Seadog said:
presidentcarter said:
Invest invest invest. Go for swing trading with an idea of 10-25% return per year. OR take much larger risks and go for option trading or day trading...where if you succeed you can double that in less than a year easily.
Care to elaborate? I'm not saying its impossible, but if it were as easy as you're making it sound everyone would be doing it.
It isn't super helpful to post something like this where you say "use this style of investing and shoot for 10-25%" (which is slightly to well beyond the realm of what any reasonable person could expect investing), offer no details, and then say "or you can do this other style of investing and make double that!" again without details.
Most people I know who tried day trading got eaten alive by transaction fees, and ignoring that, do about the same as buy and hold types.
The s&p is up around 15% ytd. The saying is "you can't time the market"...but I'd reword that as "you can't time the market perfectly". Generating above-average returns on the market requires timing.
You can trade single stocks (that exhibit ample volatility and cycles to allow you to make a good return if you can at least somewhat time it right) or you can trade indices or sectors through ETFs. Buying out of favor sectors and holding for 3-9 months can generate 5-20% returns. Recognize that everything goes through cycles.
On day trading...it can eat you alive for sure. The first year I did it, I lost a fair amount. Mostly due to not giving it proper attention and poor money management. After some lessons learned, I've done quite well. Start small, possibly even using a paper trade mock account on marketwatch or other. I mainly skim and fade gap ups using the SPY etf. It's a tricky time to do that right now as the market is trading largely on political headlines so you have pay attention to all of that and make a gamble from time to time.
For example, I had a large PUT position last week on FOMC day. Bernanke announced mostly as-expected course for the Fed, and the market went rocketing up. I was getting killed, debating on if I should cut and run, but I couldn't figure out why the market reacted so well to this as-expected news so I held on. Later that day, when Bernanke has his press conference, he provided less-scripted commentary and this combined with the market realizing that nothing groundbreaking was actually being announce, caused the market to trade back down pretty severely, and it actually went negative on the day which enabled me to sell out with a nice profit.
Trading requires learning lessons from losing money, adequate capital, systems, understanding of the ebb and flow of the market you're trading, technical support/resistance areas, news announcements, expectation vs actual, etc etc...but also requires you to detach yourself from what money really is and have the balls to stomach the pain when you are forced to cut losses and sell at a loss, let winners run despite wanting to realize you gains, and understanding you can experience a large loss in the time it takes you to refresh the page if something hits the wire.
The biggest game changer for me was treating it like a game with a score and detaching myself from the meaning of money. Ask any day trader and they will tell you that it is most all PSYCHOLOGICAL, your mind battling itself with fear and greed. This is 100% true.
And yes, commissions can be killer, especially if you're stuck using a brokerage that's not suited to high volume trades.
