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Zecco.com » General Investing » New Investors » swing trading(I'm new)
Last post 09-22-2007, 6:51 PM by Apotheosis. 13 replies.
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  •  09-19-2007, 12:40 AM 12484

    swing trading(I'm new)

    Reply Quote
    I am new to trading in general.  I am looking for places with good info on day trading/swing trading.  Maximum time I'm looking to hold a stock is a week.  Any info?

  •  09-19-2007, 12:56 AM 12485 in reply to 12484

    Re: swing trading(I'm new)

    Reply Quote
    You've got a lot to learn...

    investopedia.com might help

    Good luck. :)

    "Risk isn't in the market, it's in the trader"
    tradeswing.blogspot.com

  •  09-19-2007, 4:14 PM 12508 in reply to 12484

    Re: swing trading(I'm new)

    Reply Quote
    Try swing-trade-stocks.com--lots of good information and general knowledge.

  •  09-20-2007, 8:52 AM 12536 in reply to 12484

    Re: swing trading(I'm new)

    Reply Quote
    I think at that level you should know the basics of day trading, trend trading and fundamental analysis.

    You should get a couple of books and read them. You should not play games with you hard earned money until you've done your learning.

    That being said, I would pay special attention to bid/ask sizes and RSI. Those two can help you determine entry timing.

    Additionally, long call options may be for you. It might be a great way to leverage your money. Once you get good calling the stocks, then move into options.

    However, day trading requires 25,000$ account minimum served up as a margin call.

    If you have that amount, and not the knowledge to invest it, I would argue at this point you have more cents than sense. Please forgive the term, but do fill the gap.


  •  09-20-2007, 5:10 PM 12567 in reply to 12536

    Re: swing trading(I'm new)

    Reply Quote

    What do you mean by day trading? And having a 25k account min.  I am new to this as well, however I am aware that you need a 25m AM to day trade, but the idea of 'day' trading is buying/selling/and buying again Within 24/hr period correct.  Buying a stock and selling the same day is not day trading by definition, but it is trading none the less.  Correct?

  •  09-20-2007, 5:32 PM 12570 in reply to 12567

    Re: swing trading(I'm new)

    Reply Quote
    take investing 101 before making any trades.
    Rise of A Star! One Million By 2012!

  •  09-20-2007, 6:46 PM 12576 in reply to 12567

    Re: swing trading(I'm new)

    Reply Quote
    INCORRECT.  If you buy a stock and sell it the same day, that IS a day trade.  If you do this three times in one week, you will be flagged as a day trader.  And before you get into day trading closely consider the taxes you will pay on whatever pittance you make on the trade.  You'll be hit with the same rate that you pay in income taxes, if you make any money at all.
    Never sell YOURSELF short.

  •  09-20-2007, 10:18 PM 12585 in reply to 12576

    Re: swing trading(I'm new)

    Reply Quote
    I dont understand what your trying to say.  If you make 100 bucks on a trade/day trade what do taxes have to do with it?  Your still better off after making the 100 - taxes than you were without the 70 bucks net correct?

  •  09-21-2007, 7:22 AM 12602 in reply to 12484

    Re: swing trading(I'm new)

    Reply Quote
    Be extremely careeful; the market isn't without risk. The idea that being better off from a trade while it sounds good for the heart, the brain tells you that you could experience heavy losses if you truly believe in that as a new trader. It's thus very important to know what you're doing.  Another thing that I've noticed is that trading can be awfully addictive and if you get classifed as a PDT, you need $25,000 of equity financing.  While that might allow you to trade up to $100,000, you are at very significant risks of a margin call and of losing everything with very minor moves in stock price. You can lose your shirt with only a 15-25% loss in the stock in which for you results in a 60%-100% loss in the stock. Margin calls are devestating and you can end up owing money to the broker. I don't ever recommend using margin or making more than 1 day trade per week. You should, thus have a minimum holding period of 1 day on a particular stock (with one exception per 7-8 day period). 3 trades in a 7-8 day period is the absolute maximum you can do.

    Being a cash investor who avoids being classified as a PDT (you only need to make in excess of 3 day trades to be classified as a PDT) will also allow you to be a long-term value investor (not simply a trend-trader). Very scary to be a PDT.

    To be okay with being a PDT, I'd have $22,000 to $22,500 in broad-based ETFs that you don't trade and only $2,500 to $3,000 that you trade actively and keep it within this 10-15% range. You might consider using Cramer's 5-10 stock rule on this 10-15% discretionary money and remember to stay diversified. The rest of your stock investments should be in an index fund, like VTI, SPY, DIA, EFA, VGK, VPL, VWO, and EEM.  However, shall your portfolio drop, you may have your securities sold even before you can deposit money. If you want an all stock portfolio, I'd recommend having at the very minimum, $200,000 of investment capital (as $25,000 is 12.5% of $200,000) and $50,000 of fixed income The rest should be in ETFs, mutual funds, bonds, and cash. So with $250,000, you should have between $20,000 and $30,000 in stocks, between $170,000 and $180,000 in equity ETFs (stocks and REITs are equities) and equity mutual funds, and $50,000 in fixed income securities (whether individual or in a bond fund or ETF).

    There will be more later, but for now, I'm signing off.
    Aqua

  •  09-21-2007, 8:13 AM 12603 in reply to 12585

    Re: swing trading(I'm new)

    Reply Quote

    I agree with Aqua.

    Once you get good at long trades, try options. Once you get good at options, try short term trades. Work your way down to day trading, doing a open close position over 5-10 days. It's still very profitable.

    That being said, I would agree. Although I think capital gains can take a lot of taxes out, any money is good money.

    If it pays off your car, helps you make an extra mortgage payment, or helps you invest in Prosper, it's worth it.

    But please, when you make you first big deal, think of us: Invest the money in something which will save you money. For instance, paying off your credit cards. Do not blow the money. Take a small percentage and blow it. Use the money to make your life better.

    Whichever intestest is highest should get your money.

    PS: Also I think there was a deduction last year for gambling losses. I think this applies to stocks. Check with your CPA. So even if you lose, there might be a tax break for you. If you itemize.

    slammedtgs:
    I dont understand what your trying to say.  If you make 100 bucks on a trade/day trade what do taxes have to do with it?  Your still better off after making the 100 - taxes than you were without the 70 bucks net correct?

  •  09-21-2007, 10:54 PM 12637 in reply to 12603

    Re: swing trading(I'm new)

    Reply Quote
    Options are for experienced investors, not for newbies. I think short-term trading is glamorous, but the potential losses are anything but glamorous. They can be downright ugly. I must reiterate, don't do more than one day trade in a 5 day business period. There's almost nothing worse than being classified as a PDT. Obviously, losing all of your money is worse than being a PDT. Because options are a cash-burn vehicle with 100x leverage, they should be a very minimal part of your portfolio (less than 1/95 of your portfolio). Purchasing options are extremely speculative.

    Options are very speculative. In a 70/20/10 portfolio, options should only make up 0.7% to 1.05% of that portfolio. That's right only 0.7% to 1.05% of the portfolio. That's less than 1/95 of the entire portfolio! Why such a small amount? Because options involve an extreme amount of leverage, it is essential that you keep it small; options very often lose the entire investment, thus the rest of your portfolio has to make up for this loss (and you will underperform the market if that happens). You can get a 100% loss on your investment even if the stock increases in value for a call option or decreases in value for a put option. It must increase above the strike price on a call option or decrease below the strike price on a put option in order for you to make some money back and it must exceed the strike price + premium paid for you to break even on a call option and it must fall to the strike price - premium for a put option to break even. So, when you invest in options, remember that the premium paid is likely to be lost. I recommend using the 0.7% guideline.
    Aqua

  •  09-22-2007, 12:28 PM 12644 in reply to 12637

    Re: swing trading(I'm new)

    Reply Quote
    Sigh.. I shudder when I see "I'm new" and "day trading" in the same post (unless I also see "staying away"...)

  •  09-22-2007, 3:04 PM 12648 in reply to 12484

    Re: swing trading(I'm new)

    Reply Quote
    I started out as a swing trader back in 2000.  But after sustaining $6000-$8000 trading losses plus all the books I bought--especially about technical analysis--and data fees I paid, I would tell you that it is in the long-term investment of mutual funds and ETFs where I've been making the most money.  Learn long-term portfolio management and asset allocation first before thinking about short-term trading.

    Now that they have eliminated the short sale uptick rule, the market is more volatile than ever--thanks to those hedge funds (which I suspect are behind this).  Short-term trading means that you would have to stomach huge swings in the market, and if you don't have enough time to monitor your positions, you could end up with heartwreching losses. 

    I agree with aqua.  Compared to long-term investment, short-term trading, whether it be stocks or options trading--I've tried both, is glamorous.  But the potential large losses is not.      (It's boring to hold Warren Buffett's Berkshire Hathaway shares, but had you bought $10,000 of their shares back in the 1970s, you would have been worth $50,000,000 by now.)  And it might not be worth the time put into it.  For instance, you'll have to screen the market every evening for short-term play set-ups.

  •  09-22-2007, 6:51 PM 12651 in reply to 12484

    Re: swing trading(I'm new)

    Reply Quote
    The only thing I have to add that others haven't noted yet is that a lot of times, people severely underestimate the learning curve required to be a profitable trader.  The only suggestion that I can give you is to learn everything there is to know about level 2 and technical analysis. 

    Once you have mastered the art of technical analysis, try a mock portfolio.  Keep in mind that anyone can make money in a mock portfolio because a) you aren't trading real money so emotion doesn't get involved and b) you always get perfect fills.  You won't learn how to trade until you finally put money on the line and have large positions moving against you.

    Keep in mind that 95% of traders go broke within the first 6 months and these are also people like you who think they can do it... but they fail for one reason or another (presumably due to their underestimation of the learning curve).  Try to listen to people who have succeeded though... listening to the others will just lead you down their path.

    This is just my two cents to add to the conversation -- like most advice, just take it for what it's worth.  This is by no means meant to scare you away and I think the stock market is an amazingly interesting thing... but try to apply common sense before making huge postions.  No one ever went broke by taking a profit and Zecco has $0 trades (up to 40) so I suggest you start by making small positions and working your way up.
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