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Month: October 2020

Trading vs Investing

when it comes to day trading it’s often looked down on by “investors” but the difference is simply time. While some may say an investor is helping fund a business and sharing in the profits, this is hard to claim at current Cap levels.

I am no Warren Buffet my investments are so small that no-one knows or cares about them. They aren’t moving the market, so i don’t think i am supporting or shorting anyone. That being said i don’t like to short companies long term.

Investing

Basically long term. Investing is longer than 3 months, you put a few thousand in Tesla and in three years it’s worth a lot more. This is a great way to build money with lower risk if you have a long time frame. You could also lose it all if you pick wrong and invest in block buster video. The idea is to find a company like microsoft in the 80’s, or Amazon five years ago. I’d be thinking solar energy, other EV car companies. You could also buy a coron-virus damaged blue chip, like Natwest, but don’t buy cinema stock.

Trading

Often called “day-trading” it’s very short term and in theory works well. If you invest ,$2,000 in NIO it might go up 20% in the year. I have seen shares go up 19% in the day. if every day i invest in something that goes up 5% a day, in the week i’ll have made 25% gain. The problem is finding them, many shares goes up and then down, no one know how they will move. Shares can even drop on good news, like positive share prices. While day trading is hard and i think more stressful for me, i like it more basically because i don’t like the pre-market.

Last week fastly dropped 29% in the pre-market on some bad news. Yesterday Logiteck went up 20% in one day on earnings and i bought in my test account. Not real money sadly it was a test, it dropped 4% during the day, but i sold, and investor would hold it and lose the very high gain.

Why i don’t buy the day before earnings

Once if you can believe it. I bought amazon the day before earnings. It jumped up 5% and i made a tiny little sum. Now it scares me to think of that. So much risk on the hunch they had done well in crono, even after spending billions in their workplaces. I then thought this was a great idea and i tried it more. Etsy down, alibaba down, nvidia down, domino down. I almost got johntson and johnston but stopped myself.

The crazy thing is they also have a trial cancelled today. The bad new is not just earnings. If you’re like me and your a new croro virus made day trader, it’s a learn by mistake process. I come to find prices can drop even on good news. Now i am trying a buy on good news. I will try “Blackrock” they are up 4.5% in pre-market.

How i day trade with $2,000

warning: i am a lucky amateur, this is not advice but how i do things, which is probably wrong!

I have read a few things like “how much do you need to start trading” but if you can save up two grand and and are happy to lose at least $500, then you can start trading on a platform like Etoro. Now some say trade fake money for at least 6 months first and this is a good idea. You need a method, plan and be ready to lose money.

Here are my gold rules learned after major hits.

  • Don’t leverage
  • Hold week max
  • Never lower stop-loss
  • Never “trust” the market
  • Set profit target
  • build investment plan

Some say you need $25,000 grand to start but that is to trade on wall street. I also set goal for myself in $100 profit a day, once i hit it, i am gone. I also set $100 loss a day. Some days are just shit. I don’t trade every day and maybe you shouldn’t either. I bet election day is crazy and day when they announce job placement figures etc.

My method

Here what i do. – trade on news and sales figures. I know on thursday before open that ZOOM is going to give results. It’s great news and their share price is up 8% in pre-market. (i get news via google alerts “pre-market” and check “nasdaq.com” pre-market results which is live. Oh why didn’t i buy last night. Because the market is like a madman and reacts differently to the same input. It could have been dropped 8%. Loss potential profit is not loss.

I assume zoom will go up ( based on evidence) . I set a “buy” order for $2,000 and my stop loss for $50 and my take profit for $100. Now i am paying zero on Etoro if i don’t leverage, and don’t hold over night. The share drops as it opens as profit takers hit and drops 1% (-$20), then 2%,(-$40) but then goes up 5% over and sells. I made $100 and often his happen in five minutes if you buy when the market opens. 5% of 2,000 is $100. You will often see shares going a lot high than a 5% gain. You might like to ride it up higher, i have seen shares go up to +17% or drop -40% so if brave change you stop loss to +$50 and keep an eye on it. I sell when i get scared. (very scientific).

If it goes down and then later, probably up it’s very annoying but never change to a lower stop loss. You can buy again. If shits dropping i sell fast and buy back, it’s free and you’ll be shocked at how fear can make things drop. Imagine i buy tesla and it drops by 2.5% and hit my stop loss at (-$50), you just lost $50 dollar, the pain, but it’s a lot better than -$500. So if you like tesla keep and eye on it and during the day you see it drops to -8% then starts to go back up. I buy a fake money lot at this point and see it it’s going up from here. If you buy back lower than you sold, great.

If you lost $50 then it’s time to pick the next. i just watch what is going up and buy in fake money. If it’s still up in an hour. i buy. In $1,000 lots and $25 stop loss. i either get my +$100, or i stop at -$100.

To lose $100, three trade had to fail, that is going down when i thought up. Now long term trading takes a lot of the risk out. It annoys me that people get on there high horse and act like day traders are idiots and gamblers. Of course it easier to say “yes NIO shares will go up in the next five years” than “they will go up today,” and that is a gamble but it’s based on evidence. Everyday some shares are going up 5%, 10%, 15%, 20% and tens of them are. A great day trader will out earn a great holder. A lot of new traders like me are just lucky idiots, but investing is getting easier and easier and it’s not brain surgery to see what is going up or down.

Investment plan

It gives me some confidence to know what i want to buy and why. If you are like me you trade on news and reports. Nasdaq.com has a great service that tells you what days companys announce earnings. I like to take two or three big companies a day and put who i will watch.

Monday: Zoom, UPS, SUNRUN

Now i don’t buy the day before because i never seem to guess right. Often i miss “Zoom jumped by 30%” that really happened. But many also drop, Dominos dropped 7% on good news and so do many. others Every morning i look at my list, search news and scope pre-market. so i see zoom had good figures and are up, so i buy. Now if you are very brave, you set a higher stop loss because sometimes it drops on open, or you can just wait and buy if it is going up, you’ll miss some growth but it’s less risk and it almost always drops a bit on open.

Buying the rumor.

The great thing about etoro is you can buy fake shares. What i like to do i buy 10-15 lots of 1,000 share on monday that are part of my plan for the week. Often if zoom is anncouncinng figures, that week. they will have a massive day before then. Often you can buy before and after they have good figure but don’t hold at night. People normal try to buy a days before they announce. Often you will see share price go up, before news then drop, then go up again, so look out.

Free things i use

So if you save $2,000 you too can invest in shares. I recommend Etoro as they are free (no comission) for day trade and have a great app. So you can buy and sell from anywhere. I also recommend.

  • google new alerts: “shares jump” “pre-market” “NIO” ect
  • Nasdaq.com “pre-market sales” “earnings calandar”
  • Motley fool, if you can afford join their mailing list do
  • Investopedia, callum silver is smart and has a free email and podcast

Good luck and be brave.