Hi All, In a nutshell, I have tried and failed miserably with stock trading for the past few years, but I have also learned a lot. In the past, I tried to invest with a measly $1k or $2k (sadly, not a typo) and I got my rear kicked since I wouldn't diversify, I didn't have enough capital, I got too greedy, I wasn't patient enough, and the list goes on. Honestly, they could make me the poster child of what not to do when starting to invest. My most recent schmuckish move was when I bought a $455 call option on AAPL expiring on May 17th at a $305 premium then AAPL missed earnings and the option dipped below $100, at which point I panicked and sold. And wouldn't you know it, now the option as of today is trading around $550. At first I got remorseful and almost had an emotional breakdown (which would have been funny as a Youtube video); but soon thereafter I said to hell with my 1/2 assed trading and investing, I'm not trading again until I can prove to myself I can make money through fantasy trading, and do it consistently. I feel this was the breaking point when I went from my previous moronic trading methods to yearning for something which would actually work. Thus, on my path to the starting $10k, what's the best way to do it? One option is to just keep it in cash until I reach the $10,000 (which would take a while), or to buy good stocks every $2k or something. If I kept it all in cash until I hit the amount, I would be missing out on potential gains. I also have started using covered calls, which are another way to increase cash income from stocks and know what your profits will be down the road. I know I got a good eye for historically buying good stocks when they're cheap (JPM at $32, SPF at $4, CSX at $20, FDX at $80, etc), but since my past investing methods were flawed, I never made much money off each position. I know on the surface I should consider giving up since I lost money each year, but I also know it's possible to make money investing, and I don't want to be a quitter. I have no problem changing to more of a Buffetonian (not sure if that's a real adjective) buy & hold method and eschew active trading, but I am ready to change my game plans. Sorry, I got on a tear and talked too much (if only I could find a job to bill to speak by the hour), but I was hoping for advice on how to make money long-term and the best way to handle my portfolio on the path to $10,000! (Hedge fund managers, watch out!) (I am traveling around now, so I may not respond right away to this post, but I will read the posts) Thanks!
That AAPL trade was a rookie mistake. I was advocating to buy the stock pre-earnings (when it dropped below $400) because the odds of downside were extremely low. However, I wasn't going to buy the options pre-earnings because the volatility crunch would ruin your position. Nah, I grabbed my options the day after earnings and got an easy 1000% then dumped it.
No, you would be missing out on potential losses. It's clear in your post that you need to learn some other stuff about yourself before you ever trade again. If you are serious about making money in the markets then you need to do the following: 1. Learn to know your self. Impatience, bailling out to soon, greed, and so on, is all about you and how you think and feel. It has nothing to do with what you trade or how you trade. The results you are getting is psychology. 2. Write a businessplan and a system that will give you a tradingmethodology that will fit you. 3. Set some objectives what you want to accomplish. Or... If you do not want to do all that work and just trade, go to las vegas it is more fun and the results will be the same. You end up with zero dollars in the long run...
It definitely was, I can't argue with that . I never stopped to think about the volatility crunch; at first I was excited that the stock went up, then I looked online and saw the option chain's value had plummeted, I was like, wtf?? Very nice, that would be a good return!
I agree too. I think they can be decent for covered calls, but other than that, it takes some skill to trade them.
1. Is true, it's all in my head, not in the trades, per se. 2. I agree, I need to treat it like I am doing it as a job; i.e. if I were investing that money for someone else, would I just trade on whims and good intentions? Not so much. 3. I would like to have returns of 10% or more in up years and minimize my losses in down years. 4. Totally man! It finally dawned on me too, I realized if I don't have a method and plan to it all, then I am plain and simply gambling, and in the end, the house always wins. At least in Vegas they have scantily clad women hovering around you offering you drinks! But, I'm not going to allow myself to gamble anymore with my money when I want to be investing it and MAKING money long-term, not gambling and losing it. I'm ready to put in the time and work for it!
Options can be traded successfully if you trade them on 60 seconds and there are some mentors that are providing live training and signals to trade options and many are getting big money.
$10k is not enough to do any meaningful active trading, despite what people here might tell you. The odds of outsized returns are very low. This means it is possible, but unlikely, and that hope is what helps people to try anyway. To me, this is not unlike gambling, and is not a good way to run a business.