Hi, ET. I´m a beginner and need some advice.

[Lucias]

Skimmed this...

* Don't try to "define" your trading based on what you read. I mean that there are many ways to "day trade" and most that work aren't what you will read. Likewise, if you are forced to day trade only you will give up many opportunities.

* If you start losing then stop for the day if you find that you keep losing when you start losing -- like me. Discretionary day trading isn't like any other form of trading. You have to find the "games" you can win and stick to them and be disciplined but also keep working to learn new "games" without losing too much.

* You should be consistently profitable on simulator before going to real money.

* Be careful about expectations. 1x to 4x return per year is top notch returns. This equates to a max of around 50% to 200% return. I don't know what NOK is but let's say you are trading a 2k account then 1k-4k would be an excellent return. Few people will get excited working hard just to make $2,000 after a year of work. This causes small traders to take outsize risk which eventually blows out the account.

Trading tiny accounts is very difficult and I feel requires a different set of rules. I feel it is better to trade tiny accounts with a system then by using discretion. The margin for error is just very low and every cost is a serious factor.

Quote from ShinySox:

Hi, ET!

I am new to ET and trading, so I just want to introduce myself first.

I am 19 years old and I study finance at the moment. I find trading very interesting and dream of a job as a fund manager/daytrader and maybe a investor later if I succeed.

So, when I first enter the world of trading few days ago I read much about technical analysis and use this to find triggers. My first day I made really good profit. I started with 2000 NOK(not much, but I am a student), and ended with 3000 at the end of the day. Next day I made it to 5000 NOK. I thought I was king, and could make much more money!
Then, yesterday I entered the marked once again and started to lose money because I did not stick to the plan. I got nerves and desperate to get my money back. But I just lost more and more. And now I am sitting with only 1000 NOK. Its horrible. I was stupid who thought I was good enough to daytrade.

So now I want to do much research before I start trading again, because I am afraid to enter the market without knowing how to do it. When I did technical analysis I bought when it breaks the resistance line, but it just fell down even more and made huge losses for me.

-So could some of you guys give me some advice where to start?
-What kind of strategy and style of trading do you use?
-What are the triggers you are looking for to know when to enter?
-Is daytrading about only looking at price and trends, or is news and volume important too?

Would be grat if I got much advice where to read tips and how to be better as a trader!

Thanks!

 

[sampa]

So, when I first enter the world of trading few days ago I read much about technical analysis and use this to find triggers. My first day I made really good profit. I started with 2000 NOK(not much, but I am a student), and ended with 3000 at the end of the day. Next day I made it to 5000 NOK. I thought I was king, and could make much more money!
Then, yesterday I entered the marked once again and started to lose money because I did not stick to the plan. I got nerves and desperate to get my money back. But I just lost more and more. And now I am sitting with only 1000 NOK. Its horrible. I was stupid who thought I was good enough to daytrade.


1. So could some of you guys give me some advice where to start?
2. What kind of strategy and style of trading do you use?
3. What are the triggers you are looking for to know when to enter?
4. Is daytrading about only looking at price and trends, or is news and volume important too?

Yea, remember....it is just as easy to make 20% as it is to lose 20%.

The key is to invest money that you can afford to LOSE. Dont invest money that will cause you to lose sleep at night if its value starts to deteriorate. Here are some thoughts...

1. Thats a tough question...do you have a day time job? How much money are you investing? What kind of brokerage accounts do you have? Obviously you have a margin account, but do you trade options, for example. If you are totally a virgin to this, I would advise:

a) be lucky and good at quick math, logic and reasoning and
b) watch the how to investment guides at your brokerage account at E Trade or Options Express to learn how to trade stocks and derivatives.

2. I used to be more of a day trader, buying levered ETFs like FAS, FAZ, EDC and EDZ. I found that you have to be good at market timing because those levered funds really win or lose in the pre market. You have to hold them overnight. Now I am mostly long only and buy the bears and sell the bulls. In worst case scenarios, like the market post QE2 and post Aug 5 credit downgrade, I switch my investment horizon to 3 years. Try not to put all your capital to work (not always easy), so in down markets, or raging bulls, you can put a few grand in things like the VXX or in options strategies. I dont have any fancy software. Im part fundamental and part technical. I look for good name stocks or indices of countries I understand, and just buy those on weakness for long term holds. You dont need to be a Jim Cramer and trade a thousand stocks. You wont know those companies ever. Pick your favorite names, cos or ETFs of sectors or countries you know well and buy low, sell high, use covered options to either add income to your portfolio (options seller) or to protect positions (options buyer). And use money you can afford to lose so you dont panic when the market goes 2008 on you. I bought Brazil EWZ in early 2009 and sold in Nov. 2010 for a gain of nearly 75%. But you have to have the stomach fro it when your capital is falling 10% a week, and keep buying. Dont go all in. Dont try to be too sophisticated, unless youre some type of MIT genius who can figure laws of probabilities in his head like a first grade to add single digits.



3. Every trader, every fund manager has a different trigger. Some will buy into rallies. Some will buy into declines. Some are waiting for certain news items. Too complicated to answer generically.

4. I would say day trading is all about trends and TIMING. Cuz you can buy SDS tonight after today's gain and think that Europe still isnt in any better shape and we will see a decline on Wed. If youre right, you win. If you lose, you better hope the market reverses or be very patient. I once held EDZ for two weeks in order to make my money back and that was a killer. Very stressful! You use stop losses with stocks like that and they can be triggered in an instant. You gotta be balsy with those to make any money cuz they move so fast. Volume is important. Always by actively traded stocks. I dont think buying on volume trends is necessarily important because you can obviously make money in low volume of actively traded stocks as you can in high volume, but those are some triggers that the platform traders (quants) will use. Personally, I think it is best to be in stocks with nothing more than a penny spread between bid and ask. You want liquidity. You dont want to be a seller of something that trims a dime off the bid price just because it has low volume.

Good luck. Buy S&P 500 Puts at 1100 for Dec 2012. ; )

 

[BIDUbandit]

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