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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: JavaAdict who wrote (931)	6/17/1999 9:27:00 PM
From: Teresa Lo	Read Replies (1) \| Respond to of 18137

<<...lets say you were just starting out with a few grand as your base. What are YOU going to do?>> I think the first thing you should do, before you even contemplate making a trade, is to figure out how much risk you want to take on each trade and how you plan to manage your money. With a few grand, you can only take a couple of shots, and if they're wrong, you will be out of the game. For example, if you plan to daytrade, the average bar on something like AMZN is at least $2 so the closest stop you can have and leave decent room for a wiggle is at least 2 bars, at least $4. So if you trade 100 shares at $112 (a $11,000 trade needing minimum margin of only $5,500 at most brokerage firms) you need to have a stop that is minimum $400. Given that, you can only make 5 losing trades in a row and that will be it, so you have to reduce size or increase funds. A good rule of thumb is to not risk more than 1.5% of your account equity on each trade, so that you can ensure survival. Working those numbers out backwards, we are looking at having an account size of $27,000 to trade 100 shares of AMZN at today's price in order to be conservative and survive the game.

To: JavaAdict who wrote (931)	6/17/1999 10:21:00 PM
From: Richard Estes	Read Replies (2) \| Respond to of 18137

Your case is repeated many times over. It doesn't make any difference if it is a broker or a stock topic that gives the advice. Once you take it, you live or die by their results, not your own. Somethings to do: 1)Read William O'Neils' How to make money in the stock market. 5 times. It is the only non-TA book, I recommend. 2)Do not enter full time trading unless you have in excess of $200,000 to trade with. 3)Preserve Capital is the number one action. Divide your capital into ten segments, never exceed that amount in any trade. Never lose more than 10% of that segment or 1% of your total capital in a trade. 4)you must know yourself. How will you react to success or failure? What is your trading comfort zone? a day, a month or a year. 5)Have the tools, learn to use them. Someone can make money or lose money with any broker, data vendor, or software. It must fit your needs not someone elses'. 6)develop a plan of trading, test it, stick with it. 7)Do your homework, this is a business you are running with your hard-earned money. 8)Don't believe anything from anyone until you have tested it or processed it through your mindset. Never listen to CNBC or other media for opinions, Price is the final answer. 9) Don't get sucked into the funnymentals/news black hole. Buy because of new product, a year from now they could have the product and you would have no reason to sell, even if you are losing money. The only good stock is a stock moving in the direction of your trade. 10) Remember preserve capital, learn to take losses quickly, read, study, test, plan. YOU decide, no one else to blame. For someone who has not obtained a capital level that allows you to take part full time, trade only listed stocks in the best moving range of $10-$36. Think percentages not points. When you enter trade, set exit point and take it.Get a good EOD data vendor, forget RT until you go full time. Know where you want in and where you want out. Position trading is the path to take. Don't average down. Don't take a trade unless the odds are in your favor. Remember the market will always be there. There will always be stocks going up or down.

To: JavaAdict who wrote (931)	6/18/1999 4:17:00 AM
From: Bilow	Read Replies (2) \| Respond to of 18137

Hi JavaAdict; Richard Estes and IntelligentSpeculator.com and the others on this thread have given us some great advice! I think the thing to do with a couple grand in the market is to spend about $300 at BKS. Not the stock, the bookstore. Read through this thread and buy the books mentioned the most. My personal favorites are Trading for a Living, and Electronic Daytrading. As far as the amount required to start trading with, I think $50,000 is enough to learn whether you are going to learn. On the other hand, a certain very good and successful trader I know, started out with $5,000 that he had obtained through the use of maxed out credit cards. I wouldn't advise this. So most of your efforts should be spent in saving enough of a nut to begin trading with, in reading, and in paper trading. By the way, it's easy to save money. Just look around you, and find someone who makes less money than you, and imitate them. Take the difference between what you earn and what they earn, and hide it from yourself. If you spend all free cash, then you can hide money by putting it into really dull investments. I suggest utility stocks... The primary goal of all traders should be to survive to trade another day. The goal for a beginning trader is harder. His primary goal is to survive long enough to learn to trade. To reach this goal, make sure that you sign up at a place that has low commissions for small trades, and make sure that your trades are small. 100 shares is too many for an overnight hold in a lot of stocks (i.e. AMZN) for beginning traders. Buy or short small, odd lots. Remember, the primary goal of a beginning trader is not to make money. It is instead to learn to trade safely, and to guard his pile from sudden changes in value. It is almost as deadly for a beginning trader to have a sudden 50% increase in equity value as it is for him to have a 50% decrease, due to the bad habits such sudden wealth almost inevitably causes. After learning to trade safely (i.e. stops and money management,) the next goal is to learn to trade at a profit. But you will never get to this goal if you don't learn the first ones. Best of luck. -- Carl