I want to learn to lose my money (day trading)

altmann

So I just implemented a massive personal budget system and for the first time in my life, all my bills are paid on time, all my shit is together, I have savings etc and no money issues.

I would like to take, say, $500, and invest it personally. I know this is not a sound thing. But I'm fully aware of the repercussions but I have a SEPARATE savings setup that I contribute to that I don't fuck with at all. This $500 is simply to play with in the market so i can either lose it or make money or whatever the fuck. I figure, either way, I'll end up with a knowledge of the markets and a better understanding of what goes on.


So, where do I start? What should I look for? I know there are sites like e-trade and ameritrade, but how do I "buy" and "sell" and shit like that? Any advice, warnings, and helpful comments are welcome.

Edgler Vess

Ive got a buddy at work that has had some moderate success at Thinkorswim.com and he was a rookie as well. He told me that they answer your questions and crap and and require a fairly small intial deposit (I think places like Etrade are around a grand to start). Worth looking into i suppose. I cant personallly vouch for them though.

TheFullMetalChicken

If you work at a fair size company odds are there is atleast one person there that does some day trading I would advise to find that guy/gal and ask a few questions.

NotYou

From what I've heard, 500 isn't nearly enough. You'll get demolished by trading fees and what not so unless you're making 20% per trade you're probably losing money.

Wait until you have lots more money.

Figgy

NotYou wrote: »

From what I've heard, 500 isn't nearly enough. You'll get demolished by trading fees and what not so unless you're making 20% per trade you're probably losing money.

Wait until you have lots more money.

I think you need to read the thread title and the OP. He doesn't care about profitting. He wants to learn the market.

Dog

There are much better ways to learn about the market than just throwing cash away because you happen to have it laying around and "whatever." Honestly if that's the goal you would be better off donating it to charity than bending over and taking it with the fees Scottrade etc. will stamp on you for every transaction.

Read a book and start doing some research online. Investopedia, Yahoo! Finance and Morningstar are all great starts.

PeekingDuck

I don't think $500 will allow him to learn the market. Beyond that if you make 4 trades within 5 days they'll require you to have at least $25,000 in your account at most places, excluding margin. That's what I remember anyway.

Thinkorswim is a good software. They move much quicker than some of those others like etrade.

oldsak

altmann wrote: »

This $500 is simply to play with in the market so i can either lose it or make money or whatever the fuck. I figure, either way, I'll end up with a knowledge of the markets and a better understanding of what goes on.


So, where do I start? What should I look for? I know there are sites like e-trade and ameritrade, but how do I "buy" and "sell" and shit like that? Any advice, warnings, and helpful comments are welcome.

$500 is simply not enough to start with to make money day trading. Even if you only make profitable transactions your margins are not going to be enough to cover the trading fees. Maybe if you trade penny stocks and get incredibly lucky, but trading penny stocks can't teach you about the market.

Anyway, there's much more to the market than day trading. If you really want to learn something, I'd say put that $500 towards taking a class.

If you really want to invest it in the market, why not get together with a group of friends and start an investment club/partnership. Between the lot of you, you can find the time to actually research companies and sectors you potentially want to invest in, and build a diversified portfolio as a group by pooling your money.

seasleepy

If you want to learn about the markets and you don't really care about making/losing money, why not play with imaginary money? Googling stock market game brings up lots of options (I have no idea which is most realistic).

altmann

Hmm. That's good to know. I mean, I've not done anything like this and When I see shit that's like $10-20/share i figure I can pick up SOMETHING but it makes sense that $500 is not enough what with fees etc.

I'll have to either get my shit figured out and try it at a later date when I have more cash and more knowledge. I appreciate the response, especially the one telling me to donate to charity and get buttfucked.

I'll check out the virtual stuff first so I can see how it works and whatnot. I don't work in a big company and i just moved to the area I live in so I'll have to find someone who knows what they're doing and talk to them.

Dog

This Book

This Book

This Book

altmann

Sweet I'll check those out.

Hlubocky

Well, there is a difference between buying $500 worth of a stock you perceive as a value and holding onto it and day trading, which involves moving in and out of trades relatively quickly (which would for sure eat your money quickly).

Trentus

seasleepy wrote: »

If you want to learn about the markets and you don't really care about making/losing money, why not play with imaginary money? Googling stock market game brings up lots of options (I have no idea which is most realistic).

Two of my flatmates had to do this for one of their classes this year. I was often woken up by a very loud "FFFFFUUUUUUUUCK! I just lost 10 grand!" I had no idea it was only a game and thought these dudes were loaded.

I'd get the name of the service they used, but they've both gone home for the holidays.

Raiden333

Even if you're really dead set on this, you should probably wait 3-6 months. Now doesn't seem like a good time to be investing in much of anything.

Dog

What. No. Now is a great time for a young investor just getting started because everything is cheap, even things that really shouldn't be cheap. While it's not the best benchmark for the way things are going, the DOW has jumped over 2k in the past two months.

You know the age old saying "buy low sell high," right now we are in the low part of that statement. You're going to end up getting more bang for your buck now when things are rock bottom and you're getting a dozen shares of whatever you're investing in for pennies on the dollar than X period of time in the future when it costs an arm and a leg for the same thing.

Raiden333

robothero wrote: »

What. No. Now is a great time for a young investor just getting started because everything is cheap, even things that really shouldn't be cheap. While it's not the best benchmark for the way things are going, the DOW has jumped over 2k in the past two months.

You know the age old saying "buy low sell high," right now we are in the low part of that statement.

I was under the impression that we have definitely not hit rock bottom yet. I could be wrong, though.

Dog

Trying to time the market to its exact point of bottom is a statistical impossibility. I've upped my contributions to my 401k and other investments by a very large amount since early march.

FirstComradeStalin

Three things to be aware of here:

1. The lowest fees you can find will range between $9-7. With $500, it's probably best to just make a single purchase of a blue-chip stock (stay the fuck away from penny stocks), then plan to hold it long term.

2. You're probably not going to buy something at the absolute bottom. If you keep running around looking for a bottom, you're just going to get screwed. Just maintain a long-term perspective: How much do you think this stock will be worth when you actually need it? 20 years down the road? 30 years?

3. You're only investing $500, this really isn't much money at all, but plan on adding to this account with a portion of your monthly savings.

I use TD Ameritrade, I recommend it because I trust it more than eTrade and it's very prompt with everything.

Also, how old are you? If you are in your 30s, you need to start saving for retirement. Have you maxed out your 401(k) and IRA contributions?

Battle Jesus

If you want to learn day trading then get a practice account with one of the companies. You get however much pretend money, and then you're set free to do as you want and make mistakes without having to worry about losing all your actual money which, if you only have $500, could very easily be within an hour or two of trading. Minutes if you're really active.

Basically, you need to develop a system - likely using a whole slew of indicators each of which kind of identify trends in the market and buy or sell accordingly. Day trading is not about big gains. It is about a lot of small gains, and trying to minimize losses. Active traders will make hundreds of trades a day with accounts that have hundreds of thousands of dollars in them. They will probably only make $10-$15 per trade. At the end of a really good day, after losses and fees are added up, an account with $100,000 in it could have a daily account looking something like:
Monday: + 1000
Tuesday: - 800
Wednesday: - 1500
Thursday: + 3000
Friday: - 1000
For a weekly profit of only $700.

The next week, they might be up $10,000.

The week after, they might be down $15,000. Then a week where they break even. Etc.

Basically, the overall goal of day trading is to make consistent, small profits. There is a 100% chance that you will lose money, however. No matter how good you are. If you are a novice trying to do it, then you will lose more money than an experienced trader. Get some experience before you start trading with real money - there is nothing more frustrating than losing your cash and having no idea whatsoever why that is.

Also, you'll want the minimum amount of money in your account to have it registered as a day trading account. Some places have fees as high as $15.00 per trade after x number of trades per day. If you broke even for those x trades, and make $20 per trade on 10 trades in a day, after fees you've only made $50 after fees. If you also had 5 bad trades where you lost $10 on each, you'll actually be out $75. A busy day trader could make those x + 15 trades in a few minutes. You can see why it would be good to avoid those fees.

Last but not least: Don't trade on margin. You can lose 65% of your account (or whatever the margin call level is for your company) in seconds if you trade on margin. Don't do it.

altmann

@stock-Trading your account is almost comical in it's fraudness. Either you're a strange alt or just a horrible schill.

Aumni

You need $25,000 to Day Trade.

Otherwise you're limited to 3 - 5 same day trades a week (or something around there).

Dog

stock-trading is the best/worst phishing I have seen in a long time.

firewaterword

robothero wrote: »

This Book

This Book

This Book

Vouching.

Also, A Random Walk Down Wallstreet.

(Edited to update URL to new edition)

firewaterword

Also, have you hit the max on your Roth IRA for this year?

npreecs

I know this is only halfway helpful, but I know that there are places out there that let you do *simulated* trading. It's essentially a game based on live market data. You can make trades, watch things go up and down, and you risk nothing.

A quick google search returns wallstreetsurvivor.com and some forbes article on the subject, but I've never tried any of them, so I only recommend them because they're at the top of the market listing. Maybe give a few a try and see if any of them scratch your itch. It'll let you play around with stupid or crazy ideas with no risk at all.

-N

Rhino

Read "A Random Walk Down Wall Street" and "The Intelligent Investor"

Like others said, 'Day Trading' doesn't make any sense.

Do you have an emerency fund? Have you paid off debt? Do both of those first.

If you have both of those, then I'll willing to bet you haven't maxed your your 401K, IRA and HSA for this year? If you haven't, you should use that $500 in one of them for the tax break. That is probably a 15-25% return right there.

After that, get an account at sharebuilder.com and/or vanguard.com [min $3K on most] and treasurydirect.com (bonds). Most people don't need a real time broker. Put in $50 a month into a nice broad market index or bond fund, low load/fee, non managed. The important thing is to make it a habit and do it every month.

If you want to do single stocks, I would suggest: blue chips that have good dividend rates. Get into their DRIP (direct investment program) to reduce fees. Do the min every month, reinvest all dividends. - but, this advice is that you have read those two books, have an efund/paid off debt and have maxed your tax advance accounts first.


If you want to do technical trading, a few cheap/easy ways to get into it.
bullionvault.com
forex.com

You can start with $500. But if you're trying to play with the big guys you'll get killed in seconds. You'd probably have better chances at blackjack then 'taking' someone in a realtime market these days. I would not suggest it.

Rhino

Aumni wrote: »

You need $25,000 to Day Trade.

Otherwise you're limited to 3 - 5 same day trades a week (or something around there).

Yea; that's the other thing you have to figure in. If you're trading enough to be classified a 'Day Trader' by the IRS, you are going to take a big hit on taxes. Typically capital gains are 15% - but in the day trading you get hit with huge taxes.

I don't remember the exact details; but over X trades per week result in them all counting (and taxing!) all profit as normal business/personal income. So that is a 15% to 28% (or whatever your tax bracket is) hit right there since it's taxed after your normal income. Were as if you put that in your 401K/IRA, you get the money 'tax-free' AND all profits aren't taxable.

So, in short - it makes no sense to day trade until both your 401K, IRA and HSA are maxed out for the year.

Even then, I still don't think day trading is a good option with everything else you could be doing with that money.

Jobastion

Rhino wrote: »

Aumni wrote: »

You need $25,000 to Day Trade.

Otherwise you're limited to 3 - 5 same day trades a week (or something around there).

Yea; that's the other thing you have to figure in. If you're trading enough to be classified a 'Day Trader' by the IRS, you are going to take a big hit on taxes. Typically capital gains are 15% - but in the day trading you get hit with huge taxes.

I don't remember the exact details; but over X trades per week result in them all counting (and taxing!) all profit as normal business/personal income. So that is a 15% to 28% (or whatever your tax bracket is) hit right there since it's taxed after your normal income. Were as if you put that in your 401K/IRA, you get the money 'tax-free' AND all profits aren't taxable.

So, in short - it makes no sense to day trade until both your 401K, IRA and HSA are maxed out for the year.

Even then, I still don't think day trading is a good option with everything else you could be doing with that money.

Few days late to this one, but an important clarification should be made. You get the money into a 401K tax free, but everything at the end is taxed are taxed when you take it out at retirement. On a ROTH IRA, you don't get the money into the IRA tax free, but nothing (including profits) is taxed when you take it out at the end.
So, one or the other, not both.