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So this isnt intended to be some sort of replacement for actual research, and theres a reason why whole ass books on the subject are doing brisk business on Amazon. This is just an attempt to describe the basics of day trading as I see it and offer some useful data that helped me get up and running.
With investing, you sink money into a stock and you expect to keep it there for at least a year. Because if you take it out in less than a year you get hit with a cap gains tax beat down. By like 10% or so more than normal. So investing focuses on moderate returns, say 4-9%, annually.
Day trading focuses on capitalizing on short term trends. It's divided roughly into scalping and swing trading. Scalping is where you basically take a position you think is going to move up/down by maybe half a percent or even a quarter percent, and you exit the position with a small profit in as little time as 30 seconds or as much as an hour or two if things are going your way. Swing trading is more focused towards broader trends; you target a move in either direction that will last over night or for several day. Swing trading is, arguably, much more profitable. Swing trades target moves of say, 2-6% or more. But the risk with swing trades is also much greater; markets generally move a lot before markets open or after markets close. Retail traders, aka people reading this forum, we cant trade all those hours. Some brokers like Webull do let you trade 'extended hours' btw. But some things only trade from 9:30am to 4:00pm, such as options. More on options later.
But yeah the risk with swing trading is you can be up 4% at market close and watch helplessly as your position reverses and by the time you can exit it at 9:30am the next day, you might be down 4% or more.
Thats the mile high view.
If you're entering a position thinking it will go up in value, you buy shares. This is called being long on a position.
If you think the stock will drop in value, you sell shares. This is called being short on a position.
If you are long on a stock and the price crashes to 0, you lose your investment.
If you are short on a stock and the price goes up 10 fold, you essentially owe your broker the cost of those positions. Which they tell you via something called a 'margin call'. At which point you can pay them or declare bankruptcy. So take away from this that shorting has infinite risk, essentially.
You can place a stop-loss, meaning you automatically flatten your position (sell all your holdings) once a certain amount of losses are incurred. But if price blows through your stop loss before it triggers, your'e still on the hook.
Contemplate this on the Tree of Woe.
These concepts are described as 'naked' btw. Experienced traders will generally offset risk from shorting through various means that are beyond the scope of this convo.
However the core takeaway here is to know risk and make sure you stay ahead of it. An excellent rule of thumb is to never have more than a small fraction of your bankroll in any given trade. Obviously this is sage advice. I personally tend to YOLO my rolls around with abandon because such is my whimsey. 'If he dies he dies.' Model your approach on your risk tolerance.
That's your toe in the pool.
I suggest you go to TD Ameritrade and start a 'cash account'. There are two types of accounts, cash and margin. Margin means the broker extends you a line of credit about 3-4x your cash reserves. If it sounds alarming and dangerous its because it fucking is. It's a one way ticket to highly emotional decisions. I've vapored whole ass bankrolls in an afternoon on margin accounts chasing losses. I have never done so on a cash account.
There is another EXTREMELY good reason to choose cash account:
FINRA has a rule, called the Pattern Day Trading rule. It means, in essence, you can only enter into a position and close that position during one trading session (9:30am to 4:00pm) 3 times in a given week. If you exit a trade without holding it over night a 4th time, you essentially get your account shut down and have to beg like a bitch to get it turned back on, and eventually they refuse to turn it on and give you a 90 day cooldown where you can only close out existing positions, not open new ones.
I have lost... so much... so fucking much money... on margin accounts... because I didn't want to exit a position and get a PDT sanction. Wasn't worth it, imo.
The way around PDT rule on margin is to hold more than $25,000 in your account (this can include open positions btw).
In any case again I suggest cash for so many reasons.
So yeah, deposit as much as you're comfortable losing, and then tuck into this beautiful son of a bitches videos:
https://www.youtube.com/user/jc4x4
That's Ziptrader Charlie. I dont know the fuckin guy. He's not offering me kickbacks. He happens to be one of the only truly high level traders on the internet offering profoundly good guidance and advice on how to GET RICH on the stock market for literally free.
If I suggest something here as a sane course of action, chances are it's based on something he said first.
Also he offers a pay for access course that gets extremely high reviews. I would suggest strongly you consider it.
So yeah watch his free courses. Pay extra attention to the ones that focus on picking stocks / scanning for stocks, and the ones that focus on 'entry points' and 'exit points' on positions. Pure gold.
My one constructive piece of advice is to avoid at all costs any and all suggestions he, or anyone else, makes on penny stocks.
Yeah, people get rich off them. People also get rich off roulette. Francis Bacon once stayed up for 3 days and went to a Monaco casino and went on an absolute tear on several roulette wheels at once because he heard secret voices telling him what numbers to play. Go ahead and try that as well, see how well it works for you.
Always target safe easy profits, never get greedy. Penny stocks appeal to neither of those maxims.
Final notes...
Trading stocks can literally make you a better person. I know, non intuitive. But it rewards you for discipline, research, preparation, patience. It forces you to cultivate those character traits and if you lean into it, it literally pays you cash for your victories.
Since I started day trading, I lost money. That's not unusual. Traders take years to become profitable. But suddenly the rest of my life is .. better. I'm doing more coding, I focus more, I'm spending more time on constructive study / R&D and less time on booouuuuuulllshit. I get up early every day. I deal with setbacks better, both financial and otherwise. In general I'm becoming a more stable, productive, positive person. True story.
But don't get into it expecting it to be easy. The market absolutely doesn't care about your emotional health. It will refuse to follow rules. It will stop you out of positions then reverse and not care at all that you just walked away from a new Tesla with a single mouse click. That's what the market does. Don't get caught up in FOMO (Fear Of Missing Out), don't look backwards and ruminate in losses. Stay positive, be honest with yourself about mistakes, move onto looking for your next opportunity. And news flash, that's a great way to approach life.
With investing, you sink money into a stock and you expect to keep it there for at least a year. Because if you take it out in less than a year you get hit with a cap gains tax beat down. By like 10% or so more than normal. So investing focuses on moderate returns, say 4-9%, annually.
Day trading focuses on capitalizing on short term trends. It's divided roughly into scalping and swing trading. Scalping is where you basically take a position you think is going to move up/down by maybe half a percent or even a quarter percent, and you exit the position with a small profit in as little time as 30 seconds or as much as an hour or two if things are going your way. Swing trading is more focused towards broader trends; you target a move in either direction that will last over night or for several day. Swing trading is, arguably, much more profitable. Swing trades target moves of say, 2-6% or more. But the risk with swing trades is also much greater; markets generally move a lot before markets open or after markets close. Retail traders, aka people reading this forum, we cant trade all those hours. Some brokers like Webull do let you trade 'extended hours' btw. But some things only trade from 9:30am to 4:00pm, such as options. More on options later.
But yeah the risk with swing trading is you can be up 4% at market close and watch helplessly as your position reverses and by the time you can exit it at 9:30am the next day, you might be down 4% or more.
Thats the mile high view.
If you're entering a position thinking it will go up in value, you buy shares. This is called being long on a position.
If you think the stock will drop in value, you sell shares. This is called being short on a position.
If you are long on a stock and the price crashes to 0, you lose your investment.
If you are short on a stock and the price goes up 10 fold, you essentially owe your broker the cost of those positions. Which they tell you via something called a 'margin call'. At which point you can pay them or declare bankruptcy. So take away from this that shorting has infinite risk, essentially.
You can place a stop-loss, meaning you automatically flatten your position (sell all your holdings) once a certain amount of losses are incurred. But if price blows through your stop loss before it triggers, your'e still on the hook.
Contemplate this on the Tree of Woe.
These concepts are described as 'naked' btw. Experienced traders will generally offset risk from shorting through various means that are beyond the scope of this convo.
However the core takeaway here is to know risk and make sure you stay ahead of it. An excellent rule of thumb is to never have more than a small fraction of your bankroll in any given trade. Obviously this is sage advice. I personally tend to YOLO my rolls around with abandon because such is my whimsey. 'If he dies he dies.' Model your approach on your risk tolerance.
That's your toe in the pool.
I suggest you go to TD Ameritrade and start a 'cash account'. There are two types of accounts, cash and margin. Margin means the broker extends you a line of credit about 3-4x your cash reserves. If it sounds alarming and dangerous its because it fucking is. It's a one way ticket to highly emotional decisions. I've vapored whole ass bankrolls in an afternoon on margin accounts chasing losses. I have never done so on a cash account.
There is another EXTREMELY good reason to choose cash account:
FINRA has a rule, called the Pattern Day Trading rule. It means, in essence, you can only enter into a position and close that position during one trading session (9:30am to 4:00pm) 3 times in a given week. If you exit a trade without holding it over night a 4th time, you essentially get your account shut down and have to beg like a bitch to get it turned back on, and eventually they refuse to turn it on and give you a 90 day cooldown where you can only close out existing positions, not open new ones.
I have lost... so much... so fucking much money... on margin accounts... because I didn't want to exit a position and get a PDT sanction. Wasn't worth it, imo.
The way around PDT rule on margin is to hold more than $25,000 in your account (this can include open positions btw).
In any case again I suggest cash for so many reasons.
So yeah, deposit as much as you're comfortable losing, and then tuck into this beautiful son of a bitches videos:
https://www.youtube.com/user/jc4x4
That's Ziptrader Charlie. I dont know the fuckin guy. He's not offering me kickbacks. He happens to be one of the only truly high level traders on the internet offering profoundly good guidance and advice on how to GET RICH on the stock market for literally free.
If I suggest something here as a sane course of action, chances are it's based on something he said first.
Also he offers a pay for access course that gets extremely high reviews. I would suggest strongly you consider it.
So yeah watch his free courses. Pay extra attention to the ones that focus on picking stocks / scanning for stocks, and the ones that focus on 'entry points' and 'exit points' on positions. Pure gold.
My one constructive piece of advice is to avoid at all costs any and all suggestions he, or anyone else, makes on penny stocks.
Yeah, people get rich off them. People also get rich off roulette. Francis Bacon once stayed up for 3 days and went to a Monaco casino and went on an absolute tear on several roulette wheels at once because he heard secret voices telling him what numbers to play. Go ahead and try that as well, see how well it works for you.
Always target safe easy profits, never get greedy. Penny stocks appeal to neither of those maxims.
Final notes...
Trading stocks can literally make you a better person. I know, non intuitive. But it rewards you for discipline, research, preparation, patience. It forces you to cultivate those character traits and if you lean into it, it literally pays you cash for your victories.
Since I started day trading, I lost money. That's not unusual. Traders take years to become profitable. But suddenly the rest of my life is .. better. I'm doing more coding, I focus more, I'm spending more time on constructive study / R&D and less time on booouuuuuulllshit. I get up early every day. I deal with setbacks better, both financial and otherwise. In general I'm becoming a more stable, productive, positive person. True story.
But don't get into it expecting it to be easy. The market absolutely doesn't care about your emotional health. It will refuse to follow rules. It will stop you out of positions then reverse and not care at all that you just walked away from a new Tesla with a single mouse click. That's what the market does. Don't get caught up in FOMO (Fear Of Missing Out), don't look backwards and ruminate in losses. Stay positive, be honest with yourself about mistakes, move onto looking for your next opportunity. And news flash, that's a great way to approach life.