Spongebrain:
Nice response on a new thread!
I have day traded since last July. Made many mistakes early, here are a few:
1. Began without any preparation, thought using a room to daytrade would teach me everything I needed to know!
2. Stops, as several have expressed it STOPS are very difficult. It has something to do with ego. The stock goes down 1/4, you say "I know better, it will come back up" The stock goes down to 1/2 you say "Oh its just a little blimp, it still will go back up". Stock goes down a full point, you start figuring out that on 500 shares you have already lost 500 bucks, and say, I better buy more here, and average down, it still has to go up. It goes down another buck and you are out $1500, and say, well I will have to hold long term for a couple of weeks. You hold for a couple of weeks, earnings come out and stock goes down another $2.00. Now you have lost a lot of trading capital, can't use it to make more prudent investments, and say "If I only took a 1/4 point loss". You do this a couple of times and you are out of the day trading business, back to full time job.
3. Do research, develop a list of stocks that are volume movers, up x percent, down x percent, watch news stories, learn to short, learn to bottom hunt, and learn to supress that ego.
4. Do get a full service daytrader broker, such as MB Trading(which I use), Whatley, Cyber, JPC, anyone of them will provide you with the tools you need. You must in my opinion have level 2 to see the pace of trades, to use all tools, i.e isld, arca, soes, etc. Learn to gauge buying and selling, and know what side of the trade your are on. Don't chase a stock, there will always be others. Know the market conditions, and be able to react to real time news.
5. Investigate using a daytrading room. I use Ken Wollfs room, and for the cost I feel its well worth it.
6. Watch premarket trading, look for gaps up and down, these can be very useful for plotting strategies.
7. Try not to hold overnight - you are not in control if some bad news happens, this can wipe out your trading capital as bad as a missed stop.
8. Maintain your day job if possible. I am a full time firefighter/paramedic, which gives ample time to day trade on days off. I am also a cpa, but have given that up for daytrading.
9. Don't dwell on the past, always look at your mistakes as a learning experience, and profit from them.
Good luck to all, sorry if I have rambled on!
Bob |
