StockFetcher Forums · General Discussion · low budget trading<< 1 2 3 4 5 >>Post Follow-up
ranbaker
7 posts
msg #27032
Ignore ranbaker
6/23/2003 9:47:53 PM

Here is my opinion for what its worth. Trading penny stocks is far risker then trading better quality stocks. I much rather trade 100 shares of a quality stock then 1000 shares of a penny.

I see this common mistake amongst new traders. Many new traders seem to flock to trading penny stocks because they can buy a large number of shares. Most don't even realize the risk they are assuming when trading pennies. Heck, most don't even use a stop or know where to place them. However, if you are going to play them at least understand your risk and develop a risk managment system that fits your budget.

You can make a pretty good income from a low risk of $250 dollars even. Most of my trading friends risk an avg of $500 per trade. So when you buy 5000 shares of a .25 cent stock what are YOU risking? Hmm, lets take a look. Lets say I buy 5000 shares of a $1.00 stock. I went long at $1.00 I see the best stop at .75. So thats a 25 cent stop. So if stopped out you will lose $1,250.00 Ouch!!

Oh well, I am not here to lecture.. Just trying to save someone a few bucks ;)

Ranbaker@attbi.com





robdavis
69 posts
msg #32677
Ignore robdavis
7/25/2004 4:27:16 PM

Guys, I'm a veteran (part-time) trader in stocks; I started trading equities in 1987. And that was 17 years ago. I admire you positive attitudes, enthusiasm, and unselfishness about sharing ideas on filters and methods of trading. You're great and so is Stockfetcher!

Buyandhold.com? That's an idea! By all means use them, A) if you trade certain mutual funds, where there's only one price, at the end of the trading day, or B)if you trade certain little known utility stocks with prices that hardly ever move during the day.

Buyandhold for ordinary stocks? Even with the temptation to save hundreds of dollars per month, I don't think so. Ordinary/regular stocks are a different ball game. (By paying $15 per month) you think you're save money but chances are you pay Buyandhold up to $100 per order. No, not in the form of commissions, but in lost profits or poor fills. No broker can live on bread and water only. Either your Buyandhold broker trades ahead of you (i.e. against your best interests), or, alternatively, he routes your orders to specific companies of his choosing where (against your interests) you get poor fills and he gets the highest possible payment for "order flow".

But, isn't this illegal? No, FYI, none of these broker activities (i.e. trading ahead of you, or getting paid for order flow) is illegal as of 2004.

Any caveats? Yes! Definitely! Try not to get rich quick. Be careful about trading any A) stocks under $10, B) NASDAQ stocks, C) Bulletin board stocks, and/or C) Pink sheet stocks (because of their volatility).

The worst combination is a volatile stock that you have to exit or enter at the wrong time because of a recalcitrant or overly restrictive broker who holds all your money, and makes all your decisions as to timing.

Example: Just before the open (at 9:30) you place a $1,000 order for ABCD, a mythical stock traded on the NASDAQ NM. Let's say ABCD opens at $1.00.

Scenario 1: ABCD rises to $1.10 by 10:00 a.m., and this is when Buyandhold notifies you that you've bought $1,000/$1.10 = 909 shares of ABCD at $1.10 per share. End result: You've paid only pennies in commission, but you've just lost $100 in slippage. Your broker made 1,000 * ($1.10 - 1.00) = $100. In other words, you lost $100, or 10 per cent of your trading capital. Was it really worth it?

Scenario 2: ABCD is still $1.00 by 10:00 a.m., and this is when Buyandhold notifies you that you've bought $1,000/$1.00 = 1,000 shares of ABCD at $1.00 per share, and you have on your hands a stock that is only going sideways. End result: You've paid only pennies in commission, but you're tieing up your capital in a stock that is not moving at all. Was it really worth it?

Scenario 3: ABCD drops to 90 cents by 10:00 a.m., and this is when Buyandhold notifies you that you've bought $1,000/$1.00 = 1,000 shares of ABCD at $1.00 per share, and there was no way you could've regained control of the situation in the first 1/2 hour of trading. End result: You've paid only pennies in commission, but in the first 30 minutes of trading you lost $100 (i.e. 10 per cent of your capital) to the market. Was it really worth it?

For lowest prices and reasonable terms try Scottrade (and there are many other good ones); what I've heard from my friends tends to be 95% positive. I have no affiliation with them; I'm getting zilch, zero, nothing, nada, from recommending them; but (if you don't mind the credit check, $500/$2,000 minimum and the $7 commissions) they tend to be pretty good, i.e. above average.

As to trading often, and maintaining a portfolio of 10 stocks, I don't think so; not for me; that'd be way too expensive and way too time consuming for me. I suggest you keep 5/6th of your capital invested in a safe, stable, dependable stock that rises slowly, steadily and with little or no volatility; and you do all your high risk trading using one stock at a time, at any time, that represents not larger than 1/6th of all your capital at risk. Then you have to trade only 4 times per month, let's say, at $7 per trade. You end up paying only $28 per month. Yes, I know this is a bit more than Buyandhold's $15 per month, but you retained all control and all of your profits.

What do you think?


mslattery@dc.rr.com
86 posts
msg #32678
Ignore mslattery@dc.rr.com
7/25/2004 5:37:48 PM

robdavis and all

What would you set "Slope of Close," or "Chande Momentum Oscillator (CMO)," at to fetch stocks that rises slowly, steadily and with little or no volatility.

Thanks, Michael


robdavis
69 posts
msg #32691
Ignore robdavis
7/27/2004 2:08:04 PM

For steadiness, there's always some unsteadiness, the market is driven by emotions, and even the stocks of the greatest (publicly traded) companies in the world tend to become unsteady. You cannot avoid all "losers", but you can avoid most of them. For a "slope of close" filter, I'd start out with a "greater than 0" phrase and a value of 0 for the "slope of close", and then increase this number gradually and keep experimenting.

As to low volatility, there's always some volatility with stocks. You cannot avoid all volatility (with stocks), but you can minimize volatility of your portfolio by either choosing the "right" stocks, or having a bunch of "high" quality stocks in your long-term portfolio, or choosing a stock mutual fund with a history of steadiness, low volatility (if you don't mind not getting the highest return). To minimize volatility I'd look for, experiment with, and test filter phrases for BBW (Bollinger Band Width), for example. You could assign a number (or numbers) to them, and then increase or decrease these numbers gradually; and then keep experimenting.



HAROLD
1 posts
msg #33430
Ignore HAROLD
9/29/2004 12:50:37 AM

I am trying to find out if "LowTrades.com" is a sound company and ok to use. I can't locate them with the BBB or find any other info other than their own website. They don't indicate whether they are an individual or a company. I would appreciate some info. Thanks, Paradise.


acervapsych
39 posts
msg #33474
Ignore acervapsych
10/1/2004 10:16:10 PM

HAROLD

My friend is using low trade. He has been trading with Low Trade over a year now. Never had any problems. I am currently using Freetrade. I donít have to pay commission fees and I am happy with their services.



StockFetcher Forums · General Discussion · low budget trading<< 1 2 3 4 5 >>Post Follow-up

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