SelfWealth Trading

[wfdTamar]

Wow that's more than I see in a week!

I find it unusual that anyone trading those sort of amounts has no idea about
Discount brokerage

Hey, I'm the first to admit I'm green. You show me where I can trade in the volume I do and get fees cheaper than $9.50?

Ok, looks obvious that it is Interactive Brokers

On larger amounts they charge 0.08%, so way more than SelfWealth (the equivalent to almost 0.001% on my kind of trades). I'm trading in large volume, large dollar amounts per trade. It's simple, it works for me and I'm making heaps so far.

 

[Habakkuk]

I trade in one ETF. I'm far from a clued up investor so steer away from individual company stocks.

I understand. But don't ETFs use market makers? With your kind of volume there would not be enough from individuals. You're up against a professional.
It's an interesting idea and quite 'courageous'. You must have considered the risks. I would be very nervous knowing that my opponent, the ETF market maker / liquidity provider gets to know me.

While trading 'the banks' would carry its own risks, at least I'm amongst many others and I don't have to place a 25,000 shares buy order followed soon after with a 25,000 shares sell order.

 

[wfdTamar]

Ha ha, see I don't even know what 'market makers' means. Does that mean traders that influence the price (by sheer volume)? I'm no threat to them (yet). They trade something like 4-6 times my volume.

Wikipedia - 'A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn.' Ahh, too complicated for me.

An ETF stock works just like any other share (as far as I know). The one I trade in - yes you can pick the individual traders from the pro's just by numbers and the pro's offer price fluctuates by each 'last trade price' fluctuation whereas the individual will pick a price and stick to it. I'm about between the two by share volume I trade and the price I buy/sell at.

The risk is a fall in the ASX200 generally (I trade 'STW' which follows the ASX200) in which case if I'm holding shares I just hang on till it comes back up (still receiving dividends at least). I feel that the ASX200 companies are fairly blue chip, it's 200 companies so in the rare case that one goes broke or plummets it won't affect the overall price that much. Dividend returns are reasonable if that's all you're in it for.

 

[Habakkuk]

Ha ha, see I don't even know what 'market makers' means. Does that mean traders that influence the price (by sheer volume)? I'm no threat to them (yet). They trade something like 4-6 times my volume.

Wikipedia - 'A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn.' Ahh, too complicated for me.

An ETF stock works just like any other share (as far as I know). The one I trade in - yes you can pick the individual traders from the pro's just by numbers and the pro's offer price fluctuates by each 'last trade price' fluctuation whereas the individual will pick a price and stick to it. I'm about between the two by share volume I trade and the price I buy/sell at.

The risk is a fall in the ASX200 generally (I trade 'STW' which follows the ASX200) in which case if I'm holding shares I just hang on till it comes back up (still receiving dividends at least). I feel that the ASX200 companies are fairly blue chip, it's 200 companies so in the rare case that one goes broke or plummets it won't affect the overall price that much. Dividend returns are reasonable if that's all you're in it for.

I haven't looked at ETFs recently but the highest bids and asks are from individual investors. Typically only a few hundred shares or even less. Somewhere a few ticks below that you'll find the market maker's bid and ask at slightly worse prices. They are usually round numbers like 2,000 shares. Sunday is not a good time to show examples.
Your limit buy order waits for the right price - it doesn't matter who it comes from. Same for the sell order, the price of which is based on your judgement.

You would have done well in the last 8-9 days. You are confident because it has worked.

The impression I get from your posts is that you have very little trading experience. I could be wrong about that. But if I'm not wrong, you will be under-performing buy-and-hold in the long run, cheap brokerage notwithstanding. Because unless you have an actual edge and apply it consistently and frequently, you're relying on luck. Not to mention the taxation disadvantage. I don't think you will go broke or that STW will go to zero. Just that in the long run without an edge you will make enough mistakes to slowly erode your capital.
This is only meant as a friendly warning to be careful. Trading can be simple but not that simple.

 

[barney]

on average $780,000 to $843,000 per trade

... and you don't think that is possible ?

To the contrary ... Lots of big punters out there, but I'd say those numbers are something the majority of us will never experience, myself included ...

It sounds like you also trade large so well done on that ...... I could be wrong but "wfd" seems to be punting big and relying on the "bull" in the market ..... dangerous combination from my experience

 

[Habakkuk]

To the contrary ... Lots of big punters out there, but I'd say those numbers are something the majority of us will never experience, myself included ...

It sounds like you also trade large so well done on that ...... I could be wrong but "wfd" seems to be punting big and relying on the "bull" in the market ..... dangerous combination from my experience

That's why I issued a friendly warning.

 

[wfdTamar]

I have been trading for a few years, but far less money and less often up until recently. I am, I suppose, a naive trader. I like to keep things simple. I start off with as simple as possible and maybe try to learn techniques gradually rather than learn all the tricks and techniques before investing.

I'll certainly be monitoring my performance and if it changes significantly I'll change my tactics. I'm not silly enough to think I have it all worked out or that the way I've gone this month so far is the way I'll always go. Buy and hold? With this stock that would get me maybe 6% dividends and possibly the same again in stock price rise. Add on the capital gains tax benefit and it'd be possibly 15, at most 20%?

I absolutely do not mind the friendly warning.

 

[wfdTamar]

I don't need a rising market to do it, just a decent fluctuation during the time I'm holding shares. That can be as little as going from a share price of $54.10 to $54.20 - that's $1500 profit. I've bought and sold like that in 30 minutes, and at even smaller gaps than that for $1000 profit.

I made $3000 in 2 hours a little bit before that 1% market fluctuation that happened about a week ago due to his Trumpness spouting off. Could have added another $12,000 if I'd hung on another day, but I was happy.

 

[wfdTamar]

Here's an example of a mistake I made. It was past 4pm and I didn't realise you can't make fresh orders after 4. So I was left holding stock overnight. I was a little worried as I'd only been trading during the day (not holding overnight) during March and doing well. Anyway I made $2600 when I logged in the next morning but it could easily have gone the other way big time.

 

[Habakkuk]

Here's an example of a mistake I made. It was past 4pm and I didn't realise you can't make fresh orders after 4. So I was left holding stock overnight. I was a little worried as I'd only been trading during the day (not holding overnight) during March and doing well. Anyway I made $2600 when I logged in the next morning but it could easily have gone the other way big time.

Something I read a long time ago: "the market acts like a bad teacher" or words to that effect. Making a mistake rewarded you in this case. And why not when you consider that the markets are mostly random most of the time. In theory it should be just as easy to make money as to lose money. Especially with next-to-nothing brokerage.

But that's not the mistakes I meant. More along the lines of not being in the market when it's going up and not exiting when it's going down. Because the impression I get is that you simply wait for the inevitable rise. That you haven't back-tested your method and that you don't know what your edge is.

The trading blogosphere is full of research/strategies/systems to trade ETFs. Lots of quants are giving it a red-hot go. I've dabbled in it myself - never actually trading ETFs, just researching.
I gave up. It's not impossible, but I'm not smart enough. Keeping in mind that I always assumed retail brokerage - I didn't know about SelfWealth at the time.

But I'm not saying all this because I feel inferior or inadequate because you have been so successful in the last 8-9 days and I have not. There will be others tomorrow more knowledgeable than myself. Some might agree with me.

Re: market-makers, I'm not sure if that is an actual person or a robot in the case of State Street or Vanguard or iShares ETFs. This would be a job ideally suited for an algo, just calculate the value of the basket and set an appropriate spread. When you think about it, you are a market-maker yourself if you are entering limit orders, although you are not considering risk.
The "round number" I quoted in post #24 should have been 20,000 or 25,000 and not 2,000

 

[wfdTamar]

8-9 days of good result means nothing. Jeez, even if I got a few months worth doesn't mean there isn't something lurking to bring me down (like a recession when I'm holding shares). Just by how you're talking it's obvious you know more about it than me.

It's true not exiting for a small loss is probably a mistake. I do try to not be in the market when it's going down and be in when it's going up (duh), but that is the market - it's unpredictable. I don't know if I'd call it a mistake not to be in a rising market - more bad prediction, luck, forecasting. Of course once you get to the point where you know how financial and world events can affect markets that would all help predict what the market will do. Yes, if the market falls I do wait for the inevitable rise, but that's why I only invest in this ETF that covers the ASX200. My thinking is that is far safer than trying to do the same with individual company stocks. I'm certainly not suggesting the ASX200 can't have big falls, but not as big as some companies (Jeez, Slater & Gordon anyone?).

Why do you think an ETF stock is so difficult? It's just another stock, isn't it. Maybe because they don't have big swings (depending what area they invest in). For the way I trade I find them far easier than company stocks.

Yes, for sure the market makers are computer controlled. Every time there is a new trade price their offers change, so their offers have to be based on some algorithm. Also yes, they do quantities like 50,000. That's 2.7 mill in the stock I trade. Gotta be commercial investors. Unless there's an even bigger (dumb) shot than me around

I do consider risk. When the price is high, I wait for it to go down and/or don't invest for a large profit/long time. So if it's very high, I'll only go for a rise of maybe (Buy)$54.25 to (Sell)$54.29. That would only be $600 profit - only possible using SelfWealth. If it got toward the end of the day I would even sell for a $0.01 rise (still $150 profit).

If the price is low I might go (Buy)$52.2 to even (Sell)$53.2. In this stock anywhere over $51-2 is getting up there by recent charts. If I was playing a longer game I would wait till it went down below $50, buy, then sell at over $53. That'd be $45,000 profit for a $3 share rise.

 

[wfdTamar]

One thing I found a bit dodgy/tricky was in this stock (and presumably all) there are a lot of single digit trades moving the price just a tad. I asked on Whirlpool/Finance and people there thought it might be a tactic by the big boys to manipulate the price and if you did it, it would be considered illegal and could get you into trouble. I thought either it's really dodgy, or very clever (if legit).

 

[Habakkuk]

Why do you think an ETF stock is so difficult? It's just another stock, isn't it. Maybe because they don't have big swings (depending what area they invest in). For the way I trade I find them far easier than company stocks.

I must admit on second thoughts that my comment about ETFs being traded by professionals is pointless. Blue chip stocks are also traded by professionals and that's what I'm up against. The other thing is that the banks are highly correlated and they make up something like 40% of the index. It shouldn't be any more difficult to trade STW than it is to trade NAB or Westpac.

Luckily it's Sunday and nobody is complaining that I keep going off-topic. Would you believe, I had the same idea last year as soon as I heard about this low brokerage deal. I figured that I could reasonably safely trade several 1,000 bank shares (even CBA) at a time and extract a fraction of a percent on turnover. The four bank charts are permanently displayed on my screens and I know how they behave by now after looking at them every day. But I haven't got the guts to try it with that sort of money. Obviously, my brokerage is several basis points and not a flat rate.

Even though you have been successful, I believe you are trading a flawed strategy. That's just my opinion after reading your comments, and you have been consistent about them. Without going through it point for point, I see warning signs. I wish somebody agreed or disagreed with me, but we may have to wait for that until tomorrow.

In the meantime, all the best.

 

[barney]

I see warning signs. I wish somebody agreed or disagreed with me, but we may have to wait for that until tomorrow.

100% agree with your summation Haba ..... I see a lot of potential pain sometime in the future with what I have read so far.

I'd be happy to be totally wrong and hope "wfd" continues to make good cash but I reckon there are too many possible pitfalls to see this ending well

 

[wfdTamar]

C'mon then, spill it. The main one I think is I could get holding stock when it falls dramatically and because I don't yet have an 'exit for minimal loss' strategy that could be a big loss - if I sold later. Or a long wait for recovery.

 

[wfdTamar]

...Would you believe, I had the same idea last year as soon as I heard about this low brokerage deal. I figured that I could reasonably safely trade several 1,000 bank shares (even CBA) at a time and extract a fraction of a percent on turnover. The four bank charts are permanently displayed on my screens and I know how they behave by now after looking at them every day. But I haven't got the guts to try it with that sort of money. Obviously, my brokerage is several basis points and not a flat rate.

Why not open a SelfWealth account and have a go with a smaller amount? You could see how you go without risking very much money. Say you did it with 100 shares how much of a share price rise would you need to cover $19 brokers fees (a Buy and a Sell)? 19 cents per share? On Friday there was about a 60 cent range. Easy peasy

 

[barney]

C'mon then, spill it. The main one I think is I could get holding stock when it falls dramatically and because I don't yet have an 'exit for minimal loss' strategy that could be a big loss - if I sold later. Or a long wait for recovery.

"wdf" .... I'm not trying to judge your decisions at all, but I am concerned you may get caught in a situation you haven't adequately planned for.

If you are trading the size you mention then I assume you have a pretty hefty bank balance to buffer your nerves ..... The big question is, if the market moves heavily against you, how long are you prepared to hold on before your cut your losses, and what draw down are you prepared to absorb before you actually start "sweating"?

We are in a Bull phase ... you might need to consider the possibility of a sustained downturn when you least expect it where you might end up losing large amounts of cash per tick as opposed to the current situation where the market is "always" going to rise and save the day ....

I hope you do well, and I wish I had your account balance, but big accounts need good risk control!

Here I am telling a millionaire what to do ... lol ......

 

[tech/a]

Question
How much money would you need to lose
To hurt
$10,000,$50.000, $500000?

Or ----

 

[barney]

Question
How much money would you need to lose
To hurt
$10,000,$50.000, $500000?

Or ----

Beat you to it tech ... lol ...... I was just more long winded about it!

 

[tech/a]

One of us should get an answer then