Day Trading

I'm not familiar with CNBC's Million Dollar Portfolio Challenge, so I don't know what their investing time horizon is like for this task. Depending on how long that horizon is, I would probably make different sets of choices for your million dollars. Over a longer horizon, I would probably do some research and then pick 20 stocks, $50,000 each, and then let them sit there and do nothing for several months as that is, historically, the best way to get a return on investment. Too much "in and out" of the market would kill you on commission costs alone anyway.

Now, keep in mind that the premarket trading doesn't open where it left off the day before, but rather, where the current bid/ask prices are. Thus, if a stock closed yesterday at 10 bucks, came up with stellar earnings this morning at 7:30, you'd expect the initial bid/ask to be above 10 bucks (as everyone, not just you, got this news). Now, it is possible that the last trade for the stock this morning was lower than the pre-market bid/ask. But it is the current bid/ask price that matters and tells what you can get for it now. Thus, you wouldn't be able to pick it at 10 bucks pretrading. Now, it is possible that if you premarket trade and you get the stock early in the day, you can appreciate the continued rise during the day of that stock (although you probably could have done the same by just buying it at market open). However, the premarket trading could have also over-reacted (in particular, if the stock is very lightly traded). If the latter is the case, then you would have been better off just buying the stock at market open.

Bottom-line is that you should probably buy/sell stocks pre/after-market just as you would normally, keeping in mind everyone else has the news too. Further, you should be careful of large spreads with the after-hours trading, as it reduces possible gains. Hopefully this helps?

If you notice price fluctuations over time, there seems to develop something some people call ceilings and floors. The price seems to stay within a channel. In statistics you would call that a standard deviation, as practically applied–technically, it is a bit more involved, yet it is a functional equivalent of the principle.

Now, if the price of the stock or commodity contract "breaks out" of that corridor, whatever caused that would likely have some strength or momentum to it. The turtles found that they got to get more action in watching the 50-day moving average breakouts, but there was more strength and better results in waiting for a 200-day breakout. Bear in mind, it didn't matter which direction the price broke because they would buy (go long) for increasing prices or sell-short (go short) for falling prices.

Next you apply a stop loss of some sort, usually a trailing stop of something like 5 or 10 percent depending on how volitile (how the price flops around). Just because something set a new higher or lower price than it experienced recently doesn't mean it will be a straight shot up or down.

What it seems like you are trying to do is get a distribution from the fund like a dividend or special payment. Trust me, you wont come out on top with this strategy. What you have to remember is the purchase & sell fees involved. Assuming you are buying B shares, you could pay upwards of 5-8% on the sale amount, it costs nothing to buy in. In addition, many funds have an early withdrawal fee of about 2-4% if you sell before 90 days. If you are doing A shares, you have the same problem but you are paying the fee up front, so you actually are working with less than what you put in. No load funds also have the early cash out fee. Then lets talk taxes on the short term gains. Then talk brokerage fees.

You would not only have to make a monster sized gain on your principal, but that must also be a sizable distribution that you need to get in order for it to make sense. Does not sound like a good idea for such a short term play.

A Free Basic Hands-on Training is available at http://finance.groups.yahoo.com/group/currencytrader/.

There are some conservative strategies to invest in the forex market that many people consider too boring and evidently not complicated enough. It seems there is a breed of players entering the Forex market the same way they would belly up to a roulette wheel in Las Vegas.

I ran an analysis a couple of weeks ago that you may find interesting. First of all it is important to note that this is based on historical prices and is not necessarily representative of future results. But it is interesting.

Let's say that you opened a conservative hedge trade on the 1st of any month this year.with $10,000 and used a conservative margin of 10% You just let the account sit and didn't touch it what would it have looked like on 7/20/2007 (the day I ran the analysis).

If you opened your account on

Jan 1st = $13,161 on 7/20/2007
Feb 1st = $13,645
Mar 1st = $11,924
Apr 1st = $12,045
May 1st = $10,473
Jun 1st = $10,530

None of these accounts would have ever been close to a margin call and the Jan and Feb accounts would seem to have faired quite well through the China correction during late Feb / early Mar.

So I guess the morale of the story is that it is not the Forex market that is the problem. It is the human elements of greed, fear, lack of knowledge and lack of a conservative investment strategy.

It's not what you do it's how you do it!

Good luck with your decision process.

Paul

The other long term strategy is to buy good companies that keep making money every year and wait many years as their shares grow with the earnings. This is the usual way normal people invest their money for the long term. In the short term trying to catch moves is exceedingly difficult for non-professionals.

Briefly the new rules stipulate that brokers must have a minimum capitalization of $5m plus a percentage to cover client funds.

If your broker meets these two requirements the next question is whether your broker is an ECN or FCM dealing broker – ie will his dealing desk be playing against you? This will matter if you want to include scalping as part of your trading strategy.

This is just the beginning of your quest to find a broker which best suits you and the resource list below should help you find the answers you will need.

Good luck.

I am a day trader and often try to derive profit from the disparity in currency rates at various points of time. People who try to make some huge profit can incurr loss using this techniques but if we try to capture small pips then its a winning strategy.

One of the fund Manager of FINEXO suggested me to try this once when i was looking up for high returns. Surprisingly i made huge pips in just 1 hour and thats how i became a Day trader.

Anyways the basic requirements for successful Day trading are:

1. Excellent Command on Technical charts.

2. Look beyond what common man does.

3. Foresightedness

4. Be Different.

5. Good Source of market news and technical charts

6. Ability to draw conclusions from market updates.

If you have these you can very easily succeed here. I am using Finexo charts and updates which are quite accurate and reliable for me. If you have other sources it would be an added advantage.