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OfflinegeokillsA
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Re: I had en epiphany about money today [Re: i like cow poo]
    #19255288 - 12/10/13 12:50 PM (10 years, 1 month ago)

A simple S&P 500 index fund, like the commonly traded SPY is an excellent way to gain hands off exposure to the market's forces.  It is diversified and self regulating, since the S&P 500 removes bad companies and replaces them with better companies incrementally over time.  This is why the majority of money managers actually fail to beat the S&P 500's returns.  So unless you think you'll enjoy the challenge of actively trading your own money, there is nothing bad about using an index fund as your investment vehicle.  I would generally stay away from mutual funds because they carry higher fees, the SPY is really all you need.


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Invisibleblackdust
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Re: I had en epiphany about money today [Re: geokills]
    #19255698 - 12/10/13 02:33 PM (10 years, 1 month ago)

Quote:

geokills said:
I have been an active stock, option & peer-to-peer loan investor for eight years now (and a passive investor/observer for quite a bit longer than that), and while I agree that stocks are one of the most lucrative opportunities to increase your net worth, it is NOT without risk and I just wanted to chime in to offer my perspective on a few things...

Quote:

ch1ck3n.s0up said:
A good place to start would be with some trade simulation software that allows you to "back-test" your positions. Then you can try out different ideas, without putting any real money at risk.



I agree that paper trading will be a huge benefit to beginners attempting to manage their own money in the market.  And when you are ready to start trading real money, don't just go piling in.  Dole it out slowly.  Your emotions will have a greater affect on your trading discipline when the gains and losses on your screen are real gains and losses in your wallet.  Further, the market is dynamic, so if you start out in a strong period for the aggregate market, it will likely make you feel like a genius since practically everything will be making you money.  While you should capitalize on this while you can, you should also be mindful that it is not always going to be this way, and thus don't let yourself get cocky by taking on ever-increasing amounts of risk, because in my own experience, that type of behavior tends to end very poorly!  And even though I know this, I still find myself falling into the same bad habit from time to time.  So please remember: discipline trumps conviction.*


Quote:

From there, move on to "penny stocks," where there's some real ca$h in the game. See how you do, without the risk of incurring huge losses.



I cannot disagree more.  Penny stocks are the most volatile, unpredictable pieces of lottery out there.  They do not adhere to generally accepted accounting principles, some of them don't even report their earnings, most are not profitable and there is almost no liquidity.  This last concern ties in directly to the original poster's concern "One thing i didn't realize is that you actually have to wait for someone to buy your stocks" -- if there is no liquidity, you won't be able to get the price you want for the stock you want to buy or sell, because the spread between the bid and the offer will be wide, or there simply won't be enough shares available to complete the transaction at the specified price, leading to added and often painful volatility when you execute your trade.  While this volatility can potentially work in your favor, more often than not it will not.  Most importantly, the "lessons" you learn trading penny stocks are not necessarily the same rules you will want to apply when trading stocks with normal liquidity because they trade differently.


Quote:

- You'll have to invest in trading software that executes trades quickly.



Most online brokerages execute trades very quickly and cheaply.  I use TDAmeritrade which includes a robust java client called Think or Swim, here's an example of what my trading desk looks like, and this software is included with your account at TDA with no additional charge.  Trade commissions are also in line with generally standard rates for reliable online brokerages and if you have a large enough account and pester them, they will even lower your commissions below their advertised rates.

    Monitor Setup:

                           

    Screenshot from this morning, the top center screen is my "dashboard"
    that tells me at a glance the general health and direction of the market
    at any given moment:

         


Quote:

- You'll need news services (like Bloomberg). Without cutting-edge information, opportunity will be lost.
- You'll need a decent amount of cash to get started
- You'll need a solid USD$100,000 to really make any decent money. The less money you have, the more risk you have to take to hit it big... and the more losses you'll incur.



While more trading capital certainly makes it much easier to make a living wage, I would not discourage people from investing with smaller amounts.  News is important, but I have found through my near-decade of trading that the most important piece to successful trading is understanding price action, and to do that, all you really need is the chart.  The price speaks for itself... no matter what a company may be doing, that information is already being factored into the stock price in real time; this is, after all, the purpose of the market: to be a forward pricing mechanism that incorporates all available information into the formulation of an appropriate valuation.  There are some company specific metrics that are important to keep an eye on, such as profitability, growth, and the related price to earnings ratio of the underlying stock.  But ultimately, you make money on what the stock price does, not what the company does, so get comfortable reviewing charts.  If you're in this business, it will serve you better than anything else.


Quote:

i like cow poo said:
A roth IRA seems like a safe way to make some cash.



A Roth IRA (or any special tax-adjusted account) is simply a vehicle to allow you to incur a lower tax rate on your investment profits. It is not a "safe" way to make some cash, because your Roth IRA account can still go to zero if you invest it all into companies that are going bankrupt, or may not change at all if you don't actively invest the money that you have in it.  The only advantage is a tax advantage, everything else about how you actively manage your money will be the same as if it were in regular old investment account.


*So please remember: discipline trumps conviction.  What does this mean?  In part, it means not falling into the trap of "this company has such great prospects, the market is stupid to be selling is off, I know I'll eventually be proven right and everyone selling is an idiot, so I'll just hold on for a little while longer (or maybe I'll buy even more!) and wait until it turns around."  Or the dreaded "damn I have really lost some serious money on this stock, so I'll just hold on until I get back to even and sell it."  Discipline is all about planning your trade and trading your plan.  Set your stop loss levels before you get into the trade, and ADHERE to them.  So what if you lose a little money on the trade?  Better to lose a little than to lose a lot, not to mention the psychological benefit of getting that loser off your screen so you can focus on the next, better trade.  Your first loss is your best loss.



:aweoverdose:  :awethumb:


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OfflineManianFHS
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Re: I had en epiphany about money today [Re: blackdust]
    #19265529 - 12/12/13 12:20 PM (10 years, 1 month ago)

Wow @ that setup. Only thing i would recommend is a mouse beanbag for wrist comfort :wink:

To chime in, about 6 months ago i purchased a course called online trading academy for $250 or so, am getting through it and have learned a good deal. I also listen to the podcast power trading radio and try to understand everything theyre talking about. Hopefully one day it will be fluent language.


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notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... "

ChrisWho said: "It's all about the journey, not the destination."


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OfflinegeokillsA
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Re: I had en epiphany about money today [Re: ManianFH]
    #19266297 - 12/12/13 03:09 PM (10 years, 1 month ago)

By far, the most valuable resource helping me to get a better handle on trading has been Stock Market Mentor and Option Market Mentor.  At its core are the teachings of one trader, Dan Fitzpatrick, who has dedicated an unbelievable amount of time to creating the near-daily content and active forum community that the subscription service provides.  If you're only doing one, do Stock Market Mentor.  He even has free short videos posted most days, and a 30 day free trial.  If you are struggling in figuring out the market but are determined to make it work, the daily strategy sessions and various other tutorial material provided is well worth the time.  Even if you have a handle on the market, the daily information and forum participants can alert you to opportunities as they arise and certainly help keep me in sync with the aggregate flow of the market.


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··∙   long live the shroomery  ∙··
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Offlineunderfliptown
I suck and you should kill me


Registered: 03/07/11
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Re: I had en epiphany about money today [Re: geokills]
    #19272408 - 12/13/13 08:48 PM (10 years, 1 month ago)

Geokills, your posts are outstanding! You're so helpful!:thumbup:


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OfflineGHBeer
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Re: I had en epiphany about money today [Re: underfliptown]
    #19295979 - 12/19/13 12:24 AM (10 years, 1 month ago)

we're all monkeys


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OfflineOutThisLife
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Re: I had en epiphany about money today [Re: GHBeer]
    #19340598 - 12/29/13 07:53 AM (10 years, 1 month ago)

OP is an idiot holy shit.


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Offlineunderfliptown
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Re: I had en epiphany about money today [Re: OutThisLife]
    #19340780 - 12/29/13 09:37 AM (10 years, 1 month ago)

Why?


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InvisibleConfucian
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Re: I had en epiphany about money today [Re: underfliptown]
    #19343385 - 12/29/13 08:32 PM (10 years, 1 month ago)

Quote:

underfliptown said:
I think it would be better to watch the market and then sell your stocks the second you know its gonna jump.




You want to sell your stocks the second before it jumps?

Quote:

underfliptown said:

How long does it usually take to sell lets say 100 shares of a moderately popular stock?



The second you hit sell the shares will be gone.

Here is a look at Google's Chart on Friday. Each candle represents 2 minutes. I circled the volume bar at 10:40am. During the 2 minute duration from 10:40 to 10:42am a total of 56,400 shares were traded. The stock price barely budged by 50 cents.

56,400 shares * $1,115/share = $62,886,000

If you had $60 million sitting in your account and hit market buy the price wouldn't have even budged.



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InvisibleConfucian
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Re: I had en epiphany about money today [Re: Confucian]
    #19343470 - 12/29/13 08:48 PM (10 years, 1 month ago)

It's hard to wrap your head around how much money flows through Wall Street.

Here is FB (on 12/12) in the first 2 hours of trading. Price from 9:30 to 11:30am stays between $50.75 and $51.50.

Volume during this time = about 41 million shares exchanged

Times about $51/share = about $2.1 billion traded. Stays within a 75 cent range.



Edited by Confucian (12/29/13 08:49 PM)


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