Online Stock Trading

[Tani Coyote]

It's just yet another form of gambling. We don't get much of that down here.

Put 10 K in a casino - 40 years down the line...

Chances are you've lost a fair percentage of that. Maybe even all of it!

Put 10 K in a mutual fund - 40 years down the line...

Chances are your investment is worth multiple times what it was originally.

You do take gambles when investing, but it's a VERY different risk-taking beast than any casino game or betting would be.

 

[Takhisis]

So you do agree that it is another form of gambling.

 

[mrt144]

I've lost tons of money in the market day trading. But I've made money in the market investing.

And as for the toll it takes on you emotionally and physically, trading isn't worth that feeling. I feel better being able to sit back and check up on things once or twice a week than watching 3-4 hours a day, on top of my full time job.

Also, I have a gambling problem so obviously, don't day trade if you have a gambling problem or you feel rushes from gambling. You'll feel the same exhilaration day trading but will justify losses by reasoning trading is less risky than casinos.

Finally being a pattern day trader carries a LOT of additional legal and financial ramification, most of which are not worth it unless you're doing it for a living.


The thing that annoys me about the OP is that it's more of a "Hey, I jumped in feet first with abandon at the right exact moment. It's great!". Imagine shorting the market 2009 (as I did. I made some pretty big shorts right around March 12th.) or going long 2008.

 

[JollyRoger]

I was a great day trader until about March 2000.

 

[.Shane.]

So you do agree that it is another form of gambling.

No, its another form of risk.

@JH, but if you don't have the time and interest or aren't confident in your abilities to master stock knowledge, isn't it better to let a professional do so? Or, at that point would your advise be to put the money in established mutual funds and check in every few months?

 

[JollyRoger]

@JH, but if you don't have the time and interest or aren't confident in your abilities to master stock knowledge, isn't it better to let a professional do so? Or, at that point would your advise be to put the money in established mutual funds and check in every few months?

After reading his advice-giving blog.

 

[Theige]

No, its another form of risk.

@JH, but if you don't have the time and interest or aren't confident in your abilities to master stock knowledge, isn't it better to let a professional do so? Or, at that point would your advise be to put the money in established mutual funds and check in every few months?

Mutual funds are a horrible investment.

 

[JollyRoger]

Mutual funds are a horrible investment.

If you do not have the time or knowledge to devote to your portfolio, they are not. Also, they are a decent buffer to over-confidence. 43% of my portfolio is in mutual funds and that goes up by a percent every year. The rest of my portfolio is more aggressive, but the mutual funds flatten the risk.

 

[Patroklos]

I trade online, but I do not day trade. My shortest position was three weeks.

I got into this recently, this time last year, which allowed me to enjoy a great run until last April, after which I suffered a pretty bad loss like most people, which I learned from and profited from in the slow rise from then to now.

I am up 5.7% for this year, not bad after one month.

As for Vegas, I have made far more money from blackjack/roulette/craps, but I did that by accident. When I walk into a casino I expect to lose everything I brought in with me as the price for four or five ours of great entertainment and free drinks. If you gamble to make money, you are probably poor.

 

[JollyRoger]

I don't day trade, but my holding period for the most aggressive portion of my portfolio ranges from a few days to a few months.

 

[JerichoHill]

Put 10 K in a casino - 40 years down the line...

Chances are you've lost a fair percentage of that. Maybe even all of it!

Put 10 K in a mutual fund - 40 years down the line...

Chances are your investment is worth multiple times what it was originally.

You do take gambles when investing, but it's a VERY different risk-taking beast than any casino game or betting would be.

You said mutual fund, which isn't day trading.
OP is a daytrader.

 

[JerichoHill]

Mutual funds are a horrible investment.

This deserves a separate reply Mods.

No. Theige is completely, utterly, wholly in the wrong here. There are some rotten, fee based mutual funds. Most are not bad. Index funds, a special kind of mutual fund, are excellent for the 95% of folks who do not care to try to understand what stock or commodity to buy and don't want to spend their nights research P/E Ratios.

Not only do I cover this @ Coffeecents.org, but this is also covered here by a wealth manager whose clients are 8 figure folks.

 

[Kruelgor]

EDIT2: Buying on Margin also increases risk, and the interest rate ain't that cheap, it is always normally about a point above the prime. So if you are using Margin, keep in mind you must earn back the interest rate you are paying before you are earning $$$.

I consider the margin interest rate very cheap, the interest is about 66 cents per day per $3000 borrowed or .022% daily interest (that's loan amount x .00022). You're only charged interest if your margin purchasing power is invested in a stock, so if you sell your stock you are no longer charged the interest. For me, that's practically free money because I average 4% to 10% gain per trade per day. I make anywhere from 2 to 6 trades per week. About 25% of my picks result in a loss, but the gains heavily outweigh the losses. There is A LOT of research involved to find the gems, and I admit yes it is stressful but it's kind of like Christmas morning every day you wake up and Christmas eve when you go to sleep because the stocks I pick will either take a big jump or big loss the very morning of the opening bell. It's extremely exciting. Now, I also admit that I've only been trading during this recent bull market. I have no idea how my strategy would work in a bear market. I do not consider myself as a day trader, because day traders often make dozens if not hundreds of trades per day. I buy a stock and hang on to it for 7 or less trading hours.

As far taxes are concerned, the capital gains tax is the same rate as your personal income tax, and of course you're only taxed on your profits. The only disadvantage to "day trading" tax wise is you can't write off your losses. If you keep a stock longer than 30 days and you sell it for a loss then you can write that off.

 

[JollyRoger]

I have no idea how my strategy would work in a bear market.

Instead of Christmas Eve/Christmas Day, it will be like an endless stream of bad Mondays.

 

[Kruelgor]

Instead of Christmas Eve/Christmas Day, it will be like an endless stream of bad Mondays.

You're probably right there, which is why I want to study more on buying/selling short. That's where you profit from a stock declining in value.

 

[JerichoHill]

By definition, Krueglor, you're a day trader.

Further, you are investing during a very nice market upswing and its been a very short period of time. Almost everyone is making $$$ right now.

Finally, a good investor doesn't get "excited." That's just a problem waiting to happen. No amount of studying is going to eliminate risk.

 

[mrt144]

I consider the margin interest rate very cheap, the interest is about 66 cents per day per $3000 borrowed or .022% daily interest (that's loan amount x .00022). You're only charged interest if your margin purchasing power is invested in a stock, so if you sell your stock you are no longer charged the interest. For me, that's practically free money because I average 4% to 10% gain per trade per day. I make anywhere from 2 to 6 trades per week. About 25% of my picks result in a loss, but the gains heavy outweigh the losses. There is A LOT of research involved to find the gems, and I admit yes it is stressful but it's kind of like Christmas morning every day you wake up and Christmas eve when you go to sleep because the stocks I pick will either take a big jump or big loss the very morning of the opening bell. It's extremely exciting. Now, I also admit that I've only been trading during this recent bull market. I have no idea how my strategy would work in a bear market. I do not consider myself as a day trader, because day traders often make dozens if not hundreds of trades per day. I buy a stock and hang on to it for 7 or less trading hours.

You're still considered a Pattern Day Trader by the SEC and there are implications as to base minimums you need. If your brokerage isn't enforcing these SEC rules that could be a problem for you and the brokerage later on.

 

[Kruelgor]

You're still considered a Pattern Day Trader by the SEC and there are implications as to base minimums you need. If your brokerage isn't enforcing these SEC rules that could be a problem for you and the brokerage later on.

I use ETrade, everything is legit.

 

[emzie]

Pfft, investing. My retirement plan is the lottery, suckers!

 

[mrt144]

By definition, Krueglor, you're a day trader.

Further, you are investing during a very nice market upswing and its been a very short period of time. Almost everyone is making $$$ right now.

Finally, a good investor doesn't get "excited." That's just a problem waiting to happen. No amount of studying is going to eliminate risk.

That's the problem I eluded to earlier; Day trading, just thinking about day trading makes me excited. And I lost a boat load of money because I was so emotionally invested in it.

Now I'm doing boring stuff but it's at least making money, slowly but surely.