Slacker Day Trading At Home

Posted by Jacques - July 19, 2009

daytrading-at-home It takes a special kind of personality to be able to sit at home for a few hours each day staring at a charts and tick marks, watching money go up and down without flinching, and ultimately being able to sit back and make rational decisions in a industry driven by irrational behavior.

I’m talking about day trading. While it can be stressful and sometimes overwhelming, day trading can be done at home, with months not years of education, and can be a source of full time income. Keep in mind that is not investing, but a job, so it must be treated as such. I have compiled a short list of beginner tips for getting started from other extremely successful day traders, but keep in mind, all of these strategies work but they can easily fail if applied the wrong way. While I’m certainly not an expert, the experience that I have proves that it can be a very lucrative business with very little time investment. Check out this list and then see if you’re still interested before diving in.

1. Nobody can predict the future.
No matter what anyone says, there is nobody that can singlehandedly predict the future price of a stock. Most stocks will go above or below a given historical price in the future, it’s just matter of when. IMO Price movements are caused by 1/3 rational investments, 1/3 emotions, and 1/3 randomness. This means that 2/3 of price movements are caused by factors other than the company’s performance.

2. Stocks can dive on good news, and rise on bad.
Companies can dip on good earnings reports because people expected them to be better, or they can go up on losses due to potential external factors such as the increased possibility of a merger.

3. Buy slowly, sell quickly.
Again, this is just personal preference, but dollar cost averaging is something investors utilize to lower their risk. If you happen to purchase an asset at the wrong moment you can set yourself up for huge losses, but if you ease into the position slowly you can get the average price over a period of time rather than risking buying an asset in a momentary rally or dip.

4. Don’t give it back.
There is a tendency to want to go back in and make a little bit more. This is why the house always wins in Vegas, because you will keep playing until you run out of money. If you make a really good move then just quit, and if you make a few bad moves, just reset, think about what went wrong and try again tomorrow.

5. Cut your losses and your gains.
Along the same thread as the previous message, before moving into a position consider where you’re going to cut and run in both directions. This will prevent irrational holdings of losing positions that could cost you more than you can afford.

6. The market bounces like a Yo-Yo and moves like a staircase.
While you can’t predict when the market will make drastic movements, you can usually time the pullback. Anytime the market shoots up or nosedives, there are investors who will buy or short (opposite of buy) knowing that nothing can go one direction forever.

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July 19, 2009 | In All Slacker Methods |

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Wouldn’t you already have to have a large amount of money just to start day trading? I find it hard to believe anyone just sitting at home on their couch can say “hey I think I’ll become a day trader today.”

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Comment by RC — July 20, 2009 #
RC, There are many ways to fund such a venture, but first you will need to decide if it is even worth your trouble. Getting the money is relatively easy, you can start daytrading with your retirement accounts (they will have to stay in the portfolio though), you can refinance existing assets such as your home or your car, you can borrow from friends and family, etc. With a margin account, I was able to trade $40,000 worth of stock using only $10,000. This is plenty to get started.

Comment by Jacques — July 20, 2009 #

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