Stock trading thread

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Stock trading thread

Postby Ragorn » Mon Apr 27, 2009 6:10 pm

Just going to start a new thread with an appropriate title, rather than using the Wells Fargo thread. The purpose of this thread is just to chat about stock trading... since a couple people in the community are interested, I'll talk a little about what moves I'm making, why I'm doing it, and what the results are.

I'm not out to screw anybody, but I also take no responsibility if you follow my lead and we all get fucked. If you want to trade, make your own choices with your own money.

Today is looking like a very good opportunity to buy into the financials. Bank stocks started out real low, spiked at 11am on unfounded hope, and have been on a very consistent downward trend since then. FAS (the 3x Bull ETF) has a tendency to either swing way up or way down right before close. If today's swing is "way down," I'm probably going to buy in big at 3:58pm... it's already down 7% today, so a big dip at the end of the day could end up being a really good bargain.
Last edited by Ragorn on Mon Apr 27, 2009 8:56 pm, edited 1 time in total.
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Re: Stock trading thread

Postby Ragorn » Mon Apr 27, 2009 8:01 pm

In FAS at 7.76, 10 seconds before market end. Downward trend continued all day, hoping that tomorrow we see the same early-morning spike that's become typical of this stock so I can sell out and make a quick couple percent.
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Re: Stock trading thread

Postby Ragorn » Tue Apr 28, 2009 9:10 pm

Oops. Thought I was in good shape until 3:30, when FAS tanked (as usual). Gonna hold for a day or two, see what happens.
- Ragorn
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Re: Stock trading thread

Postby Sarvis » Tue Apr 28, 2009 9:24 pm

Ragorn wrote:Oops. Thought I was in good shape until 3:30, when FAS tanked (as usual). Gonna hold for a day or two, see what happens.


Err... if it usually tanks at 3:30 why didn't you sell before then?
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Re: Stock trading thread

Postby Ragorn » Wed Apr 29, 2009 12:29 am

Look at the chart, look at my buy-in price, look at the last couple days of trading. The "like it always does" was a flippant comment.
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Re: Stock trading thread

Postby Corth » Wed Apr 29, 2009 3:13 am

Ragorn,

I've been reading your posts and wondering if you are going to get hurt at some point with the type of trading you are doing.

The advantage you seem to have is you have no emotional attachment to your positions. You aren't buying or selling because you have some fundamental theory about where a particular company or industry is going. Rather, you buy and sell based on whether you think its simply going up or down today. You almost seem to approach it like as if its a game.. which is a very good thing. Thats not something most people can do with real money on the line.

On the other hand, you think you have a good feel for the market, and perhaps you do, but the market can change in a heartbeat. What you are doing will work for a while.. and then it won't. At that point you risk losing all your profits and perhaps a chunk of your principal. You would probably reply that you manage risk with stop losses. True. But what people who trade like you almost universally do is keep making the same mistake over and over again once the pattern of the market changes.

I have no interest in actively trading - it does not suit my personality and I almost always lose money when I try doing it. You on the other hand seem to be naturally good at it, but you appear to rely almost entirely upon instinct. My suggestion would be to learn some of the basic theory behind technical analysis of stock charts, which will give you more of an academic foundation that can help focus your instinct. As it stands you are a decent amateur, but with a LOT of hard work, you could potentially make a great living doing this one day.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth

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Re: Stock trading thread

Postby Ragorn » Wed Apr 29, 2009 4:07 am

Yeah, it's entirely possible that I could get burned very badly. In fact, I've taken two huge setbacks already I started trading in October. First I bought ATVI at the worst possible time and took almost a 20% hit as the price plunged from its then-typical 11.50-13.00 fluctuations down to the 8.50-9.50 cycle it was in earlier this year. Then I had the 12 or 13% loss I ate from FAZ two weeks ago when I guessed the coin flip wrong.

My father is a financial advisor with Edward Jones, and he retired from AT&T to day trade full time right after the tech crash. I've spent a lot of time talking to him about market fundamentals, tracking methods, economic indicators, and financial rules. I've read some very good books, and I've done some research.

Thing is, this is not a typical economy, and it isn't playing by the normal rules. Prices are being set by hope, fear, and momentum, rather than by sound financial motivations. If you put your money in the market right now according to traditional practices, you stand to make a very safe profit on the other side of the recession. Honestly, I know that's an option... I know that if I put $10k into BAC, JPM, Morgan Stanley, and Wells Fargo tomorrow, I'll have more in the bank next April than I do today. Those companies are very likely to come through the recession intact, and their stock is selling for fire-sale prices. They're all good choices for anyone looking to go long. So are GE, Intel, McDonalds, and Wal-Mart.

But right now, the potential for profit is exponentially higher for someone looking to ride the volatility. This is, with absolutely no hyperbole, the chance of our lifetimes. It's very unlikely that we're going to see market fluctuations like these again before we retire. Every day is a gamble... you can never be sure that even the most sound financial indicators will produce the expected result in market prices. So I approach the stock market the exact same way I step up to the poker table. I try to analyze the odds and learn the rules (the rules as they ARE, not as they SHOULD be), and I try to put my money on the table when I think I have an advantage. Most importantly, my strategy is not to win every hand, but simply to win more than I lose. So far, I've been pretty successful at doing that.

I post my moves here not because I want to brag or get people to follow, or because I think I'm particularly good at this. It's just interesting to talk about... it's a thread on General Discussion that has nothing to do with Obama, Somali pirates, rangers, or swine flu. In a couple months/years, when things calm down a little and the game starts following the rules again, I think that will be the time to adopt more traditional strategies of investment.

For right now, I'm just hoping for pocket kings so I can push all in :)
- Ragorn
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Re: Stock trading thread

Postby Nurpy Fuzzyfeet » Wed Apr 29, 2009 9:34 am

The Wall Street Journal used to do a competition. They'd have a monkey throw darts/poo at a group of stocks and compare the results with the experts. The monkey won every time.
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Re: Stock trading thread

Postby Ragorn » Wed Apr 29, 2009 1:42 pm

That's why I'd rather be the monkey than the analyst :)
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Re: Stock trading thread

Postby Corth » Wed Apr 29, 2009 1:50 pm

I don't know about the WSJ competition.. but I can guarantee that its easily possible to beat random odds by utilizing certain basic TA techniques.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Stock trading thread

Postby Sarvis » Wed Apr 29, 2009 2:00 pm

Corth wrote:I don't know about the WSJ competition.. but I can guarantee that its easily possible to beat random odds by utilizing certain basic TA techniques.


TA techniques?
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Re: Stock trading thread

Postby Sarvis » Wed Apr 29, 2009 2:02 pm

Hey Rags, one question that I meant to ask yesterday when the forums were down...

When I did my taxes last year there was a part where I couldn't write off the "gain" on a stock because I bought back into the same industry within a couple days. I don't remember the specifics... but I'm assuming you do, and wondering how you're dealing with that when you seem to be repeatedly trading within the banking industry.
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Re: Stock trading thread

Postby Ragorn » Wed Apr 29, 2009 2:42 pm

The internet can explain it better than I can ... google the "wash rule."

Looks like my FAS bet is going to pay me. It's 8.18 right now (bought in at 7.76). I have a lot of meetings today, so I can't watch the price... what I'm going to do is set a stop-loss for 8.15 (which is a flat 5% profit from my buyin) and let it ride through the afternoon. I hope it doesn't trigger my stop-loss, but if it does, I cash out +5% (which ain't bad for two days of non-work).

Edit: Stop-loss triggered at 8.15. Net 5% profit.

Why did I set a stop-loss? Because FAS has a history over the last two weeks of producing a "morning surge" around 10:45-11:00am. If you look at the daily chart over the past couple weeks, the price has a tendency to climb in the morning, top out before lunch, and then descend through the rest of the mid-afternoon. Some days it picks up late in the trading day, some days it continues to decline until market close. My goal was to "ride the surge" and get out before I exposed myself to any serious risk. Mission accomplished, $400 in the bank, and I'm in no danger if BAC fires its entire executive board today and the market panics.

Price is 8.11 as I finish this edit.
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Re: Stock trading thread

Postby Corth » Wed Apr 29, 2009 5:31 pm

Sarvis wrote:
Corth wrote:I don't know about the WSJ competition.. but I can guarantee that its easily possible to beat random odds by utilizing certain basic TA techniques.


TA techniques?


Technical analysis
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Stock trading thread

Postby fobble » Thu Apr 30, 2009 3:19 pm

On top of items Corth has already commented, I'd like individuals to understand the type of trading that's being done, the purpose of investment, and better explanation of costs as well. This is just to general everyone.

Type of Trading
Based on above transactions, it seems like trades are being done are day trader and focus of investment is based on calculated speculation more so than technical analysis. I think it should be clarified that this investment methods and directions are not for long term trading and others should not follow if they do not follow the market vigilantly.

Purpose
The purpose of the investment seems to be extra cash in pocket investing with side money (money not going to kill anyone if lost in its entirety).

Real Cost
1. Tax
2. Transaction Cost
As for the cost, short term transaction gains (less than 11 and 1/2 months of holding period) means individuals will need to pay short term capital gain tax (STCG) which is upto 35% and this additional gain may kick you to higher tax bracket which is one of the key costs.
Also more you transaction you do, more it piles up.
So if you do gain, please keep in mind of your tax bracket and how much you are actually profiting. You could balance this out somewhat with deductible investment such as 401K, Traditional IRA, etc.

For example,
Let's say this is year 2007, I'm single tax payer and I make 30,000 a year. I don't put anything into any deductible investments such as 401 K or Traditional IRA. So my taxable income is 30,000/yr off my job. Let's say I made 3,000 from day trading (STCG kicks in) for the year of 2007. I'm not going to include state income tax because that varies too much depending on where you live.

Simple though would be wow I made 3 grand off investment but in reality, it's less than that because you'd be kicked into higher tax bracket. I won't do the math for you but off top of my head, it'll probably be more like $1.5K in your pocket rather than $3k due to STCG and being in higher tax bracket. And this is only based off Federal tax.

I hope that provide bit more information individuals need to take into account and calculate before making investments.

Personally I am horrible at day trading, I've almost always lost money in short term trades so I invest for the long haul. As as for my investments, all the ones I've done based off technical analysis are tanking due to changing market circumstances but only one investment I've done based off calculated speculation is kicking ass and taking name (MVL). It's up 20% since I bought it in early Feb of 2009. Everything else is +1% to -30% as of yesterday (FAS, V, BK). So take it with grain of salt and find what works for you.
Last edited by fobble on Thu Apr 30, 2009 3:29 pm, edited 2 times in total.
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Re: Stock trading thread

Postby fobble » Thu Apr 30, 2009 3:27 pm

Corth wrote:I don't know about the WSJ competition.. but I can guarantee that its easily possible to beat random odds by utilizing certain basic TA techniques.


WSJ competition is where professional investors select stocks (TA) and WSJ employees throw dart on a board with random stocks (random). The stocks are tracked for period of time and measure performances.
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Re: Stock trading thread

Postby Ragorn » Fri May 01, 2009 4:07 am

Don't start saying "tax brackets"... when you do that, people who aren't familiar with incremental taxes think that someone who grosses $30,001 takes home less money than someone who grosses $29,999 because "they're in a higher tax bracket." That isn't how our tax system works.

If the bracket cutoff is $30,000, then every dollar you make up to $30,000 is taxed at 16%, and every dollar you make between $30,001 and $50,000 is taxed at 18%. You don't suddenly pay 18% on your total gross income if you cross the $30,000 cutoff.

That said, profit from day trading isn't tax-free. Come next April, I'm going to fork off a check for hundreds (hopefully thousands, muahaha) of dollars to the federal government. Why? Unlike my W-2 income, there's no withholding on my tax profits. I get it all now, and I'm responsible for it all later.

All that being said, it's midnight on Thursday night. FAS (which is not FAZ... FAZ is the bad one) opened at 8.69, almost fifty cents higher than yesterday's close. It peaked at 8.91 before taking an absolute shit in the afternoon, crashing into the dirt at 3:48pm, and closing at 8.13. After-market trading angled downward a bit further to 8.08.

Now, unless something spectacular happens overnight (someone announces profits, or global markets are way up), I'm expecting FAS to open several percent lower than todays' close price. Maybe... 7.75? 7.60? Something like that. It'll ramp upwards in the morning, back to the 8.13 close price by 11am, and then Who Fucking Knows what'll happen from there.

My plan is going to be the "filling the gap" strategy. If the opening price is indeed lower than the close price, I'm going to buy as much as I can right at the open. By 11am, when the price spikes upwards, I'm going to sell it off. My goal is to make another clean 5% profit tomorrow. If the price opens low and then tanks from there, I will have a stop-loss in place to sell everything off 3% below my buy-in price.

Wish me luck.
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Re: Stock trading thread

Postby Sarvis » Fri May 01, 2009 4:14 am

Ragorn wrote:Don't start saying "tax brackets"... when you do that, people who aren't familiar with incremental taxes think that someone who grosses $30,001 takes home less money than someone who grosses $29,999 because "they're in a higher tax bracket." That isn't how our tax system works.

If the bracket cutoff is $30,000, then every dollar you make up to $30,000 is taxed at 16%, and every dollar you make between $30,001 and $50,000 is taxed at 18%. You don't suddenly pay 18% on your total gross income if you cross the $30,000 cutoff.

That said, profit from day trading isn't tax-free. Come next April, I'm going to fork off a check for hundreds (hopefully thousands, muahaha) of dollars to the federal government. Why? Unlike my W-2 income, there's no withholding on my tax profits. I get it all now, and I'm responsible for it all later.

All that being said, it's midnight on Thursday night. FAS (which is not FAZ... FAZ is the bad one) opened at 8.69, almost fifty cents higher than yesterday's close. It peaked at 8.91 before taking an absolute shit in the afternoon, crashing into the dirt at 3:48pm, and closing at 8.13. After-market trading angled downward a bit further to 8.08.

Now, unless something spectacular happens overnight (someone announces profits, or global markets are way up), I'm expecting FAS to open several percent lower than todays' close price. Maybe... 7.75? 7.60? Something like that. It'll ramp upwards in the morning, back to the 8.13 close price by 11am, and then Who Fucking Knows what'll happen from there.

My plan is going to be the "filling the gap" strategy. If the opening price is indeed lower than the close price, I'm going to buy as much as I can right at the open. By 11am, when the price spikes upwards, I'm going to sell it off. My goal is to make another clean 5% profit tomorrow. If the price opens low and then tanks from there, I will have a stop-loss in place to sell everything off 3% below my buy-in price.

Wish me luck.


Hmm... I may copy you tomorrow.

But why not set a stop-loss at 11am in case it keeps going up?
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Re: Stock trading thread

Postby Corth » Fri May 01, 2009 4:28 am

Ragorn,

You point out a common misconception about income tax. As you stated, tax brackets apply only to income above a certain level. If you are in the 35% tax bracket, you don't get taxed on all your income at that level, but only upon the income that exceeeds the level that puts you into the 35% tax bracket.

Capital gains taxes, which we are talking about here, are different. Tax brackets are indeed relevent to this discussion. See the link below.

http://taxes.about.com/od/capitalgains/ ... sTax_4.htm

For long term capital gains, the amount of the tax will depend upon your tax bracket. If you are in the 5/10/15% tax brackets, you pay 0% in long term capital gains. Everyone else who exceeed those brackets pay 15% on their long term gains. Short term capital gains are taxed at your tax bracket. If you are in the 35% tax bracket, your short term gain will be taxed at 35%.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Stock trading thread

Postby Ragorn » Fri May 01, 2009 5:24 am

Sarvis wrote:Hmm... I may copy you tomorrow.

But why not set a stop-loss at 11am in case it keeps going up?

That's actually what I did yesterday, and it's probably a better idea than an instant sell-off. It really depends on whether I have time to watch the price tomorrow or not ;)
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Re: Stock trading thread

Postby fobble » Fri May 01, 2009 1:32 pm

Ragorn wrote:Don't start saying "tax brackets"... when you do that, people who aren't familiar with incremental taxes think that someone who grosses $30,001 takes home less money than someone who grosses $29,999 because "they're in a higher tax bracket." That isn't how our tax system works.

If the bracket cutoff is $30,000, then every dollar you make up to $30,000 is taxed at 16%, and every dollar you make between $30,001 and $50,000 is taxed at 18%. You don't suddenly pay 18% on your total gross income if you cross the $30,000 cutoff.


In my personal opinion, if individuals are not even familiar with "federal income tax brackets"... I don't think those individuals shouldn't even be investing in stocks on their own. Information about tax brackets and basics of how federal income tax work are freely available via web or phone (irs.gov, google, phone call to IRS, etc.). If individuals are not willing to learn or to put the time in on how income taxes work, I don't think those individuals would be willing to learn basics of investment which are a must.

Otherwise it's like going to betting the farm on roulette and the person don't even know how roulette works! Yes that person could beat the odd and double the farm...but more likely that person will loose the farm because he or she didn't do their homework and study the basics.
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Re: Stock trading thread

Postby fobble » Fri May 01, 2009 1:33 pm

Ragorn wrote:Wish me luck.


Good luck! and I think you're doing a great thing sharing your info and knowledge. Not a lot of people do.
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Re: Stock trading thread

Postby Sarvis » Fri May 01, 2009 1:45 pm

I'm in at 7.96... ate the loss on C, but I guess I can write that off on next years taxes. And maybe make up for it on FAS...

Wish me more luck than Ragorn, I'm not as good at this. ;)
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Re: Stock trading thread

Postby Ragorn » Fri May 01, 2009 1:49 pm

fobble wrote:In my personal opinion, if individuals are not even familiar with "federal income tax brackets"... I don't think those individuals shouldn't even be investing in stocks on their own. Information about tax brackets and basics of how federal income tax work are freely available via web or phone (irs.gov, google, phone call to IRS, etc.). If individuals are not willing to learn or to put the time in on how income taxes work, I don't think those individuals would be willing to learn basics of investment which are a must.

Otherwise it's like going to betting the farm on roulette and the person don't even know how roulette works! Yes that person could beat the odd and double the farm...but more likely that person will loose the farm because he or she didn't do their homework and study the basics.

To be fair, the tax code is such a wreck that it's understandable that individuals don't get it. Obviously, I didn't get it either... I didn't know the thing about small capital gains subscribing to your bracketed tax rate. The More You Know ======*

FAS didn't gap down as far as I thought this morning, it opened at 8.09 and is sitting around 7.95. I'm not sure what to do with this, so I'm seriously considering just sitting on my hands. I hate holding ETFs over the weekend, there's too much potential for disaster.

I guess Sarvis is in :) I imagine you should make a couple percent profit, I'm just not sure enough.
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Re: Stock trading thread

Postby Sarvis » Fri May 01, 2009 2:26 pm

Ragorn wrote:
fobble wrote:I guess Sarvis is in :) I imagine you should make a couple percent profit, I'm just not sure enough.


Yeah... my problem will be the transaction fees. Even at the highest point after I bought it, I would have been down $10 because of transaction fees... investing with small amounts of cash is harder in some ways...


EDIT: Placed a stop-loss for 7.97. At least I'll be able to say I was up by a penny. ;)
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Re: Stock trading thread

Postby Ragorn » Fri May 01, 2009 2:49 pm

If you're trading less than $2000 or so, I wouldn't suggest day trading. The fees are going to eat you alive. FAS was up as much as 4.2% today... if a 4.2% rise still leaves you negative because of commission fees, then either 1) You're not trading with enough money to be profitable or 2) You're paying way too much in commission fees. I pay $10 for each buy or sell order through Ameritrade, and you shouldn't be paying any more than that.

If you're paying $10 a trade, and a 4.2% increase still left you $10 in the hole, then I honestly think you need to hold off from trading for a while until you have the capital necessary to overcome the commission fees. The strategy I'm playing in this thread is designed to take a large number of small gains... 5% here, 7% there, 2% if I get skittish. If a nontrivial amount of your profit is going into your broker's pocket, then I think you're better off with long-term investment rather than day trading.

Also, your stop-loss is too low. I would set it for 8.10. You're up several percent, there's no reason to let the market take all of your money away and leave you with nothing.
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Re: Stock trading thread

Postby Sarvis » Fri May 01, 2009 3:16 pm

Ragorn wrote:If you're trading less than $2000 or so, I wouldn't suggest day trading. The fees are going to eat you alive. FAS was up as much as 4.2% today... if a 4.2% rise still leaves you negative because of commission fees, then either 1) You're not trading with enough money to be profitable or 2) You're paying way too much in commission fees. I pay $10 for each buy or sell order through Ameritrade, and you shouldn't be paying any more than that.

If you're paying $10 a trade, and a 4.2% increase still left you $10 in the hole, then I honestly think you need to hold off from trading for a while until you have the capital necessary to overcome the commission fees. The strategy I'm playing in this thread is designed to take a large number of small gains... 5% here, 7% there, 2% if I get skittish. If a nontrivial amount of your profit is going into your broker's pocket, then I think you're better off with long-term investment rather than day trading.

Also, your stop-loss is too low. I would set it for 8.10. You're up several percent, there's no reason to let the market take all of your money away and leave you with nothing.



I've got a little over $1k, but half of it is tied up in GE right now... I sold off the $600 I had in C so I could do the FAS buy.

I had planned on raising the stop-loss at 11, which I just did to 8.09. I didn't want to set it at 8.10 earlier because it was down to like 8.11 and I figured it would almost gaurantee instant sale. Back up to 8.20 now though... if I didn't have work to do I'd raise the stop-loss again.

But yeah, I do need a pretty big percentage swing to make a profit. ONly paying 9.95 transaction fee, but sell C, buy FAS, sell FAS adds up to $30...
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Re: Stock trading thread

Postby Ragorn » Fri May 01, 2009 3:42 pm

Don't factor the "sell C" commission into this trade. Figure out what your gain/loss from the C investment was, including the fee to both buy and sell the stock. Then figure out what your gain/loss from FAS is, using only the buy/sell commission fees for that stock.

$600 isn't enough to day trade with... statistically, you're unlikely to overcome the fees.
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Re: Stock trading thread

Postby Corth » Fri May 01, 2009 3:57 pm

Heh.. certainly you can't day trade $1,000 with $10 commissions. There are some brokers out there with cut rate commissions. I think interactive brokers is like $2 or something. There was one that had free commissions.. Zecco or something. Not sure if its still available.

Of course, day trading $1,000.. even if the commissions are free, you are probably better off saving time and going to a casino. Even if you are an excellent trader and get, say, a 20% annual return, you are making $200 for a year's worth of work.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Stock trading thread

Postby Sarvis » Fri May 01, 2009 4:01 pm

Ragorn wrote:Don't factor the "sell C" commission into this trade. Figure out what your gain/loss from the C investment was, including the fee to both buy and sell the stock. Then figure out what your gain/loss from FAS is, using only the buy/sell commission fees for that stock.

$600 isn't enough to day trade with... statistically, you're unlikely to overcome the fees.


Stupid fees...

Stop-loss sold at 8.11... but now it's down to 8, so I'm ok with that. I guess I need to figure out the next buy...

I'm also adding $60 every paycheck to the account... how much do I need to statistically beat the fees? (Assuming, of course, that I get a handle on this...) I could hold off for a bit while I figure out some good companies/funds to watch and then go back in with more money.


Corth: I can move up to a program with sharebuilder, but I have to maintain a certain number of trades each month... and I'm not sure I'm comfortable enough to trade that often. I'm trying to do something between day trading and long term, buying something that looks good and holding for a couple weeks. (Except when I listen to Rags of course...)
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Re: Stock trading thread

Postby Corth » Fri May 01, 2009 4:12 pm

http://individuals.interactivebrokers.com/en/main.php

Your typical 100 share transaction will cost $1.30. As little as $1.00 for fewer shares.
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Re: Stock trading thread

Postby Ragorn » Fri May 01, 2009 5:02 pm

Sarvis wrote:Stupid fees...

Stop-loss sold at 8.11... but now it's down to 8, so I'm ok with that.

Yes... that pattern that you witnessed first-hand today is what regularly happens with FAS. A low opening price, a climb upwards until 10:45-11:00am that usually touches the previous day's closing price (this is called "filling the gap"), then a selloff. After noon or so, the price can go either way depending on the market. The only thing that stopped me from getting into FAS this morning was that it didn't open LOW enough for me... the morning low of 7.96 was only 2% below yesterday's closing price. If it had been a 5% drop, I would have pushed all my chips in at 9:35 and sold off at 10:48am.

I'm also adding $60 every paycheck to the account... how much do I need to statistically beat the fees? (Assuming, of course, that I get a handle on this...) I could hold off for a bit while I figure out some good companies/funds to watch and then go back in with more money.

Very easy to determine. At $10 per transaction, it will cost you $20 to buy a stock and then sell it, so every trade costs you $20. What you have to do is determine how much of your investment is getting skimmed off the top by the fees:

With a $1000 investment, you're losing 2%.
$2000 = 1%
$3000 = 0.66%
$4000 = 0.5%
$5000 = 0.4%

So if you have $1000, you have to subtract 2% from your net return every time you make a trade. If you buy at 10.00 and sell at 10.50, that's 5% profit, but you're only pocketing 3% because of the fees. On the other hand, if you buy at 10.00 and sell at 9.50, that's a 5% loss that swells to a 7% loss after fees. That's bad mojo.

So the "right" amount to trade with depends on your tolerance for risk. If you're convinced that you're hot shit and every trade you make is going to net you 3% profit or more, then maybe $1000 is enough to start with. I would suggest maybe $3000 as a good baseline for starting a day trading account. Now if your plan is to buy and hold, then you can do more with less. If your plan is to buy into Morgan Stanley and leave it for three months, in the hopes that the price increases by 15% or more in that time, then you can get away with paying 2% in fees.

By the way... if I had to pick one stock as a good buy-and-hold, it's Morgan Stanley. MS does very well even when the financial sector is down, and it has INCREASED more than 50% from its January 1st close price (in a market that's down 8% in that time). If I were to buy into MS, my target entry price would be 22.00 or lower. Please don't run off and buy into MS on my word alone, but it's worth a spot on your watch list.
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Re: Stock trading thread

Postby Corth » Fri May 01, 2009 6:31 pm

I'm going to go on record and say that if you buy MS you will soon lose money on it.. and if you continue to hold it you won't break even on it for many years. Why anyone would want to buy any financial for a long term hold is beyond me. The primary problem, of course, is nobody knows what the hell they have on their books. Even if they're books are relatively clean, they will not see the types of profit margins they recently had until 50 or more years go by. It was all based upon enormous leverage which they are not able to utilize as they are now bank holding companies. To the extent that financials are making any money at all right now its because of massive government liquidity, which will not last forever.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Stock trading thread

Postby Ragorn » Fri May 01, 2009 7:10 pm

Want to bet a title change that MS will be over $30 on December 1st, 2009? :)
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Re: Stock trading thread

Postby Corth » Fri May 01, 2009 7:38 pm

You're on. Usual terms. 30 days right? :)
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Stock trading thread

Postby Sarvis » Fri May 01, 2009 7:41 pm

Corth wrote:You're on. Usual terms. 30 days right? :)


Err... I think 12/1 is a little more than 30 days away...? Or did I miss something.

/not privy to title betting
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Re: Stock trading thread

Postby kiryan » Fri May 01, 2009 9:24 pm

Going back to the casino thing, at first I was with Corth on that because I didn't think you had it in you to do this, but you seem to be sticking with it.

You may lose it, or have done better by betting on black, but you are doing skill development that may really pay off for you some day.

Buffet preached about broker fees about 4 years ago. I just read something on 401ks and stuff that suggested that if you contributed and eventually made 3.5 million in your 401k over 50 years or something, that the management firm made 1 million on just your $$s.
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Re: Stock trading thread

Postby Sarvis » Fri May 01, 2009 9:27 pm

kiryan wrote:Going back to the casino thing, at first I was with Corth on that because I didn't think you had it in you to do this, but you seem to be sticking with it.

You may lose it, or have done better by betting on black, but you are doing skill development that may really pay off for you some day.

Buffet preached about broker fees about 4 years ago. I just read something on 401ks and stuff that suggested that if you contributed and eventually made 3.5 million in your 401k over 50 years or something, that the management firm made 1 million on just your $$s.


I think I'm lucky enough for my 401(k) to not have transaction fees. Or at least certain funds don't.

On the other hand, I'm probably _not_ lucky enough for my 401(k) to ever be worth 3.5 million... :(
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Re: Stock trading thread

Postby Corth » Sat May 02, 2009 12:30 am

30 days is the length of time I'll get to control Ragorn's title.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Stock trading thread

Postby Ragorn » Sat May 02, 2009 6:13 am

30 days it is, you're on!

Morgan Stanley will be more than $30 at close of market on Tuesday, December 1st, 2009.

I don't really care how much money the brokerage makes off my 401(k). My employer matches 25% of my contribution, which is like an automatic 25% ROI before the money even hits the account (with no work and no RISK involved). I'll take that all day long.

But yes, broker fees add up... I'd probably be $250 richer if I wasn't paying fees.
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Re: Stock trading thread

Postby Sarvis » Mon May 04, 2009 7:26 pm

So who wishes they had bought FAS on Friday?
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Re: Stock trading thread

Postby Corth » Mon May 04, 2009 7:34 pm

Me!

Hell if I knew the future I would kick such major ass in the markets :)
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Stock trading thread

Postby Ragorn » Mon May 04, 2009 11:42 pm

I tried to play the gap strategy today, which had me buying into FAZ and planning to sell at 11am. My -3% stop-loss triggered seemingly before the buy order even finished processing. Quickest 3% I ever lost, but it coulda been far, far worse... always set stop-losses, kids!
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Re: Stock trading thread

Postby Ragorn » Wed May 06, 2009 9:41 pm

This shit is kookoobananas. The 3-day waiting period for the buy order I put in on Monday just kept me from scoring 30% or more. Should I buy in tomorrow? More good news supposedly coming in from Geithner at open... course, with my luck, the day I buy in is the day the pullback comes.
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Re: Stock trading thread

Postby Sarvis » Wed May 06, 2009 9:48 pm

Ragorn wrote:This shit is kookoobananas. The 3-day waiting period for the buy order I put in on Monday just kept me from scoring 30% or more. Should I buy in tomorrow? More good news supposedly coming in from Geithner at open... course, with my luck, the day I buy in is the day the pullback comes.


3-day waiting period?

And yeah, so... recession over or something? Everything's been up two days straight. (Everything I watch anyway, which is very little...)

I'd be afraid to buy in tomorrow, buying stocks on the upswing seems to have been my problem more than once.
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Re: Stock trading thread

Postby Ragorn » Wed May 06, 2009 11:05 pm

When you place a buy order through most online stock brokers, it takes three days for the order to clear the process. You get the stocks right away, and can sell them right away, but if you make a quick sale, the money in your account is "held" for three days until the buy order clears.
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Re: Stock trading thread

Postby fobble » Thu May 07, 2009 1:50 am

Market rallied very well for finance for past two days. This usually means there will be correction on the way.

For those of you that did not study business/finance/accounting in college or familiar with the terminologies, use the site below for them to familiarize yourselves. If not you can google or wiki most lingo.

http://www.investopedia.com/dictionary/default.asp
http://financial-dictionary.thefreedictionary.com/

These two are easy sites you can use to lookup some terminologies, there are plenty of others.

examples of usefulness of the sites..
http://financial-dictionary.thefreedict ... com/buy+in for terminology of buy-in in finance
http://www.investopedia.com/terms/c/correction.asp for terminology of correction in finance

Edit: Dunno when or how fast correction will come...just be wary of it as you as individual invest.
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Re: Stock trading thread

Postby Corth » Thu May 07, 2009 2:44 am

Big day for commodities. I've been lightening up a bit on them waiting for the market to turn around so I can buy it back cheaper. Its a weird predicament. I never went 'all in' as I intended.. so I'm actually hoping it goes down substantially even though in the short term I'll lose a lot of money.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Stock trading thread

Postby Ragorn » Thu May 07, 2009 5:33 am

Yes, I've been waiting and waiting for the correction for the past two weeks... and every day that FAS is up another six, ten, or twenty percent, I kick myself a little harder.

There's a correction coming, just don't know when... and I really don't want to get caught in the middle of it.
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Re: Stock trading thread

Postby Ragorn » Thu May 07, 2009 2:13 pm

I played the FAZ gap on Monday and got burned for a quick -3%.

I didn't play the FAZ gap today because I was worried that finances would shoot upwards this morning. Had I played the FAZ gap today, I'd be up 10% on the day.

Sometimes I love this game, and sometimes I hate it ;)
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