Hobby: Day Trading?

[Sytes]

So I had my first 'hobby' adventure today. I'll toss the specifics to present for review.

I went with Warren Resources Inc WRES:NASDAQ
Prior day closed @ $3.23. I purchased 630 shares @ $3.16 around 10am (via limit buy). Sold it @ $3.20 around 315pm for a $.04 profit.

Once the dust settled, I made a whoppin $25.20 though after the 'Scottrade' transaction fees, I championed a grand total $11.20!

Tell ya, I know I am at the top of the trading game producing a 0.56% profit! Haha! ~ humor intended. Seems limit orders for minimizing emotion chasing of stock loss will be my key ally. I expect loss though if kept minimal I believe my gains will exceed the loss.
Main focus points: Minimize losses, run gains. Research.

A ton to learn - looking forward to it.

 

[pointingdogsrule]

Let's see: $11.20 X 260 trading days per year = $2912.00 profit per year (NOTE: I'm not sure of taxes on this). That could pay for a hunt trip per year. NEVER laugh at a profit. Congrats.

good luck to all
the dog

 

[Sytes]

Thanks PDR. Agree, it is a profit - I suppose I am trying to keep myself grounded to the humble roots... haha! Always fun to make money vs lose money


So I ran into this -

You are using unsettled funds for this purchase. If you sell this purchase prior to the settlement date of the funding sale, without additional funds being deposited, it will be considered a free ride under Federal Reserve Regulation T. Please review information on Settlement Regulations.

Why the heck do they have 3 days* to hold my money yet I am required to have my money, 'Jonny on the spot' ready? :W:

* Is that right? 3 days? I saw this on some outside web discussion. Scottrade does not have a time frame, least what I have (or have not) found.

What a bummer, I only have 3k. I used 2k on that last purchase... Now I am on hold for 3 days before I may purchase more than 1k in stocks? If so, lesson learned.
It sh!t cans my intent to day trade if I am on hold for 3 days after each sell. I could work it to max 1k stock purchase each day though that really restrains the profit potential with the $14 charges for the buy and sell transactions...

 

[pointingdogsrule]

I have Ameritrade and I am not sure how it works with them. Interesting.

good luck to all
the dog

 

[WV Hunter]

Don't regulations require you to have $25k in the account at all times if you are flagged as a pattern day trader? If you buy and sell 4 or more times in 5 business days you're going to get flagged.

It takes time to settle funds and you have to have margin or funds availalbe to be able to purchase.

http://www.finra.org/investors/smartinvesting/advancedinvesting/daytrading/p005906

 

[MtnWest]

Congrats on your first adventure! Sounds like you are taking it seriously by having focus points and a plan. That is the way to do it.

I mentioned the settlement and how to get around them earlier. It probably wouldn't make sense until now that you found out your funds weren't available.

You need a margin account (modifying your existing Scottrade acct agreement) but still can't trade more than 3 round trips in a 5 day period unless there is $25k in that acct. The SEC wants to make sure people don't hurt themselves all at once.

With margin you can buy one day and sell the next over and over without consequence of getting flagged and without the T+3 settlement. However you will have the additional risk carrying overnight.

Seems limit orders for minimizing emotion chasing of stock loss will be my key ally

Not only emotion but limit orders will reduce "slippage" and is important on low priced securities. Even more important on low volume low priced securities. Not saying WRES is, I have no idea of the volume it trades.

If you place a market order on a $3 security and get filled $.02 from what you think you are buying and selling for that's over 1% loss just from buying and selling slippage.

Extreme case would be a $3 security that trades 20k/day and you try to sell 5k shares at the market. You would be attempting to dump 25% of the days volume instantly. That $3 price would in most cases drop several % simply to fill that order.

Look at how many shares trade daily (take price into acct) and are on the bid and ask and you will get an idea of the securities liquidity.

 

[Flatrock]

Here's my tip: Buy Berkshire Hathaway and look at your account once every year or so.

 

[Sytes]

A ton of info has been absorbed over a short course of time. Some sticks, some are quick reminders when confronted, the rest learned with a bit of a burn. Thankfully the 'hobby' entry level keeps the burns minimal. I re-read a few of the posts here and a bit more sticks having experienced a taste. Navigating the screens and evaluating stocks as a greenhorn matches opening a text book for the first time.

I think the 3 intraday actions per 5 is reasonable for the hobby level. There are enough stocks out there that hold a pattern of a low finish and start the next day with a quick gain or later day gain that would allow me to buy one day and sell the next if I really want to keep rolling. Maybe not as much gained as waiting for that patterned low of low points to buy though good enough, IMO.

I just do not like my $ tied up for 3 darn days before I may use my $ as I desire though this is part of the adventure - no use crying over spilt milk...

Here is a good one for the chuckles... I now understand the use of the word, "Bear/Bearish" in reference to market activity! heh! One of those, "Ooooh" moments.

Pretty enjoyable actually! I really value the challenge this provides w/o actual risk ($ w/o attachment to necessities) I disliked college... sitting, reading, etc - Much more a "hands on". type person. This is awesome with reward potential. Once I get stocks and methods to buy/sell etc, I'll work into ETF's, understanding margins and how to work dividends(?) All in time.

Here's my tip: Buy Berkshire Hathaway and look at your account once every year or so.

Now that would top my list for exciting hobbies...

 

[passinthru]

Here's my tip: Buy Berkshire Hathaway and look at your account once every year or so.

:hump:

 

[RobG]

Let's see: $11.20 X 260 trading days per year = $2912.00 profit per year (NOTE: I'm not sure of taxes on this). That could pay for a hunt trip per year. NEVER laugh at a profit. Congrats.

good luck to all
the dog

Well, assuming the stock goes up 260 days per year... One down day and all profit is gone... It takes a 100% gain to recover a 50% loss... As you may have figured out, I'm dubious on the practice of day trading.

I was following a stock (ANAD) since I did some work for them a while back. It kept on dipping below $2.00 and then jumping back up to $3. I thought about buying the next time it got to $2 even though I don't do that sort of stuff. Good thing I kept my buy/hold index strategy as it dropped to $1 and stayed below $2 for 7 months! It got up to $2.50 in Feb, but is below $2 now.

When would you have sold? When it was at $1, fearing the company would go bankrupt and you'd lose everything? Most likely. Now you'd have to double your money just to break even. If you managed to hold on, you'd probably sold shortly after it returned to $2 just to break even. Only in hindsight would have selling at the peak of $2.50 been a wise move: why would you choose that limit when it normally bounces up to $3? It is easy to look back at these charts and find "resistance points" etc but when you are trying to determine it in real time it is very hard. In the mean time, the S&P returned about 23% over the same period that this particular stock is actually a tad below breaking even.

So good luck - perhaps you'll make a small fortune, but hopefully you won't make it out of a larger fortune!

 

[Sytes]

A few have asked to post up my activity, gains and losses so here ya go!

Round 2 Great success!

I went with Arch Coal Inc ACI : NYSE
Prior day closed @ $4.96. I purchased 400 shares @ $4.93 around 1030am. Sold it @ $5.14 around 315pm for a $0.21 profit.

I pulled $84.00! After the 'Scottrade' transaction fees, $70.00 smooth as silk!

For a few thousand sitting in a savings account probably making pennies in interest a year and minimal risk - I'll be a trillionaire in no time! Okay, okay - maybe I'll treat myself to a tasty burger care of Arch Coal and hoard the rest for that nice range finder and a fresh set of arrows. Or replenish my bass/pike gear... Or, or... or...

All in fun! A hobby that pays to play!

 

[pointingdogsrule]

WOW!!! Every once in a while the sun shines on the dogs butt

I have always seen those stocks that have been bought out by another company and the stock price soared. Well, the sun shined on me today. LUFK has a bid by GE and the stock jumped 37% in one day!!!! Needless to say I am happier then a a June bug on a tomato plant I am not sure I totally understand what will happen from here. I must do some investigating.

good luck to all
the dog

 

[WV Hunter]

How is the stock trading going?

 

[jwayco]

As a CPA (not the famous one) I thought I would add my .02 as to what I see are the major mistakes I see day traders make that keeps them from being successful
1) They don't talk to a CPA first. For many CPAs the first hour is free and I can usually cover most of what I want to say in that time, so money usually isn't an issue there.
2) They do it as a hobby. Day trading by definition is a quick hitting, in and out proposition. How can someone possibly do it right while trying to maintain another job or something that takes up too much of their time?
3) They are undercapitalized. This affects trading behavior and sometimes causes traders to miss out on opportunities while money is being settled or there is a strain on cash for the owner to pay living expenses.
4) They are not good recordkeepers. In the eyes of the IRS, being a day trader vs. a regular investor requires a whole different way of keeping your books, from the types of expenses you can claim to various elections or options for reporting income. The books/records must be able to support the position you are taking.
5) Incompetence.

 

[Sytes]

PDR - NICE! I would love to find that big win. Hoping a couple of the long terms we have pan out like Apple or Microsoft.

Jwayco - great info! Appreciate it! I made a deal with my wife to put into another account 30% of my gains each month. Extra is extra come tax time... Also recently boosted my account funds for trading. Hoping one day to hit that margin trader status and "retire" from my current job. 5 year plan - millionaire. 10 year plan? Billionaire. Retire? Trillionaire!!! Until then, I'll enjoy my time hobby plinking away.

How is the stock trading going?

Since last:

04/09 - DVOX
* First kick in the arse buy/sell. Great lesson though.
4225 shares @ 0.49 = $ 2070.25
SOLD @ 0.46 = $1943.50 ( -$126.75 )

I had this predicted accurately. That is what really tears at my actions... It was my first "penny" transaction... I watched a graph vs the ask/bid price. I am shaking my head in disgust just thinking about it. As I happened to predict, It dropped out the gate, settled @ 0.44 and I hit the "quick buy" icon on the graph display. Next graph motion - 0.49! The peak value!!!I went to set my sell limit and my mouth dropped as I saw what I really paid - 0.49! I planned to "cha-ching that @ 0.48 if it did not continue higher... UGH! I quickly placed a sell limit @ 0.46 and just in time! Not only that though at close I noticed a news feed stating NASDAQ issued a 'Delisting'. Curious what that was - found out DVOX was unable to maintain their agreement with NASDAQ and it is a pretty bad mark on a publicly traded company. The next day or the day after, it dropped tp 0.21.

Basically, every penny = $42.25!

Vacation back home with wife... - Somehow I won some brownie points and now my Scottrade account holds $7500! Pretty good to try and make a potential run for 3 day trades per 5 business days. Once my mini vacation was over, it was back to work and my shoebox home...

04/16-17 - JASO
740 shares @ $4.0295 = $2981.80
SOLD @ $4.07 = $3011.72 ( +$29.92 )

04/17 - PWER
950 shares @ $4.06 = $3857
SOLD @ $ 4.16! = $3952 ( +$95.00 )

Now, I am waiting on the whole settled funds to clear... Initially my plan was to have 3 transactions with about $2500 each to keep my wheels turning for the settled/unsettled funds. Though tough when faced with the qty of shares able to purchase with one large transaction. I'll have to weigh the gains and transaction fees of both and see what is the best route.

Oh by the way - I had 6 free transaction trades for referring 2 friends to Scottrade - SO... if any of you are interested in Scottrade, GIVE ME A HOLLER!!! Not only do I get 3 transactions free - YOU DO AS WELL!

 

[RobG]

Congrats on doing well the last few days. I figured you'd report a disaster the way the market has zig-zagged.

Always use limit buy/sells, never market orders. I've even heard (warning: second hand info to follow) of people putting in buy orders with a limit price well below the market price on thinly traded stocks in hopes of some poor fool putting in a market order. (I'm not sure how well that works, and I also think a trade can be nullified if it is executed at an unusually low price compared to market - check with a knowledgeable person if you plan to do that.)

Watch stop-loss orders too - I have heard (warning: even more second hand info to follow) that they execute a market order when the price drops below a certain threshold. During the flash crash people who had stop losses wound up having their stock sold at prices well below their stop-loss price. To heap insult onto injury, the price immediately rebounded so they couldn't even buy it back at the absurdly low price.

I wish you luck, but not so much luck that I'd be tempted to try it myself .

 

[Sytes]

Anyone know if I increase my account to $12.5k - will my margin value that would equate to $25k in my account qualify as a day trader?

 

[MtnWest]

It won't. $25k before margin will allow more than 3 in 5 day round trips.

 

[Sytes]

It won't. $25k before margin will allow more than 3 in 5 day round trips.

Thanks MtnWest!
Not that I am hoping the avian flu H7N9 takes off, though if it does... I have a hobby level decent qty sitting with them. China has approved to fast track BCRX's Peramivir for use. We will see FDA is reviewing for domestic stockpile. That would be a nice contract as well. Current shares are $1.91 .

Anyhow, while still working with regular stocks - How does option trading pan out for hobby intra/weekly trading? I see I need to apply for trading options...?

Going to review this thread as I think MtnWest covered ETF's earlier. Looks like more to learn and get into. Seems doing the basics as I am is not really taking advantage of my market power...

Edit added: Also, is there a way to set a sell limit that allows the stock to surpass my sell point so I can ride it and if it drops to my sell limit then it sells? Basically, I thought this is how it works as some of my shares sold at a higher value than my sell limit one occasion. (?) Or do I need to wait for the price to rise beyond my goal then set the sell limit - changing it as it continues rising? I lost out on .10 per share as my shares sold at my limit price. Rookie with green gooing from my ears though I still made a good chunk off it though just looking to learn how I can do this without trying to make a quick sell using the market value.

 

[WV Hunter]

Thanks MtnWest!
Not that I am hoping the avian flu H7N9 takes off, though if it does... I have a hobby level decent qty sitting with them. China has approved to fast track BCRX's Peramivir for use. We will see FDA is reviewing for domestic stockpile. That would be a nice contract as well. Current shares are $1.91 .

Anyhow, while still working with regular stocks - How does option trading pan out for hobby intra/weekly trading? I see I need to apply for trading options...?

Going to review this thread as I think MtnWest covered ETF's earlier. Looks like more to learn and get into. Seems doing the basics as I am is not really taking advantage of my market power...

Edit added: Also, is there a way to set a sell limit that allows the stock to surpass my sell point so I can ride it and if it drops to my sell limit then it sells? Basically, I thought this is how it works as some of my shares sold at a higher value than my sell limit one occasion. (?) Or do I need to wait for the price to rise beyond my goal then set the sell limit - changing it as it continues rising? I lost out on .10 per share as my shares sold at my limit price. Rookie with green gooing from my ears though I still made a good chunk off it though just looking to learn how I can do this without trying to make a quick sell using the market value.

Trailing stops.

Options You don't want to do that. There is a reason you have to apply for options trading. Don't ask me how I know.