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Out of curiosity for the process I practiced some "day trading" using a stock game. I basically just scalped some trades. It was tedious at best. Do people really make a buck doing this? The initial capital must be huge; it makes me wonder what the adrenaline factor is in these individuals.
Any personal experiences with day trading? How do people keep tabs on the taxes they owe from this constant short term trading?
i have been full time for the last ~5mo. i set a goal of $500/day and have had some pretty good success in the last 2.5 months. I took some heavy losses during my initial learning curve, but that was expected. its quite stressfull at times, but also very rewarding in that im realizing my goal of working for myself. It does take a hefty bank account if you want to try and make a living at it, but if you are smart and cut losses quickly you can grow that account fairly quickly. Actually making my trading account smaller is what really helped me become much more disciplined and make better decisions. Tax records are kept automatically by my brokers.
i have been full time for the last ~5mo. i set a goal of $500/day and have had some pretty good success in the last 2.5 months. I took some heavy losses during my initial learning curve, but that was expected. its quite stressfull at times, but also very rewarding in that im realizing my goal of working for myself. It does take a hefty bank account if you want to try and make a living at it, but if you are smart and cut losses quickly you can grow that account fairly quickly. Actually making my trading account smaller is what really helped me become much more disciplined and make better decisions. Tax records are kept automatically by my brokers.
Interesting! Thanks for sharing. Do you receive a tax summary from your brokers?
Do you focus in certain industries or are you just looking for big dips to get into in general?
It is taxing on your nerves which also can make you your own worst enemy. I don't exactly daytrade although I have done so with leveraged commodity etn's but I find more success in holding a little longer. As the poster above mentioned I also find if a bet with less that I have been more successful as opposed to very large positions in which it is hard to watch. GL
Interesting! Thanks for sharing. Do you receive a tax summary from your brokers?
Do you focus in certain industries or are you just looking for big dips to get into in general?
my brokerage accounts keep track of each and every trade and its profit/loss as well as keep track of wash sales. The only thing im moderately concerned with is how to keep track of wash sales between my two brokerage accounts I use. I'll worry about that later.
I dont focus on any one sector. News is my friend as well as scanning software from Trade-Ideas. Real time market scanners that are totally customizable to my specs are a tool that are very valuable in finding movers. Most of my gains have come within 20-30min of market open each day. Stocks that dont have a huge number of outstanding shares can become very volatile with just a small catalyst. These are what I like to trade as they can produce thousands of dollars in a matter of seconds. I will hold some things for a few days to trade the swings, I also hold some long term speculative biotech tickers in my Roth and wifes Roth.
I was working in Afghanistan in 2011-2012 and bought Facebook one week after the IPO @ ~$38...still hold a decent size of that in my Roth. Thats was my first stock...lol. And I am not even on Facebook!
my brokerage accounts keep track of each and every trade ...
That's nice, but you still have to enter each and every trade on your tax return. Either it's going to be a lot of work for you or an expense to you if you have a paid tax preparer.
That's not a reason not to Day Trade, but it is something to be aware of. It takes me a solid hour to prepare my Schedule D each year. I like paying taxes.
Quote:
Originally Posted by Fueler
I dont focus on any one sector.
I trade a lot, but tend to do better by concentrating on just a couple sectors that I know well.
In all of my time trading, I've only made one trade that was purchased and sold in the same day so I'm NOT a Day Trader. Most trades I've made have lasted two to five weeks, but some have been just days and some have been almost a year.
All the stuff I trade are things that I have a long-term position in. For instance, I hold a few thousand shares of GG all the time, but I might be short ten thousand shares or long that many for a trade. That way, I'm either loading up or lightening up a permanent position.
I started trading Put options on the NDX back in 2000. I generally have a higher success rate picking the short side with Puts on gold miners.
I don't care which direction the trade goes as long as I'm right!
I think I read some place about 80% of day traders lose money. Might want to do some research.
I think the percentage of people who self manage their accounts, but don't "day trade" do/lose the same thing. I would be surprised if the money losing percentage is that low,
I understand that most people have a life and much better things to do than research stocks so they leave it to people who get paid to do it for them, but 80%? I bet it's closer to 98%
These studies lump every simpleton who doesn't study or research, but just picks stuff or listens to people on the news recommending stuff. I remember the dot.com bubble and all the boneheads spouting "wisdom" who thought they were geniuses till it became the year 2000. Those are the people making up those studies.
If someone likes learning about finance, markets and such and puts in the work they can beat managed funds. Those funds always have to be invested in something and are so diversified that much of their portfolios are in losers.
I've never sat through a 401k presentation by the company that sponsored my employer's plan and thought that the presenter was anything but a trained monkey.
Also, if a fund has 100 stocks in it, then some of those stocks are being researched by kids that grew up spoiled and never had a job before, but are well connected and now are "analysts." They are probably smart and went to good schools, but DON'T remember the dot.com bubble. Some probably don't even remember the 2008 crash.
I don't think you can be a good investor without the perspective that knowledge of those events give. I'm not old enough to remember the crash of 1907 or 1929, or the bear market of 1966-1982, really, but I read a lot about them.
How much do IPOs play into the "day trading" process? Are IPOs typically something bought expecting a positive turnaround within a few months?
Usually the worst as the valuations get pushed up...by IPO's later after the fluff is out of the trade. Again it does depend on the IPO and how it is priced by the underwriters.
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