T Nation

Stock Question


#1

I was reading a review for a book abot a guy who trades and at first sight of trouble sells..Shark or somthing. Not quite detailed but I got to thinking if someone buys in large volumes could one not hypothetically make money like this without losing to much from transaction fees?

For example today Google stock opened at 548 and closed at 552, sure this is high priced stock but if you bought thousands and sold when it got to 549-550 would you not make some money?

There is always a chance the stock will sink but picking good stocks that fluctuate within reasonable prices would solve this problem would it not?

Anyways I am new to this and dont plan on trading anytime soon but am interested in responses.


#2

Well…there is some companies out there that offers really low transaction fees. You have to find them. I used to trade at 0,13$/ transaction… unlimited shares by trade !

So with the ECN’S fees ( some will pay you for adding liquidities ) we were able to buy and sell at the same price and making money. If you are new to trading, make sure you know what you are doing…daytrading or scalptrading could be really hard. Look for proprietary trading. Some people could offer you some really nice deal.


#3

There is a TRIED and tested way to make money on the american stock market. And since I can;t land myself in any more trouble, here it is: know the Market makers, and hop on board. Successful stock manipulation is the KEY to making a fortune here.

Don;t kid yourself thinking the measly 25% return you get every year will vault you to millionaire status before youre 40. Financial bulking (yes, I use that term) is something that works. Be prepared to experience massive gains, and be prepared to take slight risks BUT be prepared to “bend” the law. You will need a solid base to launch off of initially.

Since I am currently on a “forced vacation”, I am writing a thesis on this subject, and it will be ready by the end of the year.
If you want to stay subservient to the SEC, be content staying poor. If you want more information about fruitful activities that will consistently elevate your bet worth, PM me, but at your own risk.


#4

[quote]UkpairehMombooto wrote:
There is a TRIED and tested way to make money on the american stock market. And since I can;t land myself in any more trouble, here it is: know the Market makers, and hop on board. Successful stock manipulation is the KEY to making a fortune here.

Don;t kid yourself thinking the measly 25% return you get every year will vault you to millionaire status before youre 40. Financial bulking (yes, I use that term) is something that works. Be prepared to experience massive gains, and be prepared to take slight risks BUT be prepared to “bend” the law. You will need a solid base to launch off of initially.

Since I am currently on a “forced vacation”, I am writing a thesis on this subject, and it will be ready by the end of the year.
If you want to stay subservient to the SEC, be content staying poor. If you want more information about fruitful activities that will consistently elevate your bet worth, PM me, but at your own risk.

NOW for a complete beginner to stock trading, may i ask the OP a few questions? YOu know your current stats? age, income, liquid assets, current holdings etc? screw everything.

There are three large variables here:risk, reward and (what people don;t realize) effort. The key is to use principles that translate this into a reward vs effort equation rather than the risk vs reward scenario that has left MANY investors NO richer than they were years back.

You will find this in my next book (on first principles of trading) which I will send out free to anyone who wants it. I;ll say this much. If you are not currently worth in excess of a million dollars and are under 40, stop wasting your time with funds and long term investments.

From a medium long term perspective the precious metal market is headed skywards in the next couple if years. I have a hunch this country’s currency will be worthless in the next few years (in a manner of speaking) so ANYONE who doesn;t want to be left out needs to be concerned with holding assets in the PMS (silver and then gold).

Again, feel free to PM me, but at your own risk. [/quote]

I WANT TO GO TO JAIL!! Can you PM your tips?


#5

Hilarious. At least give me credit for the disclosure.

But just in case you’re serious…DON’T ASSUME that I ever got in legal trouble for my “financial activities”.

[quote]dk44 wrote:
UkpairehMombooto wrote:
There is a TRIED and tested way to make money on the american stock market. And since I can;t land myself in any more trouble, here it is: know the Market makers, and hop on board. Successful stock manipulation is the KEY to making a fortune here.

Don;t kid yourself thinking the measly 25% return you get every year will vault you to millionaire status before youre 40. Financial bulking (yes, I use that term) is something that works. Be prepared to experience massive gains, and be prepared to take slight risks BUT be prepared to “bend” the law. You will need a solid base to launch off of initially.

Since I am currently on a “forced vacation”, I am writing a thesis on this subject, and it will be ready by the end of the year.

If you want to stay subservient to the SEC, be content staying poor. If you want more information about fruitful activities that will consistently elevate your bet worth, PM me, but at your own risk.

NOW for a complete beginner to stock trading, may i ask the OP a few questions? YOu know your current stats? age, income, liquid assets, current holdings etc? screw everything.
There are three large variables here:risk, reward and (what people don;t realize) effort.

The key is to use principles that translate this into a reward vs effort equation rather than the risk vs reward scenario that has left MANY investors NO richer than they were years back.

You will find this in my next book (on first principles of trading) which I will send out free to anyone who wants it. I;ll say this much. If you are not currently worth in excess of a million dollars and are under 40, stop wasting your time with funds and long term investments.

From a medium long term perspective the precious metal market is headed skywards in the next couple if years. I have a hunch this country’s currency will be worthless in the next few years (in a manner of speaking) so ANYONE who doesn;t want to be left out needs to be concerned with holding assets in the PMS (silver and then gold).

Again, feel free to PM me, but at your own risk.

I WANT TO GO TO JAIL!! Can you PM your tips?[/quote]


#6

What about what I said, any thoughts?


#7

Sounds like Day Trading to me. Most Day Traders lose money and lose big very few have even a small degree of success over the long haul.


#8

[quote]UkpairehMombooto wrote:
But just in case you’re serious…DON’T ASSUME that I ever got in legal trouble for my “financial activities”.
[/quote]

Come on, I was born and raised in South Africa. We ALL did.


#9

[quote]GhorigTheBeefy wrote:
Sounds like Day Trading to me. Most Day Traders lose money and lose big very few have even a small degree of success over the long haul.[/quote]

There are many successful day traders, aren’t most traders at firms day traders? Making many trades in a day.

Sure it is risky but it seems that it can work today Google stock is already up to 571 at it’s higherst it was 574. Now the way I see is that while it is risky, stock fluctuates so if the price goes lower than what you paid for it, there is always the chance it will go back up and higher.

Take nike for example in the past 2 months it has not gone lower than 64 dollars it is now at 68. One thing I will say is to make big money with this method one will have to buy alot of stock, or buy on margin and that can be really risky.


#10

Ok I guess I need to explain day trading so you guys realize it is shit. Day trading means you buy the stock and never hold on to it for more than 48 hours (excluding weekends). This means you will generally be buying and selling stock each day.

So you have to pay a fee to buy it and you have to pay a fee to sell it. With a day trading account you generally have to have 20+ grand in the account at all times.

So if the stock goes up 10% in one day and you sell for a 10% gain you aren’t getting a 10% Rate of Return. The fees eat day traders alive.

As far as most traders at firms being day traders that is 100% false. Not sure where you heard it but it isn’t true.

At most firms the trader is alloted a certain amount of money…we’ll say 100k. Of that 100k they are only allowed to have a certain % lets say 10-20% in one stock. Also, unless it is industry specific, they generally can’t have a majority in just one type of industry.

Ok so lets see how this works in practice with our example.

Our trader buys 20k worth of Walmart which makes up 20% of the portfolio. The trader then buys 20k worth of another traditionally high performing stock.

The trader now has 60k left to invest but has already invested in their top performers. So now they piddle around and spread that 60k out over a variety of companies for diversity.

This diversity is shit. Diversity means equates to you usually not losing a ton but you’ll never make a ton unless the whole market is going crazy. So this diversity basically breaks even or even loses money for the trader.

So at the end of the day/quarter/year the trader made a good rate of return on the top performers…lets say 20%. Thats pretty fucking good return. But, since he had to spread the rest of the money around the outcome isn’t quite so good. The report is in and the other stocks only made 3% rate of return. Thats not very good unless you are a bank.

Now when the trader sits down to calculate his real return. 40k at 20% = 8000 profit and 48000 in all. The 60k at 3% = 1800 or 61800 in all. So the total is 48k + 61.8k or 109800. So the total ROI was 9800 or 9.8%. That isn’t a bad rate of return but it is a far cry from the 20% return the trader could of potentially made.

The sad thing is that the few good stocks traders pick can make 30-40% then the rest of the portfolio could actually be negative and bring the whole thing down to really low rates of return.


#11

This is why i trade forex.


#12

Well, that is why I said one would have to be trading really high volumes. I guess what I started out asking is what if you buy costco stock, in a week it goes down 2 dollars a week later it goes up 5, you then sell. Sure it could have gone up higher but buy selling you already made a profit.

I was not really implying (well maybe I was) that you trade many times a day but, that you sell as soon as soon as the stock goes up enough(for you), whether it be one day or a week, the stock would have fluctuated a couple dollars in that time.

For ex. yesturday google stock opened at 548 to day it closed at 571 with a high of 575. You only held the stock for a day but you could have made alot of money if you bought enough.


#13

[quote]xXSeraphimXx wrote:
Well, that is why I said one would have to be trading really high volumes. I guess what I started out asking is what if you buy costco stock, in a week it goes down 2 dollars a week later it goes up 5, you then sell. Sure it could have gone up higher but buy selling you already made a profit.

I was not really implying (well maybe I was) that you trade many times a day but, that you sell as soon as soon as the stock goes up enough(for you), whether it be one day or a week, the stock would have fluctuated a couple dollars in that time.

For ex. yesturday google stock opened at 548 to day it closed at 571 with a high of 575. You only held the stock for a day but you could have made alot of money if you bought enough.[/quote]

I get what you are saying, but you could also lose your ass if you bought enough.

Look at people who bought property in the US while the market was hot. Great idea, till the shit hits the fan.

(Not putting your idea down, just saying there is a risk, as there normally is with most investments)


#14

Day trading isn’t nonsense. It is rewarding, both emotionally as well as (when done correctly) financially. You have to be consistent at it, and be content with a smaller profit (after brokerage) when you exit a position. BUTTTTTT you have to take up a new position as soon as you exit the previous position.

Successful daytraders make close to 450-500 daytrades in a fiscal year (and the key is again, to know when to exit the position)
And yes, OP, please do ignore some of the advice of my old mentor, “Mr. NV” (who has posted on this thread) or I’ll see you in the same position when I visit him this weekend (at his “guesthouse” lol)

[quote]GhorigTheBeefy wrote:
a load of crock[/quote]


#15

[quote]xXSeraphimXx wrote:
Well, that is why I said one would have to be trading really high volumes. I guess what I started out asking is what if you buy costco stock, in a week it goes down 2 dollars a week later it goes up 5, you then sell. Sure it could have gone up higher but buy selling you already made a profit.

I was not really implying (well maybe I was) that you trade many times a day but, that you sell as soon as soon as the stock goes up enough(for you), whether it be one day or a week, the stock would have fluctuated a couple dollars in that time.

For ex. yesturday google stock opened at 548 to day it closed at 571 with a high of 575. You only held the stock for a day but you could have made alot of money if you bought enough.[/quote]

I love how you play with numbers and it all goes in your favor. It seems so simple doesn’t it. Buy low, sell high. Use the law of large numbers. I too have a yahoo widget where I track the stocks I like and when they go up I dream about the big gains I ‘could have made.’ Hindsight is always 20/20.

But wait till you start trading (if you ever do), when real money is on the line. All of the sudden the companies you thought were bulletproof are suddenly dropping fast. Then you will have some real decisions to make.

I don’t mean to scare you, but one thing I have learned from my research and college professors is that there are very few people that successfully beat the market.

There are some lucky people like Jim Cramer, some geniuses like Edward Thorp who beat the market. But some of the most brilliant professors ive had in Finance, Options and Futures classes, when asked if they trade all respond ‘no.’ “They don’t need that headache” is the common response.

If your trading with your own money, any expert will tell you to trade only with money that you can afford to lose. There is a reason they say that.


#16

From the SEC website:

“Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time.”

Trading over a period of several days is NOT day trading. What you describe is not day trading either. If you are a “pattern day trader”, there are certain rules you need to abide by, including a $25,000 minimum account.

Day traders are a special kind of idiot IMO. Don’t confuse day traders with “market makers”, which is an issue for another thread completely.

Yes, you can make money by buying a stock and selling it in a few days for a couple buck profit per share, provided your profit is higher than your commissions.

It’s that simple. If you buy 100 shares of AAPL at 172 ($17,200) and sell it at 175 (a 1.7% increase), you’ve made $300 profit - $12 buy commission - $12 sell commission = $276 total. Are you OK with that? That’s a 1.6% return.

Can you do that with Google at $571? The same investment of $17,200 only buys 30 shares of Google. If Google moves the same 1.7% as AAPL you can sell it at 580 for a profit of $270 - commissions for a net of about $244 or 1.4% return.

There’s an old market saying; Bulls make money, bears make money, but sheep get sheared and rabbits get eaten. If you’re an amateur you’re either a sheep or a rabbit, so you should enter at your own risk.

Anybody who tells you it’s necessary to know an insider or do something shady is out to shear you. I mean it. Period.

So how do traders make money? Most of the short term traders are good at market analysis and technical analysis (TA) which is study of the price and volume action of the stocks and markets. You can’t predict the future, but TA shows that certain price and volume behavior patterns tend to repeat. (Sort of like human behavior.)

They know that the market is in a bear trend right now (going down) and the bullish (upwards) movements tend to be corrections. Buying and expecting a stock to go up is very risky right now.

They also understand things like the fact that AAPL has pierced it’s lower Bollinger Band, and crossed below it’s 50 day moving average. It also formed a hammer candlestick today and the stochastic is looking oversold. You probably can’t interpret what I just wrote, but the people you’re up against in the market understand all that.

They say it takes a minimum of 4 years to really learn what you’re doing. (But I have no idea who “they” are! LOL!)

In general, the Motley Fool web site is an excellent learning resource and starting point. If you want to learn about technical stuff, I suggest looking up Technical Analysis by John Murphy.

You can simplify it even further by looking up some of the trading methods by Oliver Velez which strips the trading process down to the bare bones for people want it really easy and reliable. For what’s going on in the economy I recommend the Minyanville website.

Or you can just buy and hold and hope for the best.

EDIT: changed can to can’t - whoops!


#17

[quote]UkpairehMombooto wrote:
Don;t kid yourself thinking the measly 25% return you get every year will vault you to millionaire status before youre 40. [/quote]

If you start at 19 with $10,000 and get 25% return per year with no further capital you’ll be a millionaire at 40, (before taxes.)

I’m just saying.


#18

The reason I don’t like day trading and other very short term methods is due to the fact that is mainly speculation.

Sure you can study certain stable stocks to try and figure out their daily cycles. However, you have to be prepared for the big swings both ways. Most of us can’t afford to lose thousands of dollars a day.

The bottom line would be even the pros can lose their asses. So if you want to do it you better become an expert. I’d rather just really research a few good companies for medium terms of a few years. Its hard to know what a company will do a decade down the road but a few years is fairly reasonable. Plus it helps you keep the faith when you make decent bank in 4 years instead of 10+.


#19

[quote]yorik wrote:
From the SEC website:

“Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time.”

Trading over a period of several days is NOT day trading. What you describe is not day trading either. If you are a “pattern day trader”, there are certain rules you need to abide by, including a $25,000 minimum account.

Day traders are a special kind of idiot IMO. Don’t confuse day traders with “market makers”, which is an issue for another thread completely.

Yes, you can make money by buying a stock and selling it in a few days for a couple buck profit per share, provided your profit is higher than your commissions.

It’s that simple. If you buy 100 shares of AAPL at 172 ($17,200) and sell it at 175 (a 1.7% increase), you’ve made $300 profit - $12 buy commission - $12 sell commission = $276 total. Are you OK with that? That’s a 1.6% return.

Can you do that with Google at $571? The same investment of $17,200 only buys 30 shares of Google. If Google moves the same 1.7% as AAPL you can sell it at 580 for a profit of $270 - commissions for a net of about $244 or 1.4% return.

There’s an old market saying; Bulls make money, bears make money, but sheep get sheared and rabbits get eaten. If you’re an amateur you’re either a sheep or a rabbit, so you should enter at your own risk.

Anybody who tells you it’s necessary to know an insider or do something shady is out to shear you. I mean it. Period.

So how do traders make money? Most of the short term traders are good at market analysis and technical analysis (TA) which is study of the price and volume action of the stocks and markets. You can’t predict the future, but TA shows that certain price and volume behavior patterns tend to repeat. (Sort of like human behavior.)

They know that the market is in a bear trend right now (going down) and the bullish (upwards) movements tend to be corrections. Buying and expecting a stock to go up is very risky right now.

They also understand things like the fact that AAPL has pierced it’s lower Bollinger Band, and crossed below it’s 50 day moving average. It also formed a hammer candlestick today and the stochastic is looking oversold. You probably can’t interpret what I just wrote, but the people you’re up against in the market understand all that.

They say it takes a minimum of 4 years to really learn what you’re doing. (But I have no idea who “they” are! LOL!)

In general, the Motley Fool web site is an excellent learning resource and starting point. If you want to learn about technical stuff, I suggest looking up Technical Analysis by John Murphy.

You can simplify it even further by looking up some of the trading methods by Oliver Velez which strips the trading process down to the bare bones for people want it really easy and reliable. For what’s going on in the economy I recommend the Minyanville website.

Or you can just buy and hold and hope for the best.

EDIT: changed can to can’t - whoops![/quote]

Thanks for the the response, I am curious as to where you got the $25,000 minimum account. Do they have to be special for day traders or traders who hold stock for days? I ask because ameritrade’s stock account minimum is $2000 and whether it be 100 or 10,000 stocks you only pay $9.99 per equity trade.


#20

[quote]yorik wrote:
UkpairehMombooto wrote:
Don;t kid yourself thinking the measly 25% return you get every year will vault you to millionaire status before youre 40.

If you start at 19 with $10,000 and get 25% return per year with no further capital you’ll be a millionaire at 40, (before taxes.)

I’m just saying.[/quote]

Thats a pretty high return isn’t it?