I've joined this forum to try to gain some realistic expectations of what I MIGHT be able to achieve as an active stock trader.
I've invested a lot of time and research into figuring out what I want to do in the market and how I want to do it.
I've made a SMALL start in the market and so far my returns have met and exceeded my expectations, for the most part.
I have started out with a very small amount of risk capital, under 5000 dollars.
I'm picking stocks using any and every online newsfeed I can find and also use the TC2000 stock tracker/screener.
Here's what I look for: Strong movers making multi-point percentage gains.
My success so far, in the FEW days I've traded, have been around 4 percent return.
Due to the small size of my account at this point, I can not afford to split my account up and try to make multiple trades
per day. It's all in and see what happens. If I split up my funds into multiple transactions, I pay more in commission fees and it will materially affect my bottom line.
I then have to wait three days for the funds to settle. (Yes, I am very much aware of Rule T, unsettled vs settled funds, and the limitations on using unsettled funds. I have done my research.)
Realistically I'm able to sit down at the computer and ride the trade just one day a week, that being Friday, as I also
have a full time job but get Fridays off. Otherwise I could trade five times in three weeks but only one would be on a Friday.
My approach is to pick a likely big mover that has solid fundamentals, has been increasing in activity over the last day or so,
and has no BAD news regarding the company.
I'm following the general pattern of a day trader but as I can't pull off 4 trades in one week (not without splitting up my resources, which I won't do) and not having a margin account, then I can't even be determined to be a pattern day trader anyway. But I do intend to hold (almost) no positions overnight.
I am dedicated to avoiding being greedy. I know when I go in how much I have to get back just to cover my commissions, and after that I set checkpoints for the price of the stock I'm holding, assuming it continues to go up. If it falls back below the latest checkpoint, I automatically sell it if it hits the previous checkpoint. Which I set at levels equalling half percent profit points.
SO FAR, it's been going well. 4 percent return? Do I dare to hope that I can even manage to pull HALF that return
on a consistent basis?
And there's the big reason I've registered here, to ask THAT question:
Is it at all unreasonable to think that a well informed, news-browsing, active trader can consistently pull a 2 percent (or more) profit? Or even one percent?
As my stake increases, I can accept smaller percentage returns. I hope to get to the point where a tenth of a percent
is plenty for me on a given day, making thousands off it. But at this point in the game, well, the math is easy. If I put 5K into the market and have to make 20 bucks profit to cover my commissions, then I MUST get 0.4 percent just to cover those commissions. Which I consider to be a very easy target.
Am I off base? Am I expecting too much?
What makes me wonder about that is that if it were really SO easy to make 4 percent, then there should be a lot more
rich stock traders out there.
With a 5000 dollar initial investment, playing the market once a week and making 2 percent every time, and
rolling the profits back into the principle, it becomes 14000 dollars in one year (52 trading sessions) and 39,000
in 2 years, and in 5 years, over 860,000 dollars.
The wonders of compound interest are amazing, but I'm having the hardest time thinking that these numbers are actually achievable by a solo trader working once a week. It really does seem too good to be true.
Of course I expect that I'm not going to pick winners 100 percent of the time. But my short term experiences, both
in games and with real money have shown that yes, in THIS market I can reliably pick winners. But can I pick them
early enough in their run up to make it worth my while?
So please tell me, are my expectations at all reasonable? Please set me straight.
BTW, my handle, Carrerain4, is my goal: To be able to afford to buy a new Porsche Carrera in 4 years or less.
Don't expect your account to grow that linear. Trading is a game of keeping what you do not lose, so have a plan on how you will lose and handle it.
Also the market does not care what you expect to make on a weekly basis. As a trader there are only three things that you can do. Control risk, cut losers quick, and let winners run as far as possible.
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Need help? 1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first. 2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses. 3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make. 4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance. 5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers. 6) Help using the forum? Watch this video to learn general tips on using the site.
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No, I don't have an excel spreadsheet predicting future gains. But I do have one that informs me of
what I will need to see in order to break even, at various levels. (Such as how much it takes to cover my
commissions if I put 1000 in, or 2000, or 5000, or 10,000, etc) which I probably won't even need as I've
already memorized that information.
I'm happy if I just make a few bucks off a transaction after all the fees are paid.
Controlling risk is very important to me. It's why I put days of research into the selections I make.
If the indicators aren't that good, I don't buy that stock.
Single stock all in, jumping on news related move / high volume spike and trying to ride it, been there done that, it works great can make good money for a while.
Then you get carried away or SEC stops it trading and reopens next day on bad news 50% down, even had 1 delist on me 12mins into the trade, up huge, why's it stopped, OHHHHH!! $2000 loss in 12mins doh!!
Personally, 1 day per week, trying to find a hot stock, jump on it with the amount of cash you've got I'd prefer to move to a Futures account and trade DAX and US30 ( DOW / YM ). Use your same, jump on it and ride the trend logic you could of made 40pips+ on YM earlier, I think it's $20 per pip ( spot account here so can trade any size ) but if so, that's $800 in 10mins.
Yes you have Margin kinda, no Patter Day trading worries or other madness, simpler and less stress, bigger profits.
Can you swap your Friday off to a Thursday or Tuesday, Fridays are generally weak.
Right now I understand stocks well enough that I'm comfortable picking them.
I didn't mention that I've been gaming stocks for months with consistently good results. Actually I've gamed stocks
on an inconsistent basis for several years. It really does seem to me that I have a knack for picking winners,
but I'm also very aware of the fact that there are days when I never get that feeling about any stock. When those
days happen, I'm best to NOT buy anything. But when the feeling comes, it's generally been very reliable. So
that gives me hope for a decent amount of success.
Today I pulled 10 and 1/4 percent shorting GoPro. (In the game.)
I don't understand options, futures, or forex. Not anywhere even close enough to even think about putting a real dollar into any of them.
For the moment, stocks are my comfort zone.
You know about that stock that the SEC stopped trading on, a few days ago? If I'd had access to it via my
broker, AND could place shorts with it (I can't as it's not a margin account) then I would certainly have done so.
The moment I hear of an unexplainable spike I think "Somebodys' gonna clean up shorting that!".
I have heard that 80 percent of people who put money in stocks never short. I will certainly be in the other 20
percent. Place a short sell with a tight stop loss and see what happens.
I'm starting a Tradeking account to cut my commissions down to 5 bucks each. That's half what I pay now with Vanguard.
What days ARE best for trading? I actually CAN switch around my day off at will. My boss will give me any day
off I want as long as I work 4 per week.
I used to find Thursdays best for stocks, but this is a LONG LONG time ago, haven't ever looked at stocks in 10+ years.
Futures via Index's is the same as your doing, but 2 or 3 charts to watch easier to focus on, no home work every night, lining up the 20 stocks you want to watch to hopefully jump on 1 to make a quick profit. ( you trade the DOW or Nasdaq Charts so check out those )
I stopped trading stocks, when the pattern day trading rule came out 12years ago I guess, scarey, shame I used to make good profits off it, which is why they made that rule.
Fortunately (or unfortunately, depending on your point of view) I won't be meeting the definition of a pattern day trader for some time to come, if ever.
The thing is, I trade with a cash account. If you don't trade on margin, you can't be a pattern day trader as defined even if you make a hundred trades an hour.
I am setting up a second account which gives me access to margin, but not for me to trade in margin. It's going to be used for short sales instead.
It will be some time, even if my performance exceeds my wildest dreams, before I'll be putting enough money into play
that I would divide it up into several transactions per day and thus exceed 4 round trip trades per week.
I'm not (at this time) looking for several stocks per day to get into. I'm looking for ONE good one per trading day,
and I make my picks every evening or early in the morning, and if it's not a trading day, I trade my pick in a game rather than with real money. I find this to be excellent practice. I make notes on WHY I picked a given stock, when I pick it, and then can review my rationale in light of the stock's performance later. Very instructive.
Later, when I've built up my risk capital portfolio, I can look into the idea of making more trades at once. But like
I said, I expect it'll be a while before I'm in a position to do that.