Daily Trading

[moneynuts]

Hello everyone
I hope you can help me out this time again. My question is about day trading and short term trading. Lately I’ve been looking after shares and I could not understand how you can make (money) if you are buying in the morning or in noon and sell it on the same day and make profit out of it. For example share can rise from .5 to 1.4% a day that’s what I’ve seen so far and by the time you are selling it and paying all fees and tax you are not getting anything. Can anyone explain it to me or recommend books to read? Please I need your help.

 

[wayneL]

Hello everyone
I hope you can help me out this time again. My question is about day trading and short term trading. Lately I’ve been looking after shares and I could not understand how you can make (money) if you are buying in the morning or in noon and sell it on the same day and make profit out of it. For example share can rise from .5 to 1.4% a day that’s what I’ve seen so far and by the time you are selling it and paying all fees and tax you are not getting anything. Can anyone explain it to me or recommend books to read? Please I need your help.

You need to trade a whopping position size or trade something you think might move 5-20% in a day.

It's specialized trading best siuted to guerilla fighters and mercenaries. It's kill or be killed. Read Che Guevara.

 

[IGO4IT]

You need to trade a whopping position size or trade something you think might move 5-20% in a day.

It's specialized trading best siuted to guerilla fighters and mercenaries. It's kill or be killed. Read Che Guevara.

In my understanding, if we compare long term trading to be as easy as driving a car, day trading will probably be as easy as flying a space ship to the moon!

You need a bit of capital (to get over commissions) & a bit of balls & a lot of alcohol

I researched the idea, not recommended to amateurs (less than few years trading experience) otherwise you'll be wasting your time & money.

I bought "trading for a living" by Alexander Elder, it was a good read but for an amateur like me, I felt more comfortable doing short - medium term trading (few days to weeks), also book clearly mentioned that you have to learn how to walk before starting to run!

In short - medium term investments & with a lot of research on your potential companies you tend to understand more about your potential investment & using few indicators you can hopefully get in at the right price.

I'm still a newbie (2 years experience), so I could be wrong!

 

[It's Snake Pliskin]

Have a look at swing trading and forget day trading.

Good books there are. Tharp, Radge, or look for swing trading books.

 

[bunyip]

Moneynuts

You've very accurately summed up intraday trading......the costs kill you.
Don't even think about it!
The alternatives to intraday trading are position trading and swing trading.

Position trading is basically taking a position in a trending stock, and sticking with your position until the trend changes.

Swing trading is taking a position in a trending stock, usually after the stock has briefly retraced against the trend, then exiting the position before the next retracement sets in.

Position trading has the potential to make huge three figure profits if you have the fortitude to sit through the retracements and ride the trend to completion.

Swing trading, by nature of it's much shorter time frame, typically produces smaller but more frequent profits than position trading.

The big money with swing trading is in compounding your profits, i.e. reinvesting all profits into the next trade. If you take a $5000 position and you make $500 profit, you take a $5500 position on the next trade.
If this trade makes $300 profit, then you invest $5800 in the next trade.

Below is some info to illustrate the power of compounding your profits.
The info was sent to me by someone in America. Some of what it says in reference to taxation is not relevant to Australia, nevertheless it clearly illustrates how the magic of compounding can do wondrous things for your trading returns.

Regarding books........
For position trading, Stan Weinstein's 'Secrets For Profiting In Bull And Bear Markets' is in a class of it's own.

For swing trading, try Dave Landry's two books........do a Google search for Dave Landry.
Also, Oliver Valez at pristine.com puts out some handy DVD's on swing trading.

Here's the info on compounding.......

THE MAGIC OF COMPOUNDING....... Modest returns can produce amazing results if you continually reinvest your profits.

Think about this.......
Let's say you start with $1,000 and make two stock trades per month with an average profit of 3 percent each.

Here's what would happen.

If you traded that $1,000 twice a month and averaged only 3 percent per trade, and kept reinvesting the money (including the profits) in the same way month after month, your $1,000 would more than double after one year (100+ percent return for the year)

But Wait! What if you did the same again for another year? Again, if you got the same results, your money would more than double again...growing to more than $4,000.

In a tax deferred account like an IRA if you were to continue this pattern for 10 years, your $1,000 would grow to $1,024,000.00!

That's right! $1,000 can grow to over a million dollars in just 10 years if you can find just two trades a month that average only 3 percent profit each!

Can you imagine the possibilities if you can average 4 or 5 percent per trade?

The power of compound interest and a few years can really work to your advantage and add up fast.

Bunyip

 

[wayneL]

Guys,

If you have the b@lls, Daytrading is actually quite good and swing/position trading is not necessarily better. It's just different. But for most, I agree swing and position trading is more suitable for their temperament.

If you check into the SPI thread, we actually do quite well daytrading...and you can daytrade specs also. The costs are not as prohibitive as you might imagine.

Actually you don't even need b@lls because some women do exceptionally well as well.

But you do need a different attitude and technique. Like I said, read Che Guevara....and fair warning, not many can cut it.

If it appeals, give it a try but use money you don't mind losing.

Cheers

 

[moneynuts]

Thank you very much to all of you.
I really appreciate it. I guess it’s a long way to become a real trader. I think I spent too much time reading books about successful traders. The sound is very simple in the books that everyone can do it.
Thank you very much for your help and co-operation.