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Politics are fickle. I wanted to start this blog jumping straight into the main course but due to it taking a while I now have to deal with a post on the main area of the "General" forum dealing with "occupying wall street". As a younger guy I have had the misfortune of exiting High school in 2008, shortly before the fall of Fanny and Freddy. Since that point I have been moving around the western united states (ca, or and wa) living with family and friends, unable to find consistent work. I have been getting food stamps for slightly over a year now and I qualify for free healthcare, section 8 housing, prolly welfare and a myriad of other benefits. I am the target audience of protests like "Occupy wall street" and the government healthcare plan plus other stuff. I am going to refrain from jumping too far into politics but I will say that I am going to be successful on my own and here is how.
Trading the stock market.
6 months ago I was talking with my friend about my dreams of investing and essentially retiring by the age of 30 (9 years). During this conversation he brought up the stock market. While the stock market is something that I have considered, I thought of it as unreliable and hard to get into. My understanding based on media and movies and other peoples opinions was that professional stock brokers traded with very large amounts of money on very small gains, something that I couldn't do (I'm talking about trading 100000 shares for $.25 each). After doing some research I found a program (that I will not name) that has taught me so much. In 15 months I plan to start making money off of the stock market doing focused position trading of 2 stocks and 1 index (for me that will be Apple, ?. and the OEX). I am going to mention a couple things about the stock market that most people don't know.
First thing- To trade the stock market you don't have to buy stock, you can buy options (which are the right but not the obligation to buy/sell stock). There are 2 types of options, first kind is a call, a call is where you buy the right to sell a stock at a certain price, there are 2 types of calls. The first type of call is calld in the money calls, these calls are below the asking price of the stock and can be sold immediately, one thing to note about these calls is that you will be paid the difference of the current asking price and the strike price that you set your call at (a strike price is a fixed price and they go up 2.50 for stocks below $25 and $5 for every stock up to $100, after that it goes to $10), For example, I decide to sell the call of a $30 stock at 22.50- I am immediately payed $7.50 for agreeing to sell the option. The other type of call is an out of the money call, Out of the money calls are the opposite of in the money calls and you set them at a strike price above the asking price of the stock. For example, I have a $30 stock that I can tell by my charts is going to go up, I expect it to go up above $35 so I set my call at $35 if the stock rises to above that (example- $400) then I will be bought out of the stock at a profit of $5 per share minus the cost of option (for each share).
The second type of Option is called a Put. A put is the right but not the obligation to sell a stock at a certain price. The example I will use for puts is Apple (aapl). At market open today apple was selling at 375 (closed at 377, I would have made money there as well) and because of the death of former CEO Steve jobs and the charts I would assume that that stock is going to fall. I would buy puts for aapl at 380 and pay the difference in the ask and my strike price and then as the stock fell to (so far 370) I would sell at the low point making the difference between my sell price and the current ask price (so $10 atm, 9:28 am pst) and make almost $8 a share (100 shares in a contract or $800).
When trading stocks you have the obvious technique of Buying low and selling high. This is just about as old of a selling technique as you will find (even older than the buy 1 get 1 free). This is a fundamental part of trading when dealing with calls and stocks. Here is something that most people don't know about, Go to yahoos finance page and look up any stock that you want, I wouldn't look up Berkshire hathaway nor would I bother with companies like hormel foods. But if you look up any stock and set the historical prices to look at sep 1st through jan 14th you will see a rise of upwards of 100% profits with the dow jones rising about 20% and most stocks that move (apple would be a stock that I look at) rising about 30%. If your grandparents or retired parents have a retirement account with 100k in it (they should if they are retired), you could literally just make 1 trade per year and get $30,000. Or if you trade AAPL like I plan on doing you would make 41k (last years numbers).
There are many other ways to play stocks, one of the most common ways is to buy options before earnins and/or warnings. You can get a list of earnings per season (there are a couple per year) that will consistently increase the stocks price which you can turn into an easy profit (an old adage is "up a buck and out") if you have the discipline to wait for the indicators to be in your favor. One play that I am looking forward to is called the sling shot play. The sling shot play is a technique where you buy the right to sell a stock in the last hour of a trading day to sell in the first 2 hours of the next day, This doesn't happen every day but when you see the play forming you can see a stock that is rising quickly, buy into the position, sit and wait until market close for any profits there and then put a Good tell canceled sell order for $.50 to $1 per share. That night or the next day bloomberg n such will hype the stock a lil bit and the pros will then commence eating the amateurs while you make your quick buck off of the pros before 11.
While I have only listed a couple different plays that I will be looking at in the future, I hope that I have piqued someones interest. If you have trading techniques, horror stories, boasts and anything else to add, i would be interested in reading that as well.
 
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Good luck to you in your endeavours. Know, however, that the stock market is not as simple as you make it out to be. Know also, that the money that you're investing, is, in fact, a type of gambling, and that if you don't have steady alternate income, that life can be really scary if things go awry.
I've been day trading for 3 years now, and I've had remarkable success (remarkable in the sense of having no idea what I was doing at the start, and getting lucky along the way). I've made ~15,000 off of ~25,000 invested, which is pretty nice. However, that path was full of ups and downs, and it's happened more than once where one of my stocks dropped 20% in a day, 20% the next, and 20% the day after that. If you're going to play the stock market, losing four grand cannot phase you (similar to poker), and if you can't accommodate a loss like that unphased, then you should not be playing in it.
I'm currently in such a pickle where my $30,000 invested as of 8 months ago is now worth $6,000. I'm not going to say that I'm indifferent to my current status, but I do know that if my stocks in fact don't ever recover, that $30k is only a minor blip, and I will be back trading in 2-3 years.
Trading is an excellent source of alternative income if you have the right kind of mindset and you are passionate in learning about it. However, making it a primary source of income is very risky, and when things go wrong, you're going to feel a type of horror that few other experiences in life can give you.
I wish you the best of luck. You (like all of us Day Traders) will need it.
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Don't try to make your living trading stocks... that's a pipe dream for almost everyone who tries it. The odds are stacked against you.
In my opinion, the best thing you can do is simply wait for the market to present it's opportunities. You can't force things, you can't always find a profitable situation... For example, when the recession was just getting underway, and people were panicking, people thought the world was ending and the great depression was coming again lol... Bank of America stock dropped from around $50 to a ridiculous $3 or so. I knew BAC was a solid company and would be very unlikely to go under like the banks before it. So I made a huge bet on BAC at about $4 a share, and I eventually sold around $13, more than tripling my investment in just a few weeks.
The key to investing is to find rare opportunities such as that one. Warren Buffett has the common sense investing: You buy value. You be greedy when others are fearful, and fearful when others are greedy. Don't try to make a living at it, just save and prepare for strong opportunities to supplement your regular income.
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I went into your post with an open mind, until I saw "In 15 months I plan to start making money..."
Honestly, come back when you've made money off the stock market. Actually, come back when you've been making money over a few years. It's not hard to have some luck at the beginning, but mainly the stock market is a way for large traders and money markets to take money from amateurs.
There are a lot of similarities to poker, as was pointed out above... pros and casinos want you to think that you can play better than everybody else, and can make money off of it. If you can, great. But most people can't.
Edit: and don't pay a lot of money for online books or programs that say they can teach you how to make money on the market. All the knowledge you need you can get from wikipedia, forums, the library, and regular bookstores.
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You need a lot of capital to be able to make a living trading. If you buy the stock over an option you still have a liquidable assest even if your investment loses money. If an option expires and isn't profitable you lose your entire investment.
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On October 08 2011 03:21 munchmunch wrote:
I went into your post with an open mind, until I saw "In 15 months I plan to start making money..."
Honestly, come back when you've made money off the stock market. Actually, come back when you've been making money over a few years. It's not hard to have some luck at the beginning, but mainly the stock market is a way for large traders and money markets to take money from amateurs
There are a lot of similarities to poker, as was pointed out above... pros and casinos want you to think that you can play better than everybody else, and can make money off of it. If you can, great. But most people can't.
This 100%.
No matter how intelligent and educated and skilled you are, at the end of the day you aren't going to be able to beat the massive institutions with professional teams, advanced technology, split second trading, and privileged information. You will always be the last to know and the last to trade news. That's why you invest for the long haul or look for strong opportunities instead of trying to swim daily with the sharks.
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On October 08 2011 03:26 jdseemoreglass wrote:Show nested quote +On October 08 2011 03:21 munchmunch wrote:
I went into your post with an open mind, until I saw "In 15 months I plan to start making money..."
Honestly, come back when you've made money off the stock market. Actually, come back when you've been making money over a few years. It's not hard to have some luck at the beginning, but mainly the stock market is a way for large traders and money markets to take money from amateurs
There are a lot of similarities to poker, as was pointed out above... pros and casinos want you to think that you can play better than everybody else, and can make money off of it. If you can, great. But most people can't. This 100%. No matter how intelligent and educated and skilled you are, at the end of the day you aren't going to be able to beat the massive institutions with professional teams, advanced technology, split second trading, and privileged information. You will always be the last to know and the last to trade news. That's why you invest for the long haul or look for strong opportunities instead of trying to swim daily with the sharks.
Thats extremely false, youre not against these institutions when trading, as you can do just the same as them.
A lot of people with no inside knowledge have managed to pull it off, all you need is knowledge and good business sense.
The problem is that, even if a lot of people managed to do it, a much much much larger amount of people have horribly failed.
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On October 08 2011 03:42 TurpinOS wrote:Show nested quote +On October 08 2011 03:26 jdseemoreglass wrote:On October 08 2011 03:21 munchmunch wrote:
I went into your post with an open mind, until I saw "In 15 months I plan to start making money..."
Honestly, come back when you've made money off the stock market. Actually, come back when you've been making money over a few years. It's not hard to have some luck at the beginning, but mainly the stock market is a way for large traders and money markets to take money from amateurs
There are a lot of similarities to poker, as was pointed out above... pros and casinos want you to think that you can play better than everybody else, and can make money off of it. If you can, great. But most people can't. This 100%. No matter how intelligent and educated and skilled you are, at the end of the day you aren't going to be able to beat the massive institutions with professional teams, advanced technology, split second trading, and privileged information. You will always be the last to know and the last to trade news. That's why you invest for the long haul or look for strong opportunities instead of trying to swim daily with the sharks. Thats extremely false, youre not against these institutions when trading, as you can do just the same as them. A lot of people with no inside knowledge have managed to pull it off, all you need is knowledge and good business sense. The problem is that, even if a lot of people managed to do it, a much much much larger amount of people have horribly failed.
You may not be against them, but they are against you  .
See things like stop hunting. The big players have a huge advantage on stuff like this. If you are trading over the long term you don't need to worry so much, but for a day trader the cents matter.
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If you're going to mainly focus on options I would learn everything about them, Black and Scholes formula being a key piece.
Be careful thinking options + earnings season = easy profits. Volatility is priced in under B&S and could be hard to beat consistently for example.
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On October 08 2011 03:52 munchmunch wrote:Show nested quote +On October 08 2011 03:42 TurpinOS wrote:On October 08 2011 03:26 jdseemoreglass wrote:On October 08 2011 03:21 munchmunch wrote:
I went into your post with an open mind, until I saw "In 15 months I plan to start making money..."
Honestly, come back when you've made money off the stock market. Actually, come back when you've been making money over a few years. It's not hard to have some luck at the beginning, but mainly the stock market is a way for large traders and money markets to take money from amateurs
There are a lot of similarities to poker, as was pointed out above... pros and casinos want you to think that you can play better than everybody else, and can make money off of it. If you can, great. But most people can't. This 100%. No matter how intelligent and educated and skilled you are, at the end of the day you aren't going to be able to beat the massive institutions with professional teams, advanced technology, split second trading, and privileged information. You will always be the last to know and the last to trade news. That's why you invest for the long haul or look for strong opportunities instead of trying to swim daily with the sharks. Thats extremely false, youre not against these institutions when trading, as you can do just the same as them. A lot of people with no inside knowledge have managed to pull it off, all you need is knowledge and good business sense. The problem is that, even if a lot of people managed to do it, a much much much larger amount of people have horribly failed. You may not be against them, but they are against you . See things like stop hunting. The big players have a huge advantage on stuff like this. If you are trading over the long term you don't need to worry so much, but for a day trader the cents matter.
Still dont totally agree with that. The name of the game is making money, and in the end, everyone wants to make money. Saying that a certain group is against another group is wrong, everyone wants to make money and will make it through any mean necessary. Yes, that can mean making a move thats not good for you, but if its not good for you and you know what youre doing as a day trader you will (more often then not), manage to dodge that bullet (or at least partially).
As far as big players having a huge advantage, well, of course having more money is an enormous advantage, but thats just part of the game (like playing poker). As far as indsider information goes, well, thats illegal, and yes it happens but theres not much to be said about it. In the end what im trying to say is that, even if you are at a disadvantage compared to a big player, that doesnt mean the system is against you, it just means you need to make damn sure you know what youre doing, and even when you do things dont always go your way, but not because everyone is against you, mostly because well, its how the market works.
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Be careful with options. Look at it like gambling, don't play with money you can't afford to lose. One of my old co-workers ended up putting off his marriage for years because he was in a really bad spot thanks to some short selling that didn't work out.
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On October 08 2011 03:12 jdseemoreglass wrote:
In my opinion, the best thing you can do is simply wait for the market to present it's opportunities. You can't force things, you can't always find a profitable situation... For example, when the recession was just getting underway, and people were panicking, people thought the world was ending and the great depression was coming again lol... Bank of America stock dropped from around $50 to a ridiculous $3 or so. I knew BAC was a solid company and would be very unlikely to go under like the banks before it. So I made a huge bet on BAC at about $4 a share, and I eventually sold around $13, more than tripling my investment in just a few weeks.
The key to investing is to find rare opportunities such as that one. Warren Buffett has the common sense investing: You buy value. You be greedy when others are fearful, and fearful when others are greedy. Don't try to make a living at it, just save and prepare for strong opportunities to supplement your regular income.
One of the important things to note about focused position trading is that you become extremley comfortable with the stocks that you are trading, and know how they are affected by the market. I am of the opinion that you can't trade on a day to day basis and be successful, but you have to wait for your charts to indicate a great play and go with that. You are correct that trading behind known events is a great way to go about it, an example that I used is buying puts based off of steve jobs passing away and apple stock going down.
I really like that warren buffet mentality, I have heard it before and it typically means that you are going against the public idea because the public is always wrong (because they are late). I am going to start with 2500 making 5-10 1k trades per month while going to school.
On October 08 2011 02:26 Mora wrote:
Good luck to you in your endeavours. Know, however, that the stock market is not as simple as you make it out to be. Know also, that the money that you're investing, is, in fact, a type of gambling, and that if you don't have steady alternate income, that life can be really scary if things go awry.
I've been day trading for 3 years now, and I've had remarkable success (remarkable in the sense of having no idea what I was doing at the start, and getting lucky along the way). I've made ~15,000 off of ~25,000 invested, which is pretty nice. However, that path was full of ups and downs, and it's happened more than once where one of my stocks dropped 20% in a day, 20% the next, and 20% the day after that. If you're going to play the stock market, losing four grand cannot phase you (similar to poker), and if you can't accommodate a loss like that unphased, then you should not be playing in it.
I'm currently in such a pickle where my $30,000 invested as of 8 months ago is now worth $6,000. I'm not going to say that I'm indifferent to my current status, but I do know that if my stocks in fact don't ever recover, that $30k is only a minor blip, and I will be back trading in 2-3 years.
Trading is an excellent source of alternative income if you have the right kind of mindset and you are passionate in learning about it. However, making it a primary source of income is very risky, and when things go wrong, you're going to feel a type of horror that few other experiences in life can give you.
I wish you the best of luck. You (like all of us Day Traders) will need it.
it is not my idea to rag on you in any way but if I was in a position and it dropped by 20% I would have been out as soon as the charts indicated that the trade isn't going in my favor. Quite possibly the most important thing that I left out is the amount of indicators that I will be using and how many need to be in my favor. As I will be considering this a job I will be using the 34 min, 55 min and daily charts for my decisions, my 8 mins for my entry points, I will be looking at the bollinger bands, mac d w/ histogram, stock rsi1, stock rsi2, and a couple others while following a trend line in the position that favors me and trading in the same direction as the stock market at the time.
On October 08 2011 03:21 munchmunch wrote:
Honestly, come back when you've made money off the stock market. Actually, come back when you've been making money over a few years. It's not hard to have some luck at the beginning, but mainly the stock market is a way for large traders and money markets to take money from amateurs.
There are a lot of similarities to poker, as was pointed out above... pros and casinos want you to think that you can play better than everybody else, and can make money off of it. If you can, great. But most people can't.
Edit: and don't pay a lot of money for online books or programs that say they can teach you how to make money on the market. All the knowledge you need you can get from wikipedia, forums, the library, and regular bookstores.
I made this posting kind of to see if anyone else was doing the same thign that I am doing, it seems like a couple ppl are and that is awesome. The reason why I am waiting so long before i start my investing is because I want to have the most knowledge I can reasonably attain before jumping in, that includes being knowledgeable about each of the trading seasons and other things. I hope to eliminate luck as much as possible and trade on solid information and the chart indicators saying that I should do so.
You make a great point about not paying for any online books or programs and I am not going to. I lucked into a program that someone else payed for and I just got a copy of the cds from that program. While I think that this program would be worth buying I don't need to and can't because I already have it and I am poor lol.
On October 08 2011 03:26 jdseemoreglass wrote:
No matter how intelligent and educated and skilled you are, at the end of the day you aren't going to be able to beat the massive institutions with professional teams, advanced technology, split second trading, and privileged information. You will always be the last to know and the last to trade news. That's why you invest for the long haul or look for strong opportunities instead of trying to swim daily with the sharks.
This just seems to be the end result of a lack of knowledge. While the porfessional stock brokers do have access to privileged information and having teams of ppl doing research, they don't necessarily beat a dedicated trader like you would think. The "last to know" comes from not watching charts when the stock market is open, if you can't look at the charts every 55 minutes at least then I would tell you to not look at this as your main source of income. It's true that investing for the long haul is a more traditional way that most ppl play teh stock market but it isn't the right way. You can literally pull up the historical prices for ANY STOCK THAT MOVES and you will see that the stock rises in price by more than 20% from september to january. If you don't know anything about the stock market but have been following a company extremely closely and you know that they have had fair earnings or whatnot, you can make 20% of your income in 4 months. I currently need about 2k per month to live, 1200 for rent and all my bills and 500 for food (I'm fat) and 300 is about what I want to have to spend per month. If I wanted to just invest in 1 play a month I would look to make 5% off of 40k every month to support myself. 5% is ext remely small profits, You could make 5% in a matter of hours by having the right indicators and not even waiting for your trend line to break. If I was trading last year I would have bought AAPL stock at about 260 and sold it in january 370 making 40% over 4 months just by knowing that stocks are lowest in september and highest in late december and early january. Now, if I really wanted to get into it I would actually sell puts against my AAPL stock in december when it traditionally drops slightly, buy the calls back for a profit then sell january calls against that stock looking for it to go up at the beginning of the year and then sell the stock before january 15th for my initial investment plus all of the gains for that 4 months. After that I would probably then (depends on the charts for all of this ofc) buy puts for a stock (maybe AAPL) to go down after the 15th of january, which it has done year over year. The whole point is to become a shark or a shark eating sea bass, whichever you prefer.
On October 08 2011 03:42 TurpinOS wrote:
You need a lot of capital to be able to make a living trading. If you buy the stock over an option you still have a liquidable assest even if your investment loses money. If an option expires and isn't profitable you lose your entire investment.
I plan to start with making 1k trades with 2500 in my money market account. this money won't be used for anything except trading for the first couple of months. I plan on doing 5-10 trades per month looking to make approx 40% these trades. I am going to assume that 25% of my trades will fail because I will be new at real money trading (but not new to trading in general, I am going to trade on paper for a full year starting in january) and thus only 50% of my trades will actually net me a profit. After a couple months my money market account should be somewhere around 12k where I will go to 5k trades.
Options expire the third friday of every month and you can buy options months out. If you are a serious trader, even bothering mentioning options expiring is like saying a good sc player will fail to make scvs for 5 minutes in the early game w/out pressure, it just doesn't happen. I would probably advocate for someone that watches at least teh 55 minute charts and still has options expiring to retire immediately and get help.
I was thinking of a random company to do my little test on when I saw my Autozone bag in the trash and looked them up. In september of 2010 Autozone (AZO) was selling for 210 (this is just being lazy and going by the monthly reports on yahoo finance) and the high in january was 274. Just doing 1 trade, buying at the low and selling at the high you would have a return of 30%. check it out, knowing the history of the stock market will tell you a lot.
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Day trading is for fucking madmen, good luck! I'll take my secure energy shares any day, my dad used to yell at me whenever I suggested that he should try day trading.
That said, the stock market is the greatest thing in the world, and it can make you a billionaire overnight. Of course, it can bring you to a beggar the next day if you're not careful. Don't invest with money you can't lose or you'll end up in front of a train in Manhattan
Also ~ there isn't a pattern, people have studied it since the day it was created, don't be foolish enough to try to read trends. Go to finance school, that'll really teach you that everyone investing is gambling their life. (unless you're Buffet..)
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Thank you!!!! I'll read all of this
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Day trade is gambling. Looking at historical prices and say "I could had made x money if I bought here" is same as looking at the newspaper and said I could had won the lottery if I picked these numbers.
Mid-term trades are doable and can be more profitable than long term/index, but tremedously taxing mentally to make any progress. Always keep in mind that on the average, brokers do not beat index after fees, and these are the guys that make a living off the stuff you're trying.
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On October 08 2011 14:36 Primadog wrote:
Day trade is gambling. Looking at historical prices and say "I could had made x money if I bought here" is same as looking at the newspaper and said I could had won the lottery if I picked these numbers.
Not true. You can literally look at every year and see the stock market is at its lowest in september and highest in january. You also can look at warnings and see that the stock opens lower the day after the warning and then increases slightly and then drops. these are just examples of what you can count on most times that you are trading. Nothing is absolute, but because of the average persons lack of understanding the stock market it seems more random than you would imagine.
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![[image loading]](http://images.memegenerator.net/instances/400x/10481706.jpg)
Is what immediately came to my mind when I read this blog.
Edit: Also, reading the whole OP again just reminds me of two things, first of players who say, damn, I see starcraft 2 pros that are winning tournaemnts, i'm going to go play starcraft 2 and I'm going to go win a tournament right away.
That obviously is obscene, but what this likens to EVEN MORE...is people who think they can just read a poker book or two and can hop into poker and make 6 figures a year so easily. Investing in the stock market is different once you actually start doing it. I'll be interested in seeing your progress, but just from this thread I know one thing, which is that I wouldn't invest in you.
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EPT
