| From the Complete Idiot’s Guide to Day Trading Like a Pro, by Jennifer and Peter Sander Just How Much Can I Make? The $64,000 question---how much? Well, it depends on two things: --How much you invest --How aggressively you invest Most electronic brokers, especially the ones providing “high-performance” trading products, require a minimum of $25k in investment capital. But we’ve also seen it as low as $5k and as high as $75k. This can be leveraged by using margin funds to invest twice that amount. Some day traders trade in minimum 1,000 share lots, others in 100-, 200-, 500- share lots, depending on the price of the stock traded and how much capital they want to risk. Obviously small price changes mean more realized profit (or loss) with larger share amounts—an uptick of an eighth of a point on a stock you own can earn you $125 with 1,000 shares. Your exact profit depends on --The net gain per share, and --The number of trades --Commission (transaction) costs Some day traders make 100 make 100 or more trades in a day, and may win on 5 or 10 more trades then they lose on. This is a very credible strategy if it can be maintained. The bottom line: It really doesn’t take a large mummer of profitable trades to realize a net of $300 or so a day. Three hundred bucks times about 240 trading days per year yields $72,000 in gross income per year. Not enough to make you rich, but not bad this the goal of many day traders. Many have earned considerably more. (Note: This book was published in 1999. I just paged through it and for the most part it is still valid when a bit of common sense is applied to take in today’s environment. More importantly it also gives a point of view from the perspective from average people turned day trader. Not Wall Streeters turned day trader. It is my understanding these people actually traded in Daytraders.com room - Floyd) From The Complete Day Trader, by Jake Bernstein It is not the job of the day trader to understand the whys and/or the wherefores of market movement. The day trader’s sole responsibilities are these: First to end each day “flat,” that is, without any positions Second, to make a profit, now matter how large or small Third, to keep all losses small and manageable. Within the contest of these very general responsibilities and guidelines for the day trader, all market volatility, regardless of cause, must be approached as an opportunity for potential profit. We are neither defenders of what is right or just in the markets nor pedagogues who must determine why things are the way they are. We are interested in being true to our tripartite credo as expressed above and in attaining three distinct goals which are the essence of what this book is designed to teach you. These goals are as follows: 1. To profit consistently and significantly from day trading 2. To become better day traders with more experience 3. To maintain a disciplined and business-oriented approach to help attain day-trading objectives From Day Trade Online, by Christopher Farrell The online day trader is after one thing: the quick kill. But the day trader’s job is much different than people think. Day traders are not investors, they are traders. What does this mean? It means that long-term trends and market conditions do not concern them. Reading The Wall Street Journal cover to cover is not their job, nor is studying graphs, charts, and research. None of these things will put food on their tables. Neither will listening to brokers and analysts, nor knowing every fact, rumor, and tidbit about the market. In fact, day traders may not even know anything about the stocks they trade. They may not even know the names or lines of business of the companies—because they don’t have to. In this game, knowing too much will not help you, it will hurt you. This is the short term, and the only thing day traders should be concerned about is the next five minutes. Yet, they know exactly what they are doing. Every trade they make is a precise, well-calculated move. The goal: to get in, to make a profit, and to get out, as quickly and as safely as possible. Welcome to the world of the day trader. From Day Trade Online, by Christopher Farrell The markets were going haywire that day. With the click of a mouse, I sold. The fill report came back. I breathed a sigh of relief. I was out. Five thousand shares sold at 8.A $4,000 profit in only 18 minutes. This was my best trade ever. I had never made this much money this quickly in my life. Finally, I had hit a home run. And there was no need to press my luck. I didn’t want to trade for the rest of the day. I turned off my computer and got out my golf clubs. My workday was over. It was 9:48 A.M. From theThe Electronic Daytrader, by Marc Friedfertig and George West Some traders can make money being right as little as 25 percent of the time, or perhaps even less. They do this by making a great deal of money when they are right and only losing a little when they are wrong. Some traders are right 75 percent of the time, or even more, and still lose money. They do this by losing more money when they are wrong than they make when they are right. Winners admit when they are wrong, and even more importantly they react when they are wrong. Losers hope when they are wrong. Losers tend to quote fundamentals or research and forget the real reason they entered a position—quick trading profit. From Day Trade Online, by Christopher Farrell The Limit Orders The limit order, unlike the market order, is not the preferred choice of the individual investor. But it is the method of choice for the professionals who make a living buying and selling stocks. The day trader must use limit orders to be profitable. From the Complete Idiot’s Guide to Day Trading Like a Pro, by Jennifer and Peter Sander Personal and Practical The following personal behavior “gems” come from experience and readings about day traders and their stories. · Stay detached. Don’t get emotionally involved; Emotions work against your game plan. · Don’t think that “the market is stupid.” The market is always right. · Don’t hope. · Don’t form opinions. You don’t have time, and they let in emotion. · Don’t get angry. · Don’t wish for revenge. Revenge doesn’t happen. · Eliminate the fear of losing. Scared money never wins. · Accept your loses and move on. · Assume responsibility for your losses. Nobody else “did it to you.” · Always think positive. · Hit singles and doubles—don’t always swing for the fences. · Don’t try to hit tops and bottoms. · Don’t try to win on every trade. It’s the amount that counts, not the number of wins. · Remember, it’s real money. Work for it. · It’s not a game and it’s not gambling. · Set goals. · Recover from a bad day—learn from it and put it behind you. · Always keep score. Analyze your results. Learn from burn, learn from earn. · Don’t expect to an expert right away. As in all other professions, you will pay your dues. · Don’t expect to come out ahead, especially in your first 3-6 months. Be patient. · Don’t try to focus on everything. You can’t. Do what you’re good at. · Don’t expect this to be easy. It’s hard work. Profits are earned. Maybe not the “old fashioned” way, but they are earned. · Decide each day how much risk you want to take. · Decide each day how “involved” you want to be. Some days are better than others. · Remember that different strategies suit different days, different stocks, different traders, different market makers. · Press winners, cut losers. · Expand when you are winning, contract when you aren’t. Don’t try to “get it all back at once.” · Always follow your escape routes. · Learn when you can rely on instinct vs. analysis. · Stay focused. · Stay disciplined. · Have fun and look forward to Mondays! The Least you Need to Know · Critical day trading personality traits are: detached emotions, passion, discipline, a positive attitude, and a willingness to learn from both mistakes and successes. · Among the factors to consider when developing a day trading style are: your tolerance for risk versus reward, time commitment, market appetite, and trading speed. · Although day trading has inherent risk, day traders can actively manage the amount of risk they are willing to take. · Risk-averse day traders can stick to less volatile stocks, scalping small amounts as a core strategy. · Serious day trading requires a time commitment before, during and after market hours. It’s difficult to do while doing something else—like a full-time job. ------------------------------------------------------------------------ If you have read a book that is not mentioned, and you think it should be, email me with the title and the reason you think it should be added. |
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| by Ben Stein |
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| A 1950's system that made $2million in 18 months still works
today!
by Dr Alex Chambers Have you heard a dancer called Nicholas Darvas who, in the 1950s, made $2million in the stock market? Probably not. If you have, does the system work for you? It does for me. Nicolas Darvas was a professional dancer in the 50's. He danced all round the world. However his real love was in stocks and shares. He started "dabbling" and had some winners, had some losers. He soon found that he had more losers than winners! After a while he started to analyse his stocks and work out where he was going wrong. He realised that his main problem was that he was buying stocks on impulse or on recommendation by his broker. He was trying to guess the market instead of react to what the market was actually doing (in fact, he was not alone in this - 90% of people today do the same and lose). Realising this mistake was the start of his fortune. He developed a way of picking only a few stocks at a time and analysing their price charts. He found that stocks move in definable cycles, and such movements could be represented by a box. He called these boxes "Darvas boxes". When the boxes "...stacked up upon each other...in an upwards fashion..." he bought. The boxes gave indicators on when to buy and sell. He limited the downside using stop loss orders to automatically sell. He turned an emotional investing loss into a systemised investing gain! (end) |
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