saw a guy who could read the market astonishingly well lose his a$$ on a bad call on another company.. we are one trade away from humility - hence manage your risk. Will be hard to do since at your level putting 5-10% of the portfolio is negligible, you are getting eaten by fees - and when your account gets bigger you'll be putting even less on each bet if you are disciplined.

Just because you can't tell the future doesn't mean you can't predict it with odds in your favor. Also, new traders can escape this by going directly into currency trading for pips! As long as they don't sign up at a bucket shop like forex.com.

Day trading really isn't investing, is it?

It's an arbitrage game, playing on probabilities.

Care to speak more on your experiences with day trading? I'm interested to hear about em.

Ya it's not investing AT ALL haha. Neither is the majority of common stock trading. I really did love it and was interested in moving up in the world with it, but the stress was just too much to handle. And ya I'll share more! I was actually your age when I was doing it full time.

I had a split portfolio between short term swing trades and a day trading account where I would spot out my trades the night before. A typical night would be scanning the stock charts for certain indicator plays as well as rumors and schedules for expected news for what to watch. I'd then wake up at around 5:30am, turn on MSNBC, and setup my trading windows for the day. I have a 3 monitor computer setup right now which is great for productivity for software development, but back then I was using a 6 monitor setup so I could see everything at a glance.

One of the trades I made was buying Apple in January of 2010 in the 120's, and sold it several months later in the 190's I believe? As we know now... it went on to go over $500 a share, but I was convinced that there would be consumer revolt over the iPhone 4 and the 1st generation iPad. The iPhone 4 promised 4g to people who pre-bought in September of 2009, but released news 2 weeks before it's release that it would only have 3g. The news almost made me sell, but the dip wasn't that bad and there was still big hype for the release of the iPad. When the iPad was finally released, it lacked features the prototypes had which showed a clear rollback of the device to purposely pump a 2nd generation. They were screwing over their customers. Also, they had described the iPad as a touch-screen MacBook, not an application running device or an enlarged version of the iTouch. It wasn't even revolutionary... After I sold, I was waiting for consumer's to catch up to what Apple had pulled on them, but they noticed. That was one of the big business lessons I learned in life so far.

Swing trading was my most lucrative trading set. It consists of buying, selling, shorting, covering, and repeating on a stock that's oscillating in price. The bulk shipping industry had some stocks like EGLE and DRYS around the time that seemed to be on a perfect month and a half cycle being controlled by a large NY hedge fund which showed 30-80% 1.5 monthly swings!

There was a lot going on with it, so if anyone has any super specific questions with it, like brokerages, mm's, or theory or anything, drop me a pm or ask in a thread!

 

[The-J]

Interesting stuff. I'll have more questions for you soon. Speed+

Also: I have a little bit of capital but am not willing to throw it all away just to learn how to day trade. Should I start low ($2000 or so) or go all in (a bit more than $2000)?

 

[dknise]

Interesting stuff. I'll have more questions for you soon. Speed+

Also: I have a little bit of capital but am not willing to throw it all away just to learn how to day trade. Should I start low ($2000 or so) or go all in (a bit more than $2000)?

Thanks for the speed!

If it's $2k you can afford to play around with go for it. I'd go right into currencies though. A good Forex broker in the US is MB Trading who I traded through for a bit. A $1k account is plenty to start in trading Forex on margin for pips ($.0001 moves). It's open 24 hours a day 5 1/2 days a week which makes things muchhhh smoother. The transitions between which continent is currently trading is pretty apparent, but it's nothing like the open and closed scam on the NYSE and NASDAQ. Another thing that's cool is theoretically all currencies should be in equilibrium with each other. (in theory). This means you don't really need to diversify, if you understand the players in the market you can pretty easily understand the big moves. There's also billions of dollars of liquidity being pumped through every minute which you'll see on your L2's. If you trade pennies, or even mid-cap stocks, staged sellouts are sometimes required to not wipe out the bid support or over-stack the ask. You can pretty much rest assured that your market orders will execute immediately. One last thing... It's a flat fee per pip traded. This makes trading $1000 vs trading $100,000 no different in terms of entry-exit %. Obviously that becomes unfavorable when trading very large amounts, but it's a sweet deal for people just getting in.

Look up bucket shops though and what they are if your'e going to do Forex! I know the reason I chose MB was that they were an ECN (Electronic Communications Network) who actually performed the trades unlike bucket shops. The reason for not being able to permanently transfer currency's was simple, they didn't want to deal with the physical transactions of multiple currencies being traded and therefore required an exit for every entry back to the original currency.

MB Trading - Forex

oh also! you can sign up, download a trading platform, and trade on a fake currency or stock account for free through MB! It would be a great way to practice without gambling away your money.

 

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[Chicago457]

Just bought CHTP at 1.09 it is going up about .1 every 5 minutes. Watch closely. If anyone is looking to day trade and make a little money right now I recomend this. Put a stop loss order in though just in case.

 

[The-J]

I'm currently playing stocks through MarketWatch.

Bought some AAPL, waiting for it to go to 560. Selling if it hits below 549. Playing with small percentages in the simulation.

This seems to be a game of self control. Losers play off emotions, winners play with numbers and stick to them for dear life.

Or so I think.

 

[biophase]

Just bought CHTP at 1.09 it is going up about .1 every 5 minutes. Watch closely. If anyone is looking to day trade and make a little money right now I recomend this. Put a stop loss order in though just in case.

How did this one go? Did you sell?

 

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[Chicago457]

Yea i sold oncs and made like $60 lol

Lost on 2 day trades after that but put a stop loss so just like $15 and $22 loss not bad. Also bought a random stock today with a stop loss and plan to sell at end of day regardless or if it hit certain $ and i made $50.

Than bought over a thousand $ worth of groupon today as i saw it on a steady uprise (checked largest growth list to find it) Set stop loss 10 cents below purchase price and then stop loss +5 cents every 10 minutes as stock proce raised until my stop loss went off automatically at over 10% profit. Did pretty good on this one.

I got fidelity to give me some free trades cause i said i would switch otherwise.

 

[Chicago457]

I predict I will have 25k in my account after not all that long if I keep my strategy up. It does take time day trading though monitering and can be a headache at times.

P.S typed on my iphone

 

[kurtyordy]

I can tell you from experience that more than likely you will trade differently when you get to 25k than you do at 1k. I took 2300 into 50k+ in about 6 years, so your goals are not unrealistic. But my trading changed dramatically when I got up that high. I is one thing to piss away 2300. I can make that back pretty quickly. 50k+ (I think it was 58k if I remember correctly) was about 1.5 times my annual salary at that time, so losing it had much more emotional impact on me. But maybe you will be different.

 

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[Chicago457]

^ I agree. I already have changed my risk acceptance around from when I only had 1k in the account. Still when I break things down mathematically in my head to risk-reward or +/- I am not hesitant to take educated gambles or should I say calculated risks I don't know which word fits best as it truely is somewhat true of both which adds to the excitement in a way. I found writing down numbers/goals helps me make quick decisions and more importantly stay by those mathematical decisions rather than act on emotion.

 

[Chicago457]

Just an update. I am still doing good in the green. Seems my strategy is working. I am starting to take on longer lower risk positions also such as NWS.

A mistake. I put my stop loss too close the purchase price. For example today I got screwed on NWS. I put my stop loss at 25.41 and it dipd to 25.34 for a second and than back up too 25.80 and sold my shares at 1.41. I will now rather look at the average volitility and still use a stop loss but take a more educated guess of where it should be placed.

I predict ONCS is going to go up 30% or more in the next bit. They have funding to last through 2013 and all of there products have shows positive results. This one may go down a little at times but I believe if I hold onto it, this stock has the potential for great profits. It was at 12 cents one day and 41 cents the next. Risk does come with it but I am a fan of this one and have read lots of positive info about the company. If another company was confidant enough to buy 7.5 mil in shares to me that is great. My target is to increase my money by atleast 50% on this one. It could be months but the second that the FDA approves/great news released I see this volitile stock skyrocketing.

 

[Scuzzlebutt]

isn't this called speculation? sorry don't know a whole lot about the stock market but my old man lost thousands doing this back in the 90s

anyway congrats that your making some $$ and good luck

 

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[TK1]

be careful if you are buying the biggest losers, and the entire market is tanking.

Contrarian attempt to buy and sell turning points. Keeps trying the single trade idea until he changes his mind, fundamentally. Otherwise, he keeps cutting his position size down. Then he trades the smallest amount when his trading is at its worst.

Considers himself as a premier market opportunist. When he develops an idea, he pursues it from a very-low-risk standpoint until he has been proven wrong repeatedly, or until he changes his viewpoint.

Swing trader, the best money is made at the market turns. Has missed a lot of meat in the middle, but catches a lot of tops and bottoms.

Spends his day making himself happy and relaxed. Gets out if a losing position is making him uncomfortable. Nothing’s better than a fresh start. Key is to play great defense, not great offense.

Never average losers. Decreases his trading size when he is doing poorly, increase when he is trading well.

He has mental stops. If it hits that number, he is out no matter what. He uses not only price stops, but time stops.

Monitors the whole portfolio equity (risk) in realtime.

He believes prices move first and fundamentals come second.

He doesn’t care about mistakes made 3 seconds ago, but what he is going to do from the next moment on.

Don't be a hero. Don't have an ego. Always question yourself and your ability. Don't ever feel that you are very good. The second you do, you are dead.

Paul Tudor Jones - Wikipedia, the free encyclopedia

 

[MonTexan]

A mistake. I put my stop loss too close the purchase price. For example today I got screwed on NWS. I put my stop loss at 25.41 and it dipd to 25.34 for a second and than back up too 25.80 and sold my shares at 1.41. I will now rather look at the average volitility and still use a stop loss but take a more educated guess of where it should be placed.

This can be common when trading fairly volatile positions. I typically pick stop loss figures using some multiple of the average true range. If I'm looking to trade something 'simple' like the SPY I might set the stop at two times the ART14. If I'm trading a 3X levered position I might do 2.5x ART14, but I'll also balance this against a max $$ amount or % I'm willing to risk. By the way, the link above - stockcharts.com is a great source for technical indicators and gives you the actual formulas to calculate them if you're into building spreadsheets.

The bigger concern than getting stopped out early is getting your order filled WAY BELOW your stop. Since you're trading sub-$5 bio techs you are certainly exposed to this risk. If news happens overnight or over the weekend you may wake up to a huge gap down and your stop will be filled at the market open, substantially below where you thought was your guaranteed out.