Does anyone here trades in the stock exchange? (U.S)

[Julio R]

Anyone who trades in the stock exchange, can I get some advice on books, websites, or any other resource to learn the basics of investing?

Also is there any general tips you could give me? Thank you

 

[MarneMath]

http://money.cnn.com/magazines/moneymag/money101/

General tips about money with subsections regarding investing.

 

[FlexGunship]

Anyone who trades in the stock exchange, can I get some advice on books, websites, or any other resource to learn the basics of investing?

Also is there any general tips you could give me? Thank you

Sure. I'm an avid trader. I use my personal investments as a replacement for long term savings. Yes, the risk is higher than an FDIC insured bank but my general practices with money limit this risk. If you're looking to get into the market, here are my pointers...

(Please notice that most of my time is spent on telling you what to do BEFORE you start buying volatile securities).

Before buying anything... do the following:

1. Have your monthly finances well grounded - this is so insanely important. I maintain two accounts with my primary bank (Ally). My checking account contains enough money to cover an entire month's expenses (about $4200). My savings account covers another month's expenses ($4200). Truthfully, I keep a little less than that around since I make more than my monthly expenses each month. Every expenditure I can put on my credit card goes on my credit card (because I get awesome rewards). I pay it off twice a month from my checking account. I refund my checking account from my savings account twice a month. My check from work goes into my savings account twice a month. This flow is critical and prevents me from EVER missing a bill and gains me the most from my rewards program. Also, it minimizes the amount of cash in my checking account (0.1% return) and maximizes the amount of time my money spends in my savings account (0.5% return). The extra that is left in my savings account is for investing! I move it over every three months or so. All of this process is monitored from Mint.com (the single greatest free thing in the entire universe!) so I never lose track or get confused about where my money is.
2. Invest in a 401k or other reitrement account FIRST - the magic number for retirement has been claimed to be 16% (don't know where it came from, but everyone seems to know it). I DO NOT fund my account at a rate of 16%. I fund it at 10% of my income. A 401k is a relatively safe, managed, account that I will rely on too meet the bare minimum of my retirement.
3. Have disposable income - remember that three months left-over? That's my disposable income. It comes after the mortgage, car payment, student loan payment, fuel, food, golf, clothing... etc... That money goes over to my E*Trade account for investing.

Okay, some ground rules for basic investing as a beginner.

1. Resist the urge to buy small amounts - for whatever reason, people think that buying in small amounts is safer. It's not. It just guarantees that you waste all of your returns on commission. If the commission is $9.95 (E*Trade) then don't buy anything for less than $2000. After buying and selling, that's a 1% loss. Anything more is insane. It's not even worth it. If you're buying a bond fund ETF, you'd have to wait months just to earn back your commission from dividends.
2. Resist the urge to sell (always) - if the market is falling, it's too late to sell. Buy more at a lower cost (this is call cost averaging and it lower's the overage cost of the securities you own). If the market is rising, hold on to your shares! If it's a trend upwards, buy more and ride it up! This is especially true if you've recently lost value.
3. Control your share value through buying, not through selling - This is a pretty good way to think about it. Feel free to reinforce your investments anytime the market value if lower than your cost average. This will progressively lower the average share value you hold. If you try to do this by selling at strategic moments, you'll have less control and you'll have a tendency to reduce your exposure to the market when your ultimate goal is to increase it!

Ignore the mantra of "buy low, sell high" because it doesn't work for the average investor. You can't personally predict trends. Find ways to increase the value of what you buy and resist the urge to sell.

Lastly, the basics of entering the market:
My last buy was $7500 and it was divided in the following way:

1. ~40% S&P 500 Index ETF (SPY)
2. ~30% Corporate bond fund (for a high-yield) ETF (HYG)
3. ~30% Long term bond fund (for a steady-yield) ETF (BLV)

If you don't know what you're doing... buy an index and buy it as an ETF. ETFs are a beginner's best friend. These are exchange traded funds, which are like mutual funds, but with lower management costs and no minimum cost of entry. They allow you to enter an entire market without buying a little bit of everything.

My entire portfolio is about 90% ETFs. I have a few odd bets here and there (Netflix and Tesla) that I bought as individual stocks and have no sold off completely.

When you pick something to buy, learn about it's market behavior. Corporate bond funds and government bond funds have a tendency to buck each other; that's not a rule, just an observation. So if you buy a bit of both, you'll tend to hedge your bets.

Cost averaging - I'm adding this to be clear. If you buy 10 shares of XXX at $50 and 10 shares at $100, your average cost is $75 over 20 shares. It dilutes the performance of the cheapest shares for sure, but prevents you from going bust if you buy too high one time. This is the best way to enter into the market. It's a way to stifle the unexpected swings in the market.

My cost averaging techniques put my SPY share value around $140 over the last two years. With SPY closing in on $170, you can do the math as to how well this is working. I buy SPY when it drops, and I buy it when it starts to rise sharply. If and S&P is boring over a three month period, I'll pick something else to buy. I recently bought some GLD when it was around $131/share ($1310/ounce) back in April. It hasn't returned anything yet, but that's a good long-term buy. When the next market crash hits, GLD will climb again and it'll be my insurance policy against not selling SPY fast enough (which you never can... so don't try).

Oh, yeah, that's my last tip... don't try to sell during a crash. You can't win the fight. Buy more when it turns around at the bottom and lower your cost average. Always sell when the time is right for YOU and the value looks good based on when you bought your shares. Sell when you're happy with your returns and you want to fund a major purchase. I sold some IWM (Russell 2000) recently to buy new wheels for my car. My return on those shares (while they had been sitting there) was 22% in a year. That beats ANY savings account out there. And if you look at what IWM was doing in the last year, I COULD'VE done better.

But always keep this idea in the back of your head: "if 100% of the money I have in the market disappears tomorrow can I keep paying all my bills and is my retirement account still funded?"

EDIT: Last thing, I swear... learn what limit buys and sells are. All online brokerages let you do limit buying and selling. This is essentially a trigger that says "buy when XXX reaches $YYY" or "sell when XXX hits $YYY." And you can give it a long term. I have a limit order in for GLD if it ever drops below $130 (or $1300.ounce of gold). If it doesn't go that low, then I don't want it... but if it does, it will drive my cost average down. If it rises, I'm not interested.

 

[Julio R]

Thank you so much for all of that information. Can you maybe explain a little how dividends work?

 

[Greg Bernhardt]

Thank you so much for all of that information. Can you maybe explain a little how dividends work?

Simply rather than reinvesting the profits a companies makes they instead give it to the shareholders. They are usually paid quarterly and you get a certain $ per share owned.

http://en.wikipedia.org/wiki/Dividend

 

[FlexGunship]

Thank you so much for all of that information. Can you maybe explain a little how dividends work?

Sure. Dividends are payments made to shareholders based on the number of shares they hold. Dividend might be paid yearly, quarterly, monthly, or they might be entirely unscheduled. There are three primary sources of dividends.

1. Corporate profit sharing- this is when a company shares a portion of its profits with its stockholders as an incentive to continue to hold the stock. This inherently increases the value of the stock. Look at IBM to see a great example of a dividend paying stock. For decades IBM has paid a dividend to its shareholders like clockwork. And every few years they increase the value of this dividend. The same is true of 3M (MMM). In each case, these companies usually ALSO offer a much larger yearly dividend around the end of the year.
2. Bond maturity - this is when a bond fund (any managed fund which invests heavily in government or corporate bonds) pays out a portion of its returns for maturing bonds. In general, bond funds represent a "fixed income" security. The managers of the fund don't target high returns on the value of the security itself, they target steady, monthly, dividend payments. Some bond funds are very reliable in their payments and their value is steady (BLV, AGG); these funds tend to pay between 0.25% and 0.5% value out monthly. Other bond funds are not so reliable and seek higher returns but are more risky (PHK, JNK); these funds can approach a payment of 1% each month but their value might vary wildly. Some are a middle ground (HYG).
3. Managed fund payouts - This is a mix of the two above. This is usually a fund which is representative of a sector (tech, construction, durable goods, etc.) and which seeks to track the performance of some market indicator. If the fund beats that market indicator, instead of inflating the value of the stock, they release that extra money in the form of a dividend. These dividend come out like clockwork (like a bond fund), but vary wildly in value (like corporate profit sharing). the iShares Russell 2000 ETF is an example of this. When this managed fund beats the Russell 2000 index in value, they pay the excess out at a dividend. This allows it to more closely track the value of the index without "losing on purpose."
   
   EDIT: The dividend in a managed index ETF can also come from the companies represented within that index ETF that pay a dividend. If you hold SPY (S&P 500 Index ETF) and 3M pays a dividend (3M being one of the companies in the S&P 500) that dividend goes to the fund manager who in turn may choose to incorporate it in their fund's dividend, which would be paid to you.

Most self-managed brokerages (E*Trade, Sharebuilder), will allow you to automatically reinvest your dividend payments back into the security that paid it out without paying commissions on it. Sharebuilder called their "Dividend Reinvestment" and E*Trade calls theirs "DRiP" (dividend reinvestment program).

My goal is to have a significant monthly dividend by the time I retire to help with expenses and the rising cost of living. That's why I'm buying fixed income securities 35 years ahead of my planned retirement. This is in addition to my 401k.

 

[Nikitin]

Look for good, large companies whose stocks have been pushed into the dirt due to irrational fear. Then the risk is lower and expected profit higher. Don't worry about opportunities - mr.market is always completely retarded in the short-term.

My bet is Apple. They have the best fundamentals in the technology industry, yet their stock is dirt-cheap because of some nonsense panic about the iPhone's market-share decreasing.

Also: Never buy/sell on impulses, and always think long and hard before you buy a popular stock or sell an unpopular one.

 

[xxChrisxx]

Look for good, large companies whose stocks have been pushed into the dirt due to irrational fear. Then the risk is lower and expected profit higher. Don't worry about opportunities - mr.market is always completely retarded in the short-term.

My bet is Apple. They have the best fundamentals in the technology industry, yet their stock is dirt-cheap because of some nonsense panic about the iPhone's market-share decreasing

The iGravy-train has long since left the station.

 

[FlexGunship]

My bet is Apple. They have the best fundamentals in the technology industry, yet their stock is dirt-cheap because of some nonsense panic about the iPhone's market-share decreasing.

I can't speak to Apple... I own their products but not their stock. That being said... be wary of overly inflated prices. An alternate view on AAPL's performance is that it was inflated above it actual value because of market hype and the last three months have been a correction in the value. I'm not saying that's what happened, but it's a reasonable interpretation.

If you'd like exposure (the technical term for allowing a company to affect your wallet) to Apple, there's another choice. You could pick an ETF which is heavily invested in Apple (that is to say: an ETF that holds many companies, one of which is Apple). There's a database specifically for this.

You'll reap fewer of the rewards for the rise of Apple, however, you'll be exposed to far fewer risks as you'll have someone managing that fund to make sure it doesn't lose too much money. Here's a list: http://etfdb.com/stock/AAPL/

AAPL is a foundational part of VGT at nearly 18% of the fund. You'll notice, however, that VGT does not show the 3 month slide that Apple just experienced. That's because other stocks in the fund were holding the value high. However, when AAPL goes up, you should expect that VGT would also climb. If you compare the two over 5 years, Apple wins handily (+30% to +170%) because the company went through some crazy growth... however, if you compare the two over the past year, VGT wins easily (+17% to -17%). In fact, an investment in Apple would've lost you money.

 

[Vanadium 50]

FlexGunship makes some good points, but I would start even earlier: why are you investing? Specifically - what are your goals, and when will you need the money?

 

[krash661]

to be honest i can show you teach you anything you want or need, but the reality is, it's so ever changing every second, that it takes what is called hands on. you need to do trades for the teaching to be fully understood.

you can download platforms that have simulation trading or some times it's called paper money.

if you are serious we can move from here.

edit-

just like anything else,
everything about this is relevant, econ, countries and a lot of the sort.
the more knowledge you have the easier it is.
also believe it or not human behavior is relevant also.
so there's a lot of knowledge need to be successful.

take my knowledge or leave it, but i will say,
i'm a series 3 capital markets trader.

 

[jtbell]

If you don't know what you're doing... buy an index and buy it as an ETF. ETFs are a beginner's best friend. These are exchange traded funds, which are like mutual funds, but with lower management costs and no minimum cost of entry. They allow you to enter an entire market without buying a little bit of everything.

Many people who do know what they're doing, stick to index funds, either as normal open-end funds from providers such as Vanguard, Fidelity, Schwab and T. Rowe Price, or as ETFs in a brokerage account.

Individual stocks have a lot of risk. To reduce that risk, you can diversify by buying stocks of a lot of different companies. But then how do you pick the right ones? You can turn the job over to the manager(s) of an actively-managed mutual fund, and hope they do a good job.

It turns out that most actively-managed mutual funds don't do any better than the market as a whole. The ones that do better, change from year to year. It's easy to see which funds have done well in the past, but much harder to see which ones will do better in the future.

You pay a price for active management. With a "no-load" fund, and a large enough balance at a mutual-fund provider, you don't pay any fees explicitly. Nevertheless, the costs are still there. They simply reduce the price per share by an amount called the "expense ratio" (ER). All mutual funds have to publish it. For actively managed funds, the lowest ERs are about 0.3% to 0.5% per year. Some are 1% or even higher.

Index funds are mostly managed by computers, so they have lower ERs, even below 0.1%. This makes it even more difficult for actively managed funds to come out ahead in the long run.

I now have all of my retirement funds that aren't in my tax-deferred plan at work, in index funds similar to what Flex has: some in "total stock market" funds (more broadly based than the S&P 500), some in "total international stock" funds (non-US companies), and some in "total bond market" funds. I'll never do better than the overall market, but I won't do any worse, either.

I happen to have a T. Rowe Price account with some of their mutual funds, plus a couple of Vanguard ETFs in a brokerage account at TRP. I picked TRP mainly because my father used to use them for his investments, but now that I've learned more over the past few years, if I were starting over I'd go with Vanguard because their costs are lower overall, and that's what I'd recommend for someone new.

 

[AlephZero]

A couple of "dont's".

1. Don't buy something just because somebody is trying to sell it to you.
2. Don't buy something just because it's (claimed to be) tax efficient. The object of the game is to make money, not to avoid paying tax.

My bet is Apple.

You can't invest in Steve Jobs's next big idea any more, because he's dead. And unless lightning strikes twice in the same place, the next Steve Jobs will be working for a different company.

Just my personal opinion, of course.

 

[FlexGunship]

FlexGunship makes some good points, but I would start even earlier: why are you investing? Specifically - what are your goals, and when will you need the money?

See, this is a question I've never really understood as it pertains to beginners. I get that there are day traders and people like that, but if you're asking or beginner's investment advice, I think it's always the same goal: "I want to enter the market in a way such that I enjoy the benefits that everyone else is reaping." Or the corollary: "I don't want to suffer through these current savings rates when there are so many other opportunities."

I could totally be wrong, of course. Either way, I think the strategy is the same if you're not day trading and not converting your life savings to fixed income securities.

Want to beat savings rates? Get a mix of index tracking ETFs, and bond funds.
Want to save for a house? Get a mix of index tracking ETFs, and bond funds.
Want to save for retirement? Get a mix of index tracking ETFs, and bond funds.
Want to save for your kids' college educations? Get a mix of index tracking ETFs, and bond funds.
Want to guard against inflation? Get a mix of index tracking ETFs, bond funds, and commodities.

I now have all of my retirement funds that aren't in my tax-deferred plan at work, in index funds similar to what Flex has: some in "total stock market" funds (more broadly based than the S&P 500), some in "total international stock" funds (non-US companies), and some in "total bond market" funds. I'll never do better than the overall market, but I won't do any worse, either.

I only stayed away from international stocks because the thread indicated U.S. markets in the title. I also like Vanguard for most ETFs, and I own a good chunk of VEU. I also like SPDR for anything S&P related (i.e. SPY).

 

[krash661]

trading is trading,
the differences from scalping, day trading, trading, or investing is nothing more than time frame.
it's also depended on what kind of account is opened.
you can open a regular account or an retirement account,
opening an retirement account has holds and stipulations and withdraw fee's and such(retirement account will charge a massive tax/fee just to liquidate the account before retirement date).
a regular account, you can withdraw or change without charges on most accounts and platforms.

 

[russ_watters]

The iGravy-train has long since left the station.

Agreed. The P/E ratio is a touch on the low side and investors are reacting to both the likely permanent loss in iPhone dominance and the belief that once the pipeline of Steve Jobs' products is exhausted there won't be a next new, innovative product.

 

[russ_watters]

See, this is a question I've never really understood as it pertains to beginners. I get that there are day traders and people like that, but if you're asking or beginner's investment advice, I think it's always the same goal: "I want to enter the market in a way such that I enjoy the benefits that everyone else is reaping." Or the corollary: "I don't want to suffer through these current savings rates when there are so many other opportunities."

I could totally be wrong, of course.

What benefits? They are different, depending on your goal:

-I'm retired and want 100% guaranteed returns, with no chance of loss. (Don't invest in the stock market).
-I'm 30, single, making a lot of money and maxing out my 401k already with an S&P Index fund, but I'm bored and want to play a little some of my spare cash. (Try daytrading with your play money!)
-I'm 30 and want to buy a house next year; how should I invest? (something safe, not stocks.)

Either way, I think the strategy is the same if you're not day trading and not converting your life savings to fixed income securities.

Want to beat savings rates? Get a mix of index tracking ETFs, and bond funds.
Want to save for a house? Get a mix of index tracking ETFs, and bond funds.
Want to save for retirement? Get a mix of index tracking ETFs, and bond funds.
Want to save for your kids' college educations? Get a mix of index tracking ETFs, and bond funds.
Want to guard against inflation? Get a mix of index tracking ETFs, bond funds, and commodities.

The ratios are different and types of stocks (or index fund) are different. And just beating the savings rate doesn't require stocks at all. And saving for a house depends on the timeframe.

 

[FlexGunship]

What benefits? They are different, depending on your goal:

-I'm retired and want 100% guaranteed returns, with no chance of loss. (Don't invest in the stock market).
-I'm 30, single, making a lot of money and maxing out my 401k already with an S&P Index fund, but I'm bored and want to play a little some of my spare cash. (Try daytrading with your play money!)
-I'm 30 and want to buy a house next year; how should I invest? (something safe, not stocks.)

Well fair enough, but the OP is looking at first time investment in the U.S. stock exchange. Yes, it's true that I inferred youth, but I can't imagine a 70 year old man posting: "Does anyone here trade securities? I really need some consistent income."

I'll gladly eat my words (digital version, several thousandths of a yoctogram worth of electrons) if I'm totally wrong.

EDIT: Also, the chances that an individual has enough money to start day trading seems slim to me. I don't mean that as a cold fact... just that, I have a lot of disposable income and trading with online commissions being what they are, I think I'd just wear down my entire account if I only gained a few tenths of a percent per trade.

 

[krash661]

with most platforms,that are not these retail popular names,

you can start day trading with 5k.

look into a platform called ninjatrader, it also has a couple of brokers to chose from.

 

[ModusPwnd]

you can start day trading with 5k.

Is that legal in the US? I thought you needed 25k to do that.

 

[krash661]

Is that legal in the US? I thought you needed 25k to do that.

are you serious ?

lol no,
it's the broker who decides.

 

[ModusPwnd]

No, I am not kidding.

http://en.wikipedia.org/wiki/Pattern_day_trader

Its a SEC rule, which means its pretty much a law, doesn't it?

http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p003881.pdf

"The minimum equity requirement for a “pattern day
trader” is $25,000 pursuant to paragraph (f)(8)(B)(iv)a. of this Rule."

 

[FlexGunship]

I believe a pattern day trader trades on margin, and not with liquid assets.

REGARDLESS... the OP is not going to be day trading.

 

[ModusPwnd]

I believe a pattern day trader trades on margin, and not with liquid assets.

Rather than just saying what you believe, you could actually read the link and make an informed claim.

Day trading minimum equity: the account must maintain at least US$25,000 worth of equity.

Jeez, I am just trying to clear up some possible misinformation. The post about day trading with only 5k is advocating an illegal thing, as I see it. Isn't spreading misinformation explicitly against the rules here? If I'm wrong, then I apologize. I personally don't care if someone breaks the law in this fashion, but they should know what is up. If somebody is new to investing its nice to at least have some concept of the rules and laws regarding investments.

 

[krash661]

for future contracts, there's a margin requirement per contract( daytrade requirement and initial requirement)(exchanges requirements and brokers requirements).
it's dependent on which contract,there are list for this at cme.com.
for the S&P future contract which is the ES it's only 3500$ from most brokers.
there's also this thing called shorting, it's when you take the sell side( different from liquidation sell).
i do not even know what a pattern day trader is or even means..

ModusPwnd,
two things,
there's also a thing called margin(it has two different meanings in a sense),
that means using borrowed money from the broker to implement trades.
this is used to increase your share/contract size..that's when that rule comes into play.

and the other link you referred to is out of date.

other than that it's the broker who decides account requirement off of regulators requirements.

in other words,
you are wrong.
and you are wrong, because what you referred to is out of date information.
look at the dates when published.

edit-
anyone can go to these exchanges websites, and receive the rules and regulations from there, SEC, finra and all them also,
go to their direct website.

 

[ModusPwnd]

Cool, I am glad to learn. Everything I see says that its 25k worth of equity required in your account. You are claiming that is not the case? Is there a source that replaces my out of date link?

You don't know what pattern day trading is? Its day trading. Its defined in my links.

Pattern day trader is a term defined by the U.S. Securities and Exchange Commission to describe a stock market trader who executes 4 (or more) day trades in 5 business days in a margin account, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period. As the trader is exposed to the danger of day trading and intraday risks and potential rewards, it is subject to specific requirements and restrictions.

Those specific requirements and restrictions include maintaining 25k worth of equity (not credit). At least, that's what my out of date link claims.

 

[krash661]

Cool, I am glad to learn. Everything I see says that its 25k worth of equity required in your account. You are claiming that is not the case? Is there a source that replaces my out of date link?

You don't know what pattern day trading is? Its day trading. Its defined in my links.

as i posted in my previous post,
anyone can go to these exchanges websites, and receive the rules and regulations from there, SEC, finra and all them also,
go to their direct website.

and that was a joke.
that is an out of date term. simple, pattern does not exist now days,
it's just day traders.

you do not have to believe me, that's fine, i can careless,
if anything it's luck that i typed this much, usually i would just ignore and move on.

 

[ModusPwnd]

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

What is the minimum equity requirement for a pattern day trader?
The minimum equity requirements on any day in which you trade is $25,000. The required $25,000 must be deposited in the account prior to any day-trading activities and must be maintained at all times.

You say pattern day trading does not exist, but finra (the place you told me to look) claims otherwise...

Here is another from the SEC,
http://www.sec.gov/investor/alerts/daytrading.pdf

Minimum Equity Requirement: The minimum equity requirement for a customer who is designated as a pattern day trader is $25,000. This $25,000 requirement must be deposited into the customer’s account prior to any day trading activities and must be maintained at all times. A customer cannot fulfill this $25,000 requirement by cross-guaranteeing separate accounts. Each day trading account is required to meet the $25,000 requirement independently, using only the financial resources available in that account.
If a customer’s account falls below the $25,000 requirement, the customer will not be permitted to
day trade until the customer deposits cash or securities into the account to restore the account to
the $25,000 minimum equity level.

You say that pattern day trading doesn't exist... Do people do some sort of day trading that doesn't flag them as "pattern day traders" specifically? And that is how you get around this rule?

Otherwise I think your "ninjatrader" might be aply named. lol

 

[krash661]

as the reference says,
" day trading margin requirements "

the key word is margin,
the problem is it's to confusing for you.
other than that i do not know what to tell you..
i'm moving on now.

 

[ModusPwnd]

How so? You need a margin account to day trade. This requires 25k worth of equity. I admit I'm not that smart. Instead of just dipping out, you could try to clear things up. How is the key word of margin to confusing for me? The margin is credit with your broker. You need it to make day trades because sales won't clear by the time you buy again. The rule requires that you have 25k worth of equity to get a margin account and day trade. Your claim that one can day trade on 5k seems to be in direct contradiction to this rule. Your broker should not give you a margin account for pattern day trading with only 5k worth of equity in your account.

It would probably be nice for the original poster too, to learn the correct things about margin accounts.

 

[SW VandeCarr]

I

Lastly, the basics of entering the market:
My last buy was $7500 and it was divided in the following way:

1. ~40% S&P 500 Index ETF (SPY)
2. ~30% Corporate bond fund (for a high-yield) ETF (HYG)
3. ~30% Long term bond fund (for a steady-yield) ETF (BLV)

I would caution against long term bond funds at this time because of very low interest rates and the corresponding high bond prices. Bond prices fall as interest rates rise. It's a mathematical relationship not based on market whims. The quality of long term bonds are reflected by their yields. High yields are associated with greater risk. In any case, the potential for rising interest rates and falling bond prices is substantial over the long term.

 

[russ_watters]

How so? You need a margin account to day trade...

How is the key word of margin to confusing for me?

Here:

Day traders sometimes borrow money to trade. This is called margin trading.

http://en.wikipedia.org/wiki/Day_trading#Characteristics

Sometimes.

So you're probably correct that many if not most if not the vast majority of day traders trade on margin and therefore need to follow rules for trading on margin, but there is nothing stopping someone from daytrading with a very small amount of real money.

 

[ModusPwnd]

That makes sense. But I think that if you do day trade with a small amount then you will be compelled to apply for a margin account or you have to slow down your trading. I have gotten this warning a few times before for using unsettled funds. I ignored it because I was only trading a lot for a day or two then I sit on it for a while and all my transactions cleared up.

I think you would be hard pressed to day trade without getting flagged as a pattern day trader. I don't even day trade and I have gotten the warning. You could probably vary which stocks you buy, while staying in the same sector or something like that. Or just day trade one day a week or so.

 

[krash661]

actually, majority of these so called professionals, daytrade futures more than anything.
stocks suck in reality,
they take a lot of money to make a little money.

it's usually funds(mutual,hedge and such) and home owners as it's called(retail traders) who play stocks.
and even then mutual funds and such do not daytrade stocks much.just homeowners really.

look up payout per contract on some of these futures and commodities futures.
it's a lot more, but it is also just as easy to lose.

there's also things that outsiders do not know about that occur on any time frame.
i'm not going to get into that. to much to type.

an example are the wall street movies.
things like that occur on a daily bases.it's the big boys game.
and that's all it is,nothing but a game.

actual economics and such is just a small part.

 

[krash661]

That makes sense. But I think that if you do day trade with a small amount then you will be compelled to apply for a margin account or you have to slow down your trading. I have gotten this warning a few times before for using unsettled funds. I ignored it because I was only trading a lot for a day or two then I sit on it for a while and all my transactions cleared up.

I think you would be hard pressed to day trade without getting flagged as a pattern day trader. I don't even day trade and I have gotten the warning. You could probably vary which stocks you buy, while staying in the same sector or something like that. Or just day trade one day a week or so.

i would say you were receiving this warning because you were about to be margin called,from your purchasing power,(which is for clearing by the way)(because it's a margin account)
which occurs from making losing trades or being in a losing trade close to the amount of the margin requirement of the account.
the reason why you did not get margin called(or you did,which is more probable)is probably because what ever you were in( assuming buy side) went back up, and the losing amount decreased,
am i correct ?

 

[ModusPwnd]

No, I don't have a margin account. That was the problem. I traded one symbol too much and didnt wait for my sales to settle and cover my purchases. No big deal if its a once in a while thing. The first time I got the warning was an accident, the second I knew it would happen. :p

I hardly trade at all these days. Just anxiously wait for dividend month to pay off some bills.

 

[Julio R]

What benefits? They are different, depending on your goal:

-I'm retired and want 100% guaranteed returns, with no chance of loss. (Don't invest in the stock market).
-I'm 30, single, making a lot of money and maxing out my 401k already with an S&P Index fund, but I'm bored and want to play a little some of my spare cash. (Try daytrading with your play money!)
-I'm 30 and want to buy a house next year; how should I invest? (something safe, not stocks.) The ratios are different and types of stocks (or index fund) are different. And just beating the savings rate doesn't require stocks at all. And saving for a house depends on the timeframe.

How about "I'm under 20 and want to get into the game not necessarily for long term reasons"?

 

[ModusPwnd]

For a quick buck the market sure does beat vegas! But know that is pretty much what you are doing. Speculating for a quick buck is much like gambling. Thats not to say that the house always wins though...

 

[krash661]

No, I don't have a margin account. That was the problem. I traded one symbol too much and didnt wait for my sales to settle and cover my purchases. No big deal if its a once in a while thing. The first time I got the warning was an accident, the second I knew it would happen. :p

I hardly trade at all these days. Just anxiously wait for dividend month to pay off some bills.

who's the broker ?

 

[jhae2.718]

I had a professor who used turbulent flow theory to model the stock market with one of his grad students. They made loads of money and started a company based off of it.

 

[Julio R]

I had a professor who used turbulent flow theory to model the stock market with one of his grad students. They made loads of money and started a company based off of it.

Definitely beyond my level of knowledge.