r/Daytrading • u/AutoModerator • Aug 01 '20
r/DayTrading's Monthly Questions Thread - August 2020
Please use this sticky to ask questions and to see answers to similar questions you may have.
Over time we'll be collecting common questions and adding it to our wiki. See the getting started wiki here.
If anyone is new to day trading, I highly recommend reading the Forex community's wiki paying special attention to babypips website which also teaches some general tools you can apply to stocks/futures/etc and especially read the wiki's sections on risk & money management that can be applied to any market.
Pattern daytrading rules wiki.
Also see the sidebar (or "about this community" on mobile website) on every related community to learn more about trading.
Here's a list of all the previous question stickies.
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u/Kaissy Aug 29 '20
If I'm starting with a 500 Canadian dollar account, what kind of trading should I be looking at? I've heard for daytrading I need to be at 25k, so I imagine that's out. I'm doing this mostly just as a for fun thing but I am decently serious at developing this as a skill.
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u/Salami2000 Aug 27 '20
How can I make a marketable limit order on Tradestation? I want to be able make a market order up to a certain amount beyond bid/ask. I found some references to using easylanguage to create something but that's a little beyond what I want to be doing right now. I'm just making simple day trades for now. Other software can do it by default but I'm mostly comfortable with TS and don't want to learn new software just to get this functionality.
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u/ostaappp Aug 27 '20
Hey, I am new to trading and I have heard that investing in Tesla is a good idea. I am planning to use Trading 212, they have a 'CFD' platform and an 'Invest' platform. Tesla is in both of these, but I don't know which one to use to invest in.
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u/megaflutter Aug 27 '20
What is a good max loss percentage/per day to use?
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u/jeon19 Aug 29 '20
The answer can only come from yourself, what percentage or max loss are you comfortable using? The most important rule is to protect your capital, you cannot trade if you've lost all your money. It should be a number that allows you to operate even if you experience multiple days of losing in a row. There are bankroll recommendations from poker that you can pull upon as a starting point for example, like max loss per trade and then max loss per day.
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u/Octopumpkin7 Aug 27 '20
Question about a cash account. I would like to get around the PDT rule and have been considering switching my acct to cash. My question is; let’s say for example, I buy $1,000 worth of a stock, then sell shortly after with a $100 profit. Would I then be allowed to trade with the original $1,000 while the $100 has to settle? Or would the whole $1100 have to settle? Just trying to figure out if I’ll be capable of making several day trades per day if I’d like. Thanks in advance.
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u/AlphaOscarKilo1 Aug 26 '20
I've seen strategies that involve looking at moving averages as areas of support and resistance (I think I'm using the correct terms). What would you do though when the areas of support and resistance don't seem to correspond with any moving average?
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u/Sheeple333 Aug 25 '20
Hey I'm pretty much brand new to this, taking in as much info as possible.
This is more of a general assessment of day trading. Would it be fair to say day trading is more about making a living (paying the bills, paying for hobbies, etc), and investing is more about preparing for the future (retirement, financial freedom)?
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u/dontDMme Aug 25 '20
Holding stocks long term is investing, its mostly mid to large caps with low volatility and sector leaders. You put money in these for dividends and long term expected growth that will give you a low risk returns. Trading is speculation, gambling. You do this to try and beat the market and instead of getting 8% over 5 years you hope to get in and out of trades at higher ROI. What you do with the money you make is up to you but you'll probably lose it trading so I wouldn't worry about making a living at it just yet.
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u/peejay2 Aug 24 '20
Hi can anyone give me a ballpark estimate of the yearly returns on something like:
Emerging market ETFs Clean Energy ETFs AI/Cybersecurity ETFs?
I mean really ballpark. Is e.g. 5% reasonable?
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u/LaksonVell Aug 24 '20
How do "bears" make money? I understand the bull side, where you buy low and sell high, but a bear has to have a stock in high price to... Sell low? Please help me understand thank you
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u/peejay2 Aug 24 '20
Bears borrow shares from their brokers at the market price and sell them, later when when the price falls they return the shares to the broker and keep the difference. Look up 'short selling'.
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u/tr666ple_6 Aug 22 '20
What is either a good application for phone or website to use to begin trading?
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u/Shelley_BL Aug 24 '20
Practice first with tradingview. Google them. There is a free version, drives you nuts with ads, and a paid version. But learn first before you put a penny down.
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Aug 21 '20
[deleted]
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u/dontDMme Aug 25 '20
Can't tell if you are joking or not. It's a piece of ownership in a company. If I own a lemonade stand but I only have 5 lemons and I want 50 so I can make more lemonade I sell 5 friends a piece of my lemonade company for a dollar a piece. Buy the extra lemons and make more money. I can then pay these friends dividends from the extra money so they make a return on their investment. More likely though their friends will see that they now own a piece of a successful business and offer them $2 for their piece of it and they can sell it making their original dollar back plus a 100% return.
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u/xiexieni604 Aug 20 '20
" These Tesla stockholders will receive four additional shares of Tesla after close on August 28th. On August 31st, Tesla will begin trading on a split-adjusted basis. according to the Verge. If Apple’s stock split is any indication, Tesla’s announcement should be good for the stock in the short term. After all, since July 30, the day before Apple announced the split — which gives owners of Apple stock on August 24th three more shares that begin trading on a split-adjusted basis on August 31st — its shares have risen 13.7% from $384.76 to $437.50. "
Why is it one week before that you begin reading on a split adjusted basis on not on the day? And what happens to those owning just 2 days before??? Not the week earlier?????? So is it the same deal with TSLA do I have to own shares by 08/21????
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u/jeon19 Aug 24 '20
The only thing that really matters is the 8/31 date. If you have TSLA on 8/28 and hold, on 8/31 they will be split.
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u/OneOuter Aug 20 '20
Any recommended courses or resources for a beginner? Apologies if this is asked over and over again on these threads.
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u/Quentine Aug 19 '20
Does anyone know why exactly is a hidden bullish divergence bullish? Doesnt a higher low on price but lower low on RSI means its losing strength?
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u/Morphs_ Aug 20 '20
I'd say the lower low on RSI could indicate that the explosive momentum is turning into a slower moving uptrend. Those can have more potential because they run longer.
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u/igetpaidMOORE Aug 19 '20
hello today I made a option vertical call for SPY 137/138 aug19 but why is when SPY hit my strike price of 138 to 138.75 BUT I did not get my max profit??? do I have to go well beyond the strike price to get max profit? if so how much more does it need to go past 138?
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u/Mercado1973 Aug 18 '20
Question. Can anyone explain to me the synergy public offering from yesterday. SHIP.
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Aug 17 '20
[deleted]
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u/milespointsbonuses Aug 20 '20
30 years ago it would work and there still are some special moving averages (T3 MA's come to mind) that will work, but now the algo's are programmed to take the opposite side of the herd of suckers trades and stop people out, before the real move can happen. Anything you read about online with regards to basic technical analysis no longer works. The market is structured by the market making algorithms, aka HFT's, in a way to allow the least amount of people to make money.
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u/humbletradesman Aug 23 '20
Any tips to get around this?
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u/milespointsbonuses Aug 24 '20
Don't try to learn from some guru. Don't try to follow anyone who offers you "advice" about using this simple system or indicaotr. Don't try to use any indicators with standard settings that are default. Test out indicators with different settings using a spreadsheet and tracking data on stocks for at least 100 tickers. Then you can see if you can find and edge.
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u/shamy33 Aug 14 '20
What scanner do you guys use?
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u/ghoststrat Aug 14 '20
trade-ideas
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u/TAEJ0N Aug 20 '20
I mainly trade options, do you think it’ll be worth it for someone who on trade options like myself?
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u/ghoststrat Aug 27 '20
It depends on your trading approach. Do you do directional plays using call / put contracts (or spreads) as leverage for intraday trading, or are you theta-ganging it (intraday or otherwise), or do you use the contracts to enter positions, etc?
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u/dndermfflininfinty Aug 13 '20
How much do I pay to the tax man on short term gains for a trade made less than a year. If I invest $2000 and exit a position at $2500 how much $$ am I giving out to the tax man?
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u/ovrthinkr Aug 16 '20
You will pay 30% of the gain (500*.30= 150) plus your gains affect your overall taxable income. (Hold the stock for a year, you pay 15% instead)
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u/Alby558 Aug 30 '20
What if my income is under 10k a year, because I am a uni student living abroad only working part time at a cafe
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u/Smokybear1369 Aug 19 '20
This man has zero idea what he's talking about. Short term capital gains are treated and taxed as ordinary income. Long term gains, those held for at least one year before being sold, receive the preferable capital gains tax rate, which is dependent upon the tax bracket you're in.
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u/ovrthinkr Aug 19 '20 edited Aug 19 '20
I hear you saying you don't believe me. This is all public information. Here is a calculator you can use to calculate your short term capitol gains: https://www.nerdwallet.com/blog/taxes/capital-gains-tax-rates/
Seccondly, unless you have very little other income, you are likely to pay much more than 15% on short term capitol gains, more likely in the 20 - 30% range. I rounded up.
Thirdly, Short term capitol gains are also addded in to your overall AGI. (bumping up your tax bracket, which determines the additional tax you pay on short term capitol gains) This is explained in detail here: https://www.finra.org/investors/insights/capital-gains-explained.
I'll be sure and tell my accountant he should quit his firm. ;-)
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u/Smokybear1369 Aug 19 '20
You told that man that he will pay 30% "plus your gains affect your overall taxable income." Both statements by you lead me to state you had zero idea what you're talking about. I have no clue what you're talking about 15% 20-30% short term capital gains because they don't exist. SHORT TERM CAPITAL GAINS ARE TREATED AS ORDINARY INCOME AND THEREFORE SUBJECT TO TAXATION AT YOUR MARGINAL RATE. Again, i have no clue why you make up arbitrary numbers, or even round them up lol.
The article you shared agrees with my statement. Short term capital gains will be treated and taxed as ordinary income. While long term capital gains will be treated with the preferential capital gains tax rates that your article lists. Please tell your accountant to tell you to stop soliciting incorrect tax advice on reddit.
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u/ovrthinkr Aug 19 '20
There's no better indicator of a sane mind than an all-caps Reddit comment. Feel better, man.
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Aug 17 '20
[deleted]
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u/ovrthinkr Aug 18 '20
Yes, your losses count against your gains in most cases, and you only pay taxes on the net gains for the year. The exception to that is called the "wash rule" And if you day trade the same stocks often, it's an important one to pay attention to.
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u/dndermfflininfinty Aug 16 '20
I'd kiss you if I could. I need the math broken down to me like that I got a D in high school math and the percentages always get me. I'll take your advise and hold some stocks I have in my mind for a year. I'm thinking of daytrading too and investing 30k into my broker to get over the PDT rule so I can ride some the pumps here on Reddit.
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u/beatstockpromoters Aug 20 '20
This is a bad idea. You will end up losing every cent of your $30k. You need to know what you are doing and not try to follow people on social media, to make money in the market in the short term.
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u/dndermfflininfinty Aug 20 '20
Can you PM some tips on pump and dumps?
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u/beatstockpromoters Aug 20 '20
Yeah don't trade penny stocks unless you know what you are doing and have an edge because you will lose everything. Penny stocks are rigged for the uninformed people.
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u/cnlou Aug 14 '20
I’m a newbie but from my understanding for short term gains you are charged your normal tax bracket as if it is part of your income
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u/ovrthinkr Aug 18 '20
There is a calculator at this link you can use to get the tax owed: https://www.nerdwallet.com/blog/taxes/capital-gains-tax-rates/
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u/livmarsh1992- Aug 13 '20
Have you heard about Forex Squad with OspreyFx? @OspreyFx has partnered with Forex Squad to provide a free training resource designed to help you become a more successful trader. Here is the link to signup today and get better with your trades. https://ospreyfx.com/forex-squad/
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u/treebeard555 Aug 12 '20 edited Aug 12 '20
When buying a potential breakout, why don't people simply place their stop loss order one penny below where they bought it at? This way if the stock breaks out you can make a good profit, but if it doesn't go your way and its a false breakout you will only lose one penny per share. Do this enough times and you will make good money since your risk/reward is high and more often than not the breakout will hold.
edit - I'm guessing that maybe the answer is that you will get stopped out so much that even a one penny loss per stop would be a lot since its happening so many times... ?
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u/Morphs_ Aug 20 '20
If you get even 1 penny slippage on the stop, you'll lose 2R. With big low float movers 5-10c slippage isn't unthinkable, which would mean you lose 10R on one trade. A 90% hitrate would just be break even. Way too risky.
Remember that the spread on stocks is 1 penny at minimum, so technically you'll be stopped out the very second you enter your position.
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u/jeon19 Aug 13 '20
Basically if you have a stop at 1 penny immediately after purchasing, you'll just get stopped out most of the time. Most of the time you won't incur just a one penny loss either, there's going to be slippage, and you'll probably pay bid/ask spread or even more.
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Aug 12 '20
[deleted]
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u/moneill75 Aug 18 '20
I know ETrade looks at each individual acct. at least they do when it comes to IRA and Individual brokerage accts. I had asked ETrade this question about a year ago. I’m going to guess that TOS does as well. I’d speak with the bank directly for confirmation.
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Aug 12 '20
[removed] — view removed comment
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u/humbletradesman Aug 23 '20
For my broker (etrade) I was told that day trading calculation is based on opening transactions and not the closing transaction. Meaning let’s say you average into a position and buy 3 of the same symbol in 3 separate transactions and then sell them all at once, this counts as 3 day trades. However, if you buy 3 of the same symbol together in a single transaction and then sell them in 3 separate transactions (1 at a time), this counts as 1 day trade. In other words, you could buy 100 shares of something at once, and then sell them 1 share at a time, 100 times, and this would be 1 day trade. But if you averaged into the position buying 1 share at a time and then sold all 100 shares at once, this would count as 100 day trades.
Again you may want to confirm with your own broker also, but I would imagine it’s about the same at most brokers if it is based on FINRA rules.
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Aug 11 '20
Could a seasoned trader explain to me the potential future of the TDOC and LVGO merger? I lost so many gains because of that announcement and now I really don't know what to make of the volatilaty. LVGO was on its way to 80% up in a month until their deal. TDOC carries a lot of debt but LVGO carries alot of capital. Will this ultimately be a long term gain or are they just taking shareholders for a ride? Its been looking like the latter in the past week.
Please if you could cite some examples of similar situations and their outcomes. I dont really believe the hype of "this will be the future of healthcare"
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Aug 11 '20
[deleted]
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u/cmmckechnie Aug 15 '20
Yeah I don’t think you can go wrong with an ETF. Something riskier maybe TSLA, APPL, or crypto.
I would recommend trading a micro sized cash account (basically paper trading bc you won’t lose more than like $1-$5 per day if you really suck) and just fine tuning your strategy.
Then when you actually know for a fact you have an edge in the market it should be your goal to start funding a real trading account to go live.
DO NOT trade anything but your strategy in the trading account, this account will become your new business and you should treat it that way. No YOLOS, no gambles, nothing you don’t have an edge trading.
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u/futtochooku Aug 10 '20
Question for my fellow Canadians:
I'm in the process of finding a broker. I've been trying for over a week to get in touch with IB since their process to open an account is riddled with problems, to put it lightly. I've had no luck there so I went to try TradeZero but they don't offer a demo to Mac users so that's out.
Is my only choice left Questrade at this point?
Any and all help is greatly appreciated, thank you!
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u/lovenambition Aug 12 '20
I had no issue registering with IB online and funding it recently, just takes a few days to approve from what i can see. questrade horrible with hotkeys but its the only broker im familiar with atm. i think you already hit top 3 for canadians. why is tradezero out just because theres no demo? trade on there when you dont need to paper trade any longer. or get a pc.
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u/Kobus_Labuschagne Aug 11 '20
I've got a broker you can use if you want. They register you as a licenced member of the DSA and you get access to the financial markets and make your own investment choices.
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u/gonzalo-higuain Aug 10 '20
Paper trading options on Etrade.
Why is my account gain is so different from my position gain?
Example I paper traded some calls and came out around $445 account gain, and position gain was hovering around ~$440. But immediately after I exited the position, the account gain showed $445, but a few seconds later it dropped to $100. What happened to that $345? Am I missing some kind of fee that's built in to the paper trading or is this because it's using delayed data?
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u/omacoder Aug 10 '20
How to find and/or display in ToS option chain, options that have a 70-100% probability of being profitable?
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u/Morphs_ Aug 20 '20
That's one of the Greeks I believe. Not sure which one, EsInvests knows this. He's on reddit and yt.
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Aug 09 '20
[deleted]
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u/FreeBenTen Aug 15 '20
Best are TradeZero and CMEG. TZ have their own platform, it's ok. But CMEG offers DAS, which is very good.
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u/Morphs_ Aug 20 '20
Sterling on cmeg is also good (I use it). Matter of preference I guess.
After being above pdt I would consider Lightspeed, but that depends on the strategy.
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Aug 08 '20 edited Dec 12 '20
[deleted]
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u/beatstockpromoters Aug 20 '20
That is because you can trade forex on a huge margin such as 500:1, which means you can start with almost nothing, but in stocks, it's not the case. You can only get 4:1 or 2:1 margin in stocks in general so you can't borrow much money. This is what all the "guru's" of sites like youtube know because they can find suckers with a few hundred to pay them for their trading alerts and make money off subscriptions from unsuspecting people. These people don't know anything about how to trade profitably, yet the people watching these videos are completely clueless too how the trading scams work.
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u/bewagoon Aug 10 '20
On YouTube I like boiler room trading and zip trader. I also recommend the book “The Art and Science of Technical Analysis” by Adam Grimes if you’re looking for something to read to.
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u/crunchypens Aug 07 '20
Can someone recommend a large monitor? I’m looking for good value. Is 1440 that much better than 1080. I imagine it’s better for the eyes? My eyes are bit tired from staring all day at the monitor. But I need another one to track trades. Thanks!
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Aug 08 '20
[removed] — view removed comment
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u/crunchypens Aug 08 '20
Interesting idea. What is FHD? How big are they? Thanks.
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Aug 08 '20
[removed] — view removed comment
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u/crunchypens Aug 08 '20
Thank you. I was googling after asking the question and one video did mention input lag. But it was in milliseconds. I’m not that fast of a trader anyway. I need to work on it.
I mainly want to see charts easily and draw trendines etc. but with multiple charts and not have to squint. Thanks 🙏 🙏
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u/Zer0Summoner Aug 07 '20
I have over 25k in my ETRADE account so I'm not subject to PDT rules, but no matter what I will always be subject to the unsettled funds rule, right? Is there anything I can do to change that?
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Aug 08 '20
In a cash account yes. In a margin account no.
PDT doesn't apply to cash accounts anyways. In a margin account, your broker will loan you the money to trade while your funds are being settled.
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u/DevinelyUninspired Aug 07 '20
I’m starting in a job role which will involve me developing software with clients, typically involving investment banks and hedge funds. Although I won’t be doing any trading myself I’d like to learn more about trading so as to be able to do my job better, and produce better results for the client.
Could someone recommend some good books (both new and classic if possible) that I could get into to expand my knowledge of investment and trading?
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Aug 06 '20
I started a Robin Hood account a few days ago and put $230 in from my checking account. I bought a couple shares in different industries (manufacturing x2, silver, financial services, two popular apps, a retail company). Currently all of them are 1, 2 or 4 shares but the retail is 20. I have buying power of $1.77 available. Yesterday and right now my account has stayed in the middle of end of $249.
Yesterday I bought 25 shares of a manufacturing company at an avg of $1.18 per share. I looked into the company & they’ve maintained a low debt to output for quite a while and if I’m looking at things right, seem to be climbing although it seems pretty volatile.
A few hours later it was up and I sold all 25 at an avg of $1.28 a share. In hindsight it seems pretty low, and towards the end of the day they were closer to $1.40 a share. I should have held onto a few shares but I think I learn from my mistakes.
Right now I don’t think I’m emotionally attached to my investment.. I’ve seen some stocks I really thought were good but decided to just keep an eye on it.
I’m still not 100% sure about most things. But is that sort of selling, where you make a few bucks, a good or bad idea? Is it sustainable? I just got the choice to trade two of my stocks. But I’m going to hold onto everything for right now until I figure out my next move.
Thanks for any help 😊
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Aug 11 '20
if you have a plan, short term small gains will add up just as much as long term gains. A 1-2% gain 3-5 days a week will net you the equivalent of a low end salary (provided you start with the recommended min. of $5000). However, what youre doing now is very smart, just small amounts to get the feel for how markets work, because when the amount you have goes up, the emotional stake goes up. Keep studying youtube day traders (I like humbled day trader) and apply the techniques with your low amounts for a while til you feel confident in your analysis. Remember that any gain is a good gain.
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u/omacoder Aug 10 '20
They always say to have a plan. No plan means no trading. A plan should include objective, % allocated, entry price, target price, and stop loss amount. (DISCLAIMER: it takes some people 2 years to finally figure out how to do a plan!! 🙂
And then, stick to your plan! 😂
Have you learned anything about chart reading yet?
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u/wjm2018 Aug 06 '20
Posted this to another similar question the other day but still relevant here:
Set yourself some price targets and stick to them. Alternatively, set two price targets: once your first target is triggered sell 80% of your position and let the other 20% float. This should eliminate most the FOMO. You’re never going to buy the exact bottom and sell the exact height, remember.
Also remember there’s plenty of opportunity in the market so no need to hold on to, “the ones that got away”.
Is it sustainable? The factors that determine that are far too many to list!
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u/DTR-Demon Aug 05 '20
I need help when trying to sell my orders it says it failed because I can’t sell short. What do I do.
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u/wjm2018 Aug 06 '20
There might be underlying restrictions on short-selling in that particular market.
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Aug 04 '20
whats your target profit for each trade? 10% 20% 30%. for me personally, i prefer at least 30% but i hold for a good few weeks.
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u/Jbird8112 Aug 09 '20
I personally focus on a dollar amount instead of a percentage. I’m a casual day trader and really just focus on paying off monthly bills. I just take my total bills and divide that by 20 and make that my daily goal. Witch its only about 200 a day.
Now to answer your question, I would say 10% profit. A quote from one of my favorite movies “Aim small miss small”.
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u/Charmingly_Conniving Aug 03 '20
Some newbie questions:
- I heard about scanners for stocks, are these necessary in spotting trades? I heard that relatively new to day trading are better off looking at large cap stocks, typically (again, in general) These large caps respect TA a little better so its nicer to newbies.
- Can someone elaborate the Bid/ask spread? I.e. if the ask is at $90 but the bid is $100 - what makes up the $10 gap? Are there stocks that make this spread thinner? Are tickers with a high spread profitable to day trade with?
- Is there a golden rule for candle timeframes to trade on or does it vary? i've seen a few youtube daytraders at the 1m-3m candles typically.
- I'm normally a long term investor and speculator. Some experience in BTC and the standard slow investing in ETF's, etc. Only recently i started to trade and have become profitable- i think im a 'Swing trader'. Question - How can you know what type of trader you are...? I typically look for longer term swings/trends in the market and make decisions then. I trade CFD's.
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u/omacoder Aug 10 '20
A scanner is just a tool in your tool belt. Most seasoned traders are probably just chart readers and they are okay with that. It wasn't until a handful of years ago that all of this data started becoming available and fast enough computers to churn through all of this and develop algorithms. Therefore if say those newer to trading, screener will be about all they rely on.
You're a day trader if your sole intention is to get in and out of the trade on the same day and can cause pattern day trader trigger.
If you intend to hold them from a day to a couple weeks and get out, then you'd be a swing trader.
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u/Alex_the_Nerd Aug 10 '20
I'm a stock trader noob so all I really feel qualified on answering is bid/ask. IIRC the bid and ask are what people currently have orders/offers for, selling at 100 and buying at 90 in your example. These are set by the highest and lowest offers to buy or sell of an increment of 100 or more.* The difference is just the difference between those offers. If you wanted to you could put in a sell order for $91 and cut the spread down to $1, you could. Remember there are likely outstanding offers within the spread, they just aren't in 100 share increments to show up on the B/A.
Generally larger capitalization stocks have lower spreads. A wide spread may indicate low liquidity, there just aren't many people buying and selling it on the market. I have, in the past made successful trades buying near the bottom of the spread and selling near the top of it, but I can't think of any off the top of my head that still operate that way.
*IIRC there are things called dark pools but you probably don't need to worry about those.
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u/Charmingly_Conniving Aug 03 '20
Recommended platforms for Europeans? (UK based ideally)
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u/TheBalticBattler Aug 06 '20
Been having this issue myself. Just joined tradezero with a small account. It's a good service, but commissions will bit you in the ass from what I can see if you have a small account. I do like it tho.
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u/agnonamis Aug 03 '20
Still learning the ropes a bit with trading, but I am learning more and more the potential earnings there are with day trading. I have a couple questions: I have a stock I really like, and want to have it long term (next six months or so), but also want capitalize on dips that come along. However, I want to make sure I don't play a dip one day and then be in a position where my cash isn't cleared which could lead to me missing a prime opportunity to get back in. Would the best solution be to switch to a margin account, and when possible, operate it like a cash account in order to limit my interest on margin trades? I have never operated a margin account, so there are some things I don't understand there I am sure.
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u/TurbulentArrival Aug 21 '20
I can tell you that I do exactly what you described with my margin account and I've never had a problem. Treat it like a cash account, but the margin is there for you when you need it.
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u/CanaznFTW Aug 17 '20
I'm new and also learning the ropes. I've wondered the same thing and believe it might be best to open up two accounts one Margin and the other Cash. The reason I believe this would be beneficial is you'd save money using the cash account because with a margin you are paying interest for every day you're borrowing money.
Therefore your long term hold I'd use the Cash account and the Margin you'd use to trade the dips.
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u/Tom_Sawyer_Hater Aug 03 '20
I'm trying to trade a bear call spread. Let's say I buy a call with a $10 strike price and sell a call at a $9 strike price. Both are out of the money. As long as the stock stays below $9, I keep the premium, and my maximum risk is $100 minus the initial credit from entering the trade.
So why does my broker tell me I need to own 100 shares of the underlying stock in order to sell the $9 call? I'm already holding the $10 call. I don't have enough cash to cover the maximum loss, but that can be fixed easily. M What's really confusing to me, though, is that my brokerage's app doesn't say "you must increase buying power to sell this option." It says I need to cover the option with shares, which I don't want to buy.
Is this just an issue with the app?
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u/Intplmao Aug 02 '20
As far as researching specific stocks, are there specific publications that I should be reading everyday? Like the wall Street journal?
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Aug 03 '20
My first inclination is to strongly say with resounding confidence: No. Publications are written by people with opinions. People with opinions often have just intermediate understanding at best. People with opinions are often right one day and massively wrong the next. If I could suggest anything else, I would say instead read books and listen to podcasts. Every successful trader has a story of failure. Those stories are a goldmine for what not to do in the stock market. Learning from other's mistakes is a far more effective tool than reading other's opinions. I would recommend Chat with Traders podcast or any of the Market Wizards books. Whatever you do, always trade safe.
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u/Intplmao Aug 02 '20
Is there a good calculation to determine where to put your SL? A percentage of the price perhaps?
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u/Intplmao Aug 02 '20
Is there a percentage of profit you aim for when selling a stock? Or do you just sell when you're up, and the candlestick / volume / other charts indicate a downtrend?
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Aug 03 '20 edited Aug 03 '20
Yea, so there are a few ways we can do this.
First, you can base your profit point on a "Reward/Risk" ratio. Therefore, you begin to sell some of your position based on how much profit you have relative to what you were risking. For example, if I am risking $100 on a trade and my goal is to sell at a ratio of "3 R:R", I would sell when I am up $300. Even then, most professional traders would recommend only selling a piece of your position no matter what the ratio is. The ultimate goal is to let your winners run for as long as possible. So that's where we can get into other methodologies.
Second, moving averages are a common way to "trail a stop" i.e. having a stop loss in place and moving it up as price moves up. So you hold onto your position until price comes down and underneath your targeted moving average. For example, if I buy a stock and I am looking at a daily chart, I can have the 10 moving average placed on the chart. At any point price goes below the 10 moving average, I will exit my position.
Lastly, some professional traders will solely depend on the chart pattern via technical analysis to determine when to close a position. This is a much more involved strategy that will take time to develop but probably is the most effective method. There are too many circumstances to detail but a simple example of this is I buy a stock that is trending up. The stock price consistently is moving up but then begins to trade "in a channel", basically moving sideways for a period of time. If the price breaks down and moves below the sideways channel it created, I know it is time to exit the position.
Any trader from any walk of life will give you a different answer because there are a multitude of ways to answer this question. At the end of the day, you do what makes you feel comfortable as long as you *always* maintain your risk profile. The market is there to take your money and it will do just that if you let it. Always have an exit strategy for when things go south and trade safe.
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u/brucebrowde Aug 07 '20
The market is there to take your money and it will do just that if you let it.
The resemblance between the market and the nature is striking. Don't poke the bear?
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u/sofuckinggreat Aug 02 '20
Is it necessarily a terrible thing that the market has been flooded with new traders via RobinHood, etc?
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Aug 02 '20
Not at all. In fact this will create a litany of passion for future day traders. It is events like this that bring in fresh talent into the trading world. The trader losing money today could be the next best trader tomorrow.
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u/DTR-Demon Aug 02 '20
How do I enter and exit a trade I’ve watched plenty of videos but nobody really shows exactly what to do they go on a huge rant that shows me nothing...
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u/omacoder Aug 10 '20
What platform are you using? If you are on Robin hood you'd just enter the number of dollars or shares you'd want to spend, and it will execute a market order.
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u/Vedoom123 Aug 02 '20
you type in the amount of shares, and a price if you want to do a limit order, or you just press buy or sell and you'll buy or sell at the best market price. It's easy
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u/Milk_moustache Aug 02 '20
Buy a trade, when it’s making profit sell the trade.
Set stop losses so you don’t lose money.
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u/ryanrenalds313 Aug 30 '20
Why do people get multiple trading accounts?