Serious issue : daytrader-swingtrader inner conflict

I agree with Privateer that when you can't afford to lose you shouldn't be investing. But on the positive side, I doubled a $3,000 account to over $6,000 about 10 years ago, in 45 days ($50 commissions each way). The downside was I lost it all when I took on more money than I could handle and the pressure killed me.

I think he can do it if he can risk $1,000 of that $4,000 and gets a profitable system that he creates, understands and fully believes in. Otherwise the money is good as gone.
 
Just because he borrows money doesn't mean he has to use it. It could be reserve cash in case things do go wrong. Trading is a business and borrowing is a part of business. Personally, I feel it's important to have this reserve because of freak events that can occur. I don't think I need to give examples.
 
"I think he can do it if he can risk $1,000 of that $4,000 and gets a profitable system that he creates, understands and fully believes in. Otherwise the money is good as gone."

THANK you DD! Thats exactly my point nailed... I CAN risk 100, h** I can even risk 2000$ if it'lll give me enough time to learn the market basics and systems and stuff. Besides, regarding my first trade, it was really all overwhelming, emotions, excitement etc. as I ve been learning for 3 years and finally gotten to do it for real.

I think you can imagine what was in my head. Besides, now i have learned what MM means. I only tie up 25% of my capital into any position, risk like 1% ... etc. So im guessing this IS a good MM and just enough to get my feet wet and perhaps earn something on the way. Most of all learn a lot.

And I just wanted to say that my toughest problem is that I need to find that one setup , try it inside out and ...well, have enough money and nerves to persist through it all. And see if its profitable and most important if it works for me.

Thank you all for your input!
Alex
 
Neo :
"I CAN risk 100, h** I can even risk 2000$ if it'lll give me enough time to learn the market basics and systems and stuff. "

If you loose 2K of your 4K, you need to make 100% on your remaining capital to just break even.
Not to mention, that it's even harder to make some money with only 2K left in an account.
We had this subject discussed here already. How many traders make 100% return on their capital ( after taxes and commissions , of course )?

Sure, you can do it - I made 60% on my first 2 stocktrades ever , lasting less than 3 days each. Just with luck - not with knowledge.

Maybe you're lucky enough to make it too. Some of the techstocks gave you 100% and more during the last 4 - 5 weeks and even some of my mutual funds made more than 30% up from their lows. You had just to hold on to them , looking at the big picture, rather than jumping the gun each and every day - or not looking at the market at all.
- it's that easy ( actually it isn't , was just kidding, otherwise... ;-)).

Borrowed money as a last resort and safety belt :
However you take it, borrowed money has to be given back at one time. With or without interest payment.
If you loose it and you have no other ressources, you're in deep trouble. This idea alone would prevent me from even thinking about trading with borrowed money if I'd no other ressources.

Anyway NEO, I wish you all the best and lot of success in your attempts. Would love to read a post from you saying "Hey I made it "
 
Privateer,

The markets will still be there tomorrow.

Excellent reminder! Your entire first post was very well thought out, sincere, and hopefully neo will see past the hard-edged reality of your tone and get down to the underlying truth. Daytrading is a fantasy right now, given his level of capital. Even short-term swingtrading is probably quite dangerous for the same reasons. And taking out a loan, if he used it for trading (as he surely would if it was sitting there just begging him...) would only put him deeper in debt given him current level of knowledge and experience.
 
ahhhh....i believe this to be a no-brainer as you have no choice but to swing trade given the new margin regs for daytraders.

otherwise, how can you daytrade with 4K???

you can't buy even 100 shares of many stocks, and you can't short. major bummer when it comes to daytrading.

and when you do buy, you'd better be right ...or your account dwindles down to a useless level.

you got major obstacles to overcome bub.

odds are you ain't gonna make it.

sorry. but thems are the cold hard facts.

swingtrading...well that makes me nervous as all getup. what with terrorism and unpredictable major domestic tragedies and no earnings and the recession and....

well...need i say more?

you could wake up one sunny morning and find yourself holding a big down gapper...and your account decimated by 20% and you on your knees praying to god... or any deity that will listen... to get even again.

how many downdrafts do you think you can weather with $4K?

daytrading=lots of control

swingtrading=blind spots

and of course one other opition exists...you can....save your pennies till you can trade in a proper fashion...


justmy2cents


[dancing] doug neston
 
Hi, neo,

I went through the same struggle as you detailed in your post when I started out trading. And I agree that (1) it's a terribly bad idea to take out a loan as your trading capital UNLESS you have proven yourself to have consistently made money; and (2) daytrading with 4K is close to impossible even without the 25K rule for a beginner.

To give yourself a chance at succeeding in swingtrading, you have to do three things:

(a) Consider the 4K as already lost, whenever you put money in the market as a beginning trader. That attitude will relieve you of the psychological pressure you are in right now. If you can't do that, you cannot trade. Of course, I don't mean to say you can be sloppy in your setups and executions.

(b) Learn to trade small odd lots, such as 40 to 50 shares, which will reduce your risks to a great degree by taking advantage of larger price swings. Of course, you have to pick your stocks really well, such as a good price range between Support and Resistance.

(c) Understand how risk-adverse you are. If you are quite risk-adverse, don't trade volatile stocks like biotechs. You will be scared out of your positions too frequently too soon. Remember that I said in my previous post, frequent losses, however small, will drain your account just the same, only slowly but surely. You have a small account, and you can't afford to have frequent small losses.

The alternative is to consider investing, which is definitely not a bad idea at all. For $15 a month, I think, at buyandhold.com, you can buy and sell XYZ unlimited number of times and even invest in indexes. However, the downside is that you can only go long. And given the general market conditions right now, good stocks for intermediate-term are hard to come by--unless you really want to hold them a long time. In that respect investing has to be combined with trading in this type of market conditions, only this time stretching your timeframe to a few weeks or a few months.

Hope this helps,

stock

BTW, trading the market is more like fishing than, say, cramming for an exam. Unlike any other job, working harder doesn't necessarily guarantee better results. If the fish don't come, don't cast your fishline. You'll waste your bait, time and energy. So if you have anything else you love to do that pays you money to build up your capital, continue doing it, even though the pay may not be that good. Don't get excessively consumed by the desire to succeed in the market as a beginning trader. A balanced life will help you look at the market differently and trade more effectively. You mentioned something to the effect that in Croatia, you couldn't find a job that you wanted to do, besides trading. Are you sure, Alex?
 
What you're experiencing is IMHO a classic case of overcomplicating the whole trading game. It is simply a game where you not only will not, but absolutely can not, know all the right answers. By distancing yourself from all the "skies", "fishers" , and all the rest of the silly labels put on various "techniques" ...you will be able to see that your decisions need to be made by simple mental "if-then" statements....not a whole bunch of "well, I tried this, and it didn't work, so I tried that, and it didn't work, so maybe it's just me, maybe I just can't be a good trader"....This whole syndrome is part and parcel to becoming a good traders...you must get through if you want to get better...and if you decide that trading is not for you, then so be it...it's not the end of the world. The best traders, making the best decisions, still lose money a percentage of the time.

....A little note from school.... "We had a guy who was in a real funk, so I asked him who he thought was a good trader, he told me xxxxx was a good trader"...We walked over to xxxx and asked him if he ever had a losing day...he said "yes, of course"...we asked him if he ever had a losing week, "yeah, a few times" was his reply. Then this new trader and I asked the experienced trader if he ever had a losing month...he thought about it for a minute, scratched his head, and said No, I don't think I have ever had a losing month." The newer trader was confused about why I was going into all of this, and I responded...."well you can either put a whole month's worth of trading into a single day or week, or simplify your trading strategies"....either one should work. The experienced trader, BTW, only traded one stock for the prior two years, kept with the basics, and never fretted over a bad day or a bad week.

You may need to think about how to simplify your thoughts about trading, what you're trying to accomplish (hopefully, just simply making some money, not trying to prove some "whacked out" strategy that you read about somewhere)...and try to remember (sorry if you read this on another post) "trading is as simple as you will let it be, or as complicated as you want to make it."

Anyway, take a step back, make up your mind what you want to accomplish....and good luck, and don't let it bother you...
 
neo hr

Save up another 2K so you have 6K total. Open up another
account with IB in your mother/brother/sister's name with
2K of the cash and yes, open up another IB account with
your other brother/sister's name.

So, you now have 3 accounts with 2K in each account. With
margin, that gives you 4K of buying power in each account
that is enough to trade 100-300sh or so of quite a few stocks.

With the 3 accounts you now get to daytrade a total of 9 times
in 5 business days instead of the 3 you get now.

Keep putting money into your accounts so they will grow.
Trade carefully and slowly so you don't blow your accounts
up fast.

I guess you could also open up an IRA account, but wouldn't
be able to short in that account...

Just my off of the top of my head humble and probably useless
advice.

:D
 
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