Hi all, I'm new here and new to the idea of trading stocks. I have been reading a lot of the reference material that has been posted and I've made a note of a lot of the sites and books that the users have suggested. I do have one question about day trading.
I want to try it with penny stocks, but I know that with some online broker sites you need a minimum of $25,000. Since I do not have that sort of capital to work with, do any of you have any suggestions on the next best thing?
Posted by T e x on :
Most online brokers do not require $25k--you've gotten confused about being classified as a "pattern day trader."
That being said, the more capital you can bring to the table, the better. With too little, you'll likely be tempted to "swing for the fence" rather than following prudent risk management.
[ December 11, 2008, 21:39: Message edited by: T e x ]
Posted by PCola77 on :
To clarify Tex's point, you can always trade with less than $25,000, but if you want to truly daytrade, i.e., get in and out multiple times in a day, you DO have to have $25,000, and that's an SEC rule, not a broker rule, so there's no getting around it, as far as I know.
Posted by T e x on :
quote:Originally posted by PCola77: To clarify Tex's point, you can always trade with less than $25,000, but if you want to truly daytrade, i.e., get in and out multiple times in a day, you DO have to have $25,000, and that's an SEC rule, not a broker rule, so there's no getting around it, as far as I know.
well...
in a way you can--with multiple accounts. Sure, it's a bother, switching between screens or however you want to say that..."windows," "screens," monitors...or nowadays "tabs."
As many here know, I'm a great believer in multiple accounts (AT LEAST two). For one, I realize the "pattern day trader" rule is NOT designed to protect Joe Retail but instead to keep the "riff-raff" out of trading. O-mi-gawd...Joe Retail? There goes the neighborhood.
Now...that being said: even with four, five or even six accounts? You still can't "daytrade" like the genuine daytrader. Simply put, there's no substitute for having the ability to ride a volatile stock all day, in n' out, as many times as you wanna scalp it.
The po'boy version is you pick and choose your entries, realizing you only have a few, and always with an eye to your exit. As Jim Bishop says, or implies: "Dance with the one that brung ya--but dance close to the door."
As Dardadog says, "Do the due--but be damn quick about it."
In other words...once you get filled? Immediately set up your sell order.
As far as capital "requirements"? As I recall, I started with $2,500. I immediately chumped off around a grand on GTEL, the "next big thing" in sub-space wireless yadda-yadda-ya.
From there, I had accidental, lucky winners; then I got beat up... took a while to recover and get back in the black.
If I were starting now, on a bare-bones budget? I think I'd insist on at least $7,500...split among three accounts.
Really pressssssssed? OK, $5k between two accounts.
Whichever...don't carried away. Capital is a tool: don't expose it to the elements.
Posted by Machiavelli on :
quote:Originally posted by cashmerelc: Hi all, I'm new here and new to the idea of trading stocks. I have been reading a lot of the reference material that has been posted and I've made a note of a lot of the sites and books that the users have suggested. I do have one question about day trading.
I want to try it with penny stocks, but I know that with some online broker sites you need a minimum of $25,000. Since I do not have that sort of capital to work with, do any of you have any suggestions on the next best thing?
Total noob to trading?
Advice: Don't do it. Especially with penny stocks till at least you have some experience. Stick to swing and position trading. Stay away from daytrading. For now at least. Get your feet wet with "safer" types of trading.
Posted by T e x on :
quote:Originally posted by Machiavelli:
quote:Originally posted by cashmerelc: Hi all, I'm new here and new to the idea of trading stocks. I have been reading a lot of the reference material that has been posted and I've made a note of a lot of the sites and books that the users have suggested. I do have one question about day trading.
I want to try it with penny stocks, but I know that with some online broker sites you need a minimum of $25,000. Since I do not have that sort of capital to work with, do any of you have any suggestions on the next best thing?
Total noob to trading?
Advice: Don't do it. Especially with penny stocks till at least you have some experience. Stick to swing and position trading. Stay away from daytrading. For now at least. Get your feet wet with "safer" types of trading.
Solid advice...
Posted by cashmerelc on :
Hey guys, thanks for the advice. I agree that I am not into the idea of day trading, yet. I don't know enough about exactly what to look for in a particular company to decide whether it is a good idea to invest.
One question. Especially with the state of the market today, how informative are the charts as far as determining a trend?
For example, if you look at JCDS, over the past month it seems to bottom out at .0004 and then increase. Is this trend a significant thing to take into consideration?
Posted by T e x on :
quote:Originally posted by cashmerelc: Hey guys, thanks for the advice. I agree that I am not into the idea of day trading, yet. I don't know enough about exactly what to look for in a particular company to decide whether it is a good idea to invest.
One question. Especially with the state of the market today, how informative are the charts as far as determining a trend?
For example, if you look at JCDS, over the past month it seems to bottom out at .0004 and then increase. Is this trend a significant thing to take into consideration?
lol, that's three questions--at least.
OK...simmer down, big boy.
First, read more. Second, learn how to at least post a link to a chart (stockcharts.com). Third, gather more capital.
Fourth? One question at a time--you're hot to trot, which is great because we all benefit from more, better traders.
Still, unless you're extremely talented or lucky, you stand to be wiped out quickly. And if you're early lucky? That'll get you not only wiped out long term but also convinced you can't trade.
Seriously.
In the meantime, don't let anybody steer you into "a great pick."
Easy does it...steady at the helm.
Posted by cashmerelc on :
Hey Tex, thanks for taking the time to reply, and sorry about shooting out of the gate like that .
I just got my hands on a couple of trading books which I'll be reading over the holiday. And I hear what you're saying about either being wiped out.
I guess before I start asking a question (or 3) I'll make sure I know what I'm asking.
Posted by T e x on :
right on...
which books did you get?
Posted by Machiavelli on :
quote:Originally posted by T e x: right on...
which books did you get?
You beat me to that question Tex...
As for else of Tex's advice... spot on especially going by other people's "good picks"... always do your own due diligence and the #1 advice I would say is never fall in love with a stock... be ready to get rid of it and cut your losses... don't average down etc.. etc.. there is always a better stock out there somewhere then holding onto a loser "hoping" it will bounce back and/or buying more of it at a cheaper price when that "hope" eventually turns around... never bet on "hope"... and remember the Market is always right, not you.
Posted by Ace of Spades on :
quote:Originally posted by cashmerelc: Hey guys, thanks for the advice. I agree that I am not into the idea of day trading, yet. I don't know enough about exactly what to look for in a particular company to decide whether it is a good idea to invest.
One question. Especially with the state of the market today, how informative are the charts as far as determining a trend?
For example, if you look at JCDS, over the past month it seems to bottom out at .0004 and then increase. Is this trend a significant thing to take into consideration?
Charts are the best tool for trading. But only for BIG BOARD STOCKS....Pennny stocks they don't mean ****! Penny stocks are run by hype, shady companies, manipulation, ect. There are to unpredictable.
I would start here to learn charts....MACD, STOCHASTICS, and RSI are my 3 favorite indicators
How I Made 2 Million in the Stock Market - Nicholas Darvas and How to Make Money in Stocks - William O'Neil.
I also have a few issues of Money magazine that my father gave me. He has been pretty successful in the market for decades and suggested I read it front to back every month. You guys have any opinions on Money mag?
I am also going to pick up the short term trading book by Toni Turner that was recommended.
Posted by SoAngel on :
I picked up 3 books by Toni Turner, and she provides quite a bit of information in them. Good luck!
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