Guys - GREAT DISCUSSION Stockoptionist - Options are a no-no for me as I would have a lot to learn and I DO however know something about stocks. Privateer - I agree with your analysis of DRMD, and I DID make a mistake by taking it. I did so because of others opinion (another mistake). I just hope it wont gap down and sell it today. My plan originally was a 2R gain 'cos the risk eas lik .70ish My stop is set to a 2 day (now 3) low. I DID risk 2% you can see that from my stop. DDefina- I AM exposed to overnight risk and no stop in the world can save my b*** if the stock gaps like 15 points down. Sure it will trigger but heh...( Also, trhank you others, ET really is a nice place to hang out and get some "treatment" after we've made some mistakes or just want to learn something. BTW. I vote Spock ;-) definitly Alex P.S. Wareagle, who did you have in mind when you said "Que, spam...."? I couldnt find anyone with that nick. Or was it a Star trek joke that I didnt get
Most of us around here realize there are just lots of ways to lose money trying to quickly make (also read day trading/swing trading) a little on "XYZ", then make a little more on "ZZZ", etc. Consider this: Since neo hr is new to actual trading, aren't there fairly high odds that he may just bleed his account to death? If I only had 4,000 bucks, I think that I might attempt to put my money on something longer term than what we traditionally refer to as swing trading. I'd look for an industry that might have some real potential for a good profit over several months or so. In the meantime, I'd keep paper trading my a** off, in anticipation of the day when day trading would be more of a real option for me. IMHO, it's just extremely difficult to do short term stuff with a small account. History indicates that very short term trading has been extremely detrimental to undercapitalized traders, whereas holding stock in really strong companies has been the way to go for many individuals. Just something to consider. Best of luck neo! BSAM
BSAm Thanx for being honest . I however think that it is really the best option for me or I will just end up spending my money on something stupid. And In Croatia there aren't actually ANY possibilities to enlarge that acct into something bigger. Besides, I think that It was JMC Graw that said how he managed to turn a small 6k acct into like 12 or 15 I dont remember anymore in like a couple of months. OK, he DOES have a lot more experience than I do but still... And I am really serious about this. I don't know, if I Do start losing bigtime, I may consider bailing out. In the meantime any comments on theese?? Good luck all today! Alex http://www.elitetrader.com/vb/showthread.php?s=&threadid=2605
BASM - can only strongly agree to what you say. Had some e-mail conversations with NEO before and urged him to be very very careful with his ST trading attempts. Not that one can not make money with 4K as starting capital , but the current environment is so choppy, that it's hard enough for the better capitalized traders to make some money at the end of a month, let alone a beginner with very little money. The odds are strongly against those attempts. In order to improve the odds at least a bit, I suggested, to take some of the more proven routes to trading success , i.e. scanning for strong stocks ( also with strong fundamentals ) and buy the dips ( not the breakouts or new highs ), holding them for several days or even weeks rather than trying to catch shortlived breakouts or do bottomfishing on "oversold" stocks. Let alone trying to swing-trade in the most volatile, well known daytrading subjects ( DRMD is currently not amongst them, though ) Since intraday trading possibilities are very limited with 4K , I'd say, that most of those well known daytrading strategies just won't work for him. He'd be better off, although this may sound not so "exciting" as daytrading or ST swingtrading, to do something like the O'Neill strategy ( CANSLIM ) in order to enhance the capital base for ST trading , if this is his ultimate goal. I guess , NEO is in the markets to make money, not for excitement. Of course, I'm not in the position to give any advice here. I can only make a few suggestions. It's his money and he has to find his own route to success. But Wallstreet is littered with failed daytrading wannabees, which started with too little money and too great expectations. Wouldn't like to see NEO amongst them. Undercapitalization, aside from not being mentally prepared well enough, is one of the major reasons why newbies fail to survive the game. With a 4K account, you just can't sustain ( mentally and financially ) the drawdowns many ST systems and strategies inherit. In the attempt to "comply" to some "iron daytrading rules" (min. round lots, trade the usual high volatile suspects, close your trade by the end of the day under any circumstances etc. ) and living the dreams of catching only the big fishes, undercapitalized traders take often much larger positions than they should and consequently, they have to set stops so tight, that their positions will inevitably get stopped out more often than necessary just by daily volatility ( noise ). This is not only emotionally devastating, it's also reducing their chances of making it back substantially ( if they have any ). They also face difficulties to practice sufficient MM strategies, unless they get rid of some of these "dreams". Yes, trading is a probability game and if your system tells you, that it would have made money on 60% of the trades, this doesn't mean, that one couldn't have 10 or 20 of 2% loosers in a row. Also devastating for a small account. Nothing is carved into stone when trading the markets. Anything can happen - at any time. Needless to say, that a 4K account cannot survice very long under those conditions if not managed very very prudently. I recall one sentence I read in trading book couple of years ago : "If a trader / fund-manager is able to make 25% - 35% annualized profit consistently year over year - he is King on Wallstreet." Just like any fundmanager would rarely sell a companies stock when this company has proved over 10 or 20 years, that the can make 25% - 35% Profit year over year. This company would be everybodies darling, wouldn't it ? Well, in light of the irrational excuberance, as one famous person liked to call it 2 years ago, in the stockmarkets during the late 90's, 25 %- 35% APR for a trader seems to look a bit mediocre. But when I scan my fund-databases for funds who achieved at least 25% APR for the last 10 years consistently, with interims drawdowns of less than 10% - than the selection list becomes very very short. Another good example is the MetaMarketfund - a daytrading fund where the investors were able to follow each and every trade in RT on the Net. see their requiem @ http://www.metamarkets.com/ The 2 or 3 traders working for this fund were real professionals. Equipped with the latest state of the art trading technology, own research, and millions of capital. They made almost 200 trades a day in the best times of this fund in late 1999, but were not able to make any serious money until August 2001, when the fund had to be closed due to redemptions and heavy losses. So if professionals, who do nothing else than trading all day long, cannot survive this market, what are the odds of small trader when trying to compete ? IMHO, the odds for the small trader can only be enhanced by trying to following and catch the longer term trends in strong or weak stocks and to stay out of the daily noise, until the account size is large enough ( and I don't refer here to the arbitrary 25K the new rules are asking for ) to move on to higher risk ST trades. I'd say, despite the new rules, that ST multiday swing-trading is very well possible with a 10K - 15K margin account ( which still gives you 20 - 30 K buying power ). It may not be enough for making a living, but one can take several positions / opportunities ( thereby enhancing the chances off success ) and start to practice proper MM. Sorry for the long post.
Neo,just a suggestion,what about looking at lower priced stocks like under $5, $100 share has to go to $200 to double your money $20 share has to go $40 to double your money $1 share has to go to $2 to double your money $0.50 share has to go to $1 to double your money. Its fine to work 1000 shares of a $20 dollar stock if you've got $20,000 to play with but you haven't. What about 4000 shares of a $1 stock=$4000 it moves 0.10 theres $400 bucks for you....at the moment for you to get $400 out of Drmd wheres it got to move to?? You'll get better leverage working smaller cost stocks There are movers in the sub $1 range,have a look at what bsti has done recently.Mcld,biko,gx,ax,adsx,ibas Secrets making sure theres volume with them. Have a play paper trading them cos you won't find many down there that have been in an uptrend.Also if you work otcbb stocks theres no after hours to worry about. Theres pro's and con's to it,but i reckon you've got more of a chance working the lower priced stocks. Dangerous area to play in but there can be good rewards as well ok. I think Drmd will break $23 if not in the next couple of days then probably back to $20-21 first before it MAYBE has another go. ...A buy stop above $23 would have been a smarter way to play it but hey thats how we learn...
K, guys Privateer, tHX for the insights, and dont pay attention to the length of the post; if its this good I wouldnt mind it being 100 pages long ! I'll try to follow your advice... No, I am not in the game for the thrills of it or anything else but 1st - TO PRESERVE MONEY. 2nd - NOW comes the money. A little of it... IF and WHEN I could to theese then I would like to risk more and try to earn the real thing. Any ideas how to scan for the setup Privateer suggested? One thing that crosses my mind is TradingMarkets free scanner Id look for 12mo RS of 95+ ; 6mo 95+ and I dont know should I also put 3mo 95+ Then Id scan for the charts with low RSI and overslod stoch. Would that be the way to go? THX and good trading today! Alex
NEO, you can find a bunch of good scans for free at http://stockcharts.com/def/servlet/SC.scan?s=runreport,predeftech Fee based : Very good screening service is www.marketscreen.com example : http://www.marketscreen.com/home/default.asp?chp=trend It costs 19.95 $ a month ( 199.95 annually ) and offers countless screening possibilities ( pre-built , custom, EOD, RT, patterns, indicators, candlestick patterns, price / volume and much more ). It also delivers trading alerts via email and offers a lot of TA and fundamantal analysis tools. Fine tool is also www.wallstreetcity.com . Many free features. Their screening is also very comprehensive, but subscription based ( ProSearch ) ProSearch lets you even backtest and compare your screening strategy with other strategies. Free 30 day trial. Subscription is only 9.95 a month. http://www.wallstreetcity.com/search/search_backtestedprebuilt.asp Other than that, I still use QP2 software for screening / EOD data - but TC2000 will also get the job done. regards
Heres the link to the thread that REALLY describes what has happened to me today... Had an order executed by phone cos it wouldnt go over the net. ARRRG! Alex http://www.elitetrader.com/vb/showthread.php?s=&threadid=2607
Privateer (and neo), Well said. It's hard to be profitable with a small account and higher slippages in options, especially in this type of market environment. But again, if you choose your entry and exit target prices prudently, e. g., more than 1 1/2 points, you can still be profitable. Besides, IB offers only $1.95 per option contract. That's cheap enough. Also, slippages for QQQ options are usually reasonable--about 10 to 15 cents per contract. And if you are good enough, you can even trade them intraday. I don't think the overnight gap-ups or gap-downs are overblown. I've got quite a few of these, especially when I first began to swing trade. Remember it only takes just a few of these mishaps to send you back to square one--or even worse, in spite of the many successful trades you have made. Now, I am more cautious, of course. For example, I won't get into the market if, for example, an FOMC is coming up, or in a news-driven market like we are in right now. I'll also check for possible shock events, like news release or annoucements. But those stupid analysts' upgrades and downgrades occur once in a while, and you can't completely avoid them. I agree with the many posts here that your odds are further stacked against you if you are undercapitalized, especially as a beginning trader. Further, this market environment is difficult for the daytrader, let alone the swing trader. What I am saying is that there are times to stay out of the market and there are times to flex the muscles. Right now, I'm staying out--both because of the market and because of the fact that I've been too busy to do much homework. stockoptionist
Elitetrader there seems to be a problem, EVERY single time I post something it gets wiped now wat is that all about?? Neo u crack me up "No, I am not in the game for the thrills of it or anything else but 1st - TO PRESERVE MONEY" hoooo oh hA yeah cause the Markets a real good way of keeping your money & not losing it. WarEagle "If you don't have anything of value to contribute, then don't." & what you said in your post was contributing.