Day trading

[avinalarf]

Started my learning curve today with stock picking,both day trading and for long term.
I chose HL as after I had a chat with them last night I was satisfied that they answered the phone quickly and the guy I spoke to was very pleasant and helpful.
One thing I found annoying was that even when logged in to my account if I wanted to deal shares I then had to enter more passwords etc before I could actually buy them and in that 30 seconds the price moves,how can I get around that ?
Purchased a slug of shares in a company I know well,if I'd bought them when I fancied them 4 years ago I would have made x10 my investment.
But I do realise that when fantasising you always remember the winners you never bought and forget the losers.
I am wondering how you can make a decent return day trading as any purchase over £1000 attracts a 0.5 % stamp duty plus the dealing costs.
So unless your picking penny stocks or loadsa money how does it work for you ?

[avinalarf]

R8Steve said:

Aim shares (which are most popular for day trading) don't attract stamp duty.

I've not noticed the issue with the password buying/selling shares to be honest, if you are looking to take advantage of a certain price just log in a bit earlier with the deal you are looking to do and refresh the trade. That way you don't have to put your password in again. Even AIM shares shouldn't change that much in 30 seconds though.

I thought that the market in AIM shares was not that liquid and that might be a problem when selling ?
Yesterday you said you had a few issues with HL,what are they ?
Thanks for the advise Steve,I appreciate it.

[avinalarf]

walm said:

Why on earth are you day trading?
Are you mad?
Even without stamp duty trading costs will destroy any returns.
And even without trading costs you will lose money.

Just look for any research online about the viability of part-time day trading.

Literally you are giving your money away.

If you believe that a complete novice can somehow make a fortune day trading (which is what your actions imply) then why on earth wouldn't EVERYONE be doing it???

Hi Walm....I'm not day trading....just feeling my way...you'll know from previous comments I've made that I only commit in business if my experience tells me I have an edge,and I certainly don't feel that in the stock market.
It's taken me only the past 10 years to picking individual stocks rather then funds.
At the moment I'm only picking shares in companies whose business model I understand.
Just got pissed of with the fund management charges,low bank rates,and the toppy property market.
So I've done my deal for the moment,I'll have to do my research on a couple of other companies and go from there.

[avinalarf]

Ozzie Osmond said:

^^^ OP, my own thoughts are much the same as Walm. Proceed with caution, if at all.

Here in the Finance forum there are a fair number of "investors" as opposed to "traders". What's the difference? Investors will usually be looking for returns in the medium to longer term, say 5 to 10 years, so will not get in a flap if something they have bought drops by 10% in the first 3 months.

If you want a fairly extreme example of Investing,

• A "commodities" fund had been trading at about £5.00 in 2012
• By 2014 it was at £3.50 and I thought, "I'll buy me some of that, it's bound to go back up again".
• It went on falling to £2.50 so I bought some more. This takes bottle when you've already lost 30% of your money. But if you believe commodities are a good long term bet then it's the logical, if difficult, thing to do. Namely, putting your money where your mouth is.
• As of this week the fund is finally back up at £3.25 giving me overall a roughly break-even position. Phew.
• Now I sit tight for the long term profit - Hopefully!

Thanks for your comments.
I would really like to sit down with somebody that either works in the markets or understands how they operate,if only to gain some real knowledge.
For me that would be more worthwhile than reading books with the graphs and technical analysis.
Breaking my virginity today has taught me a lesson.
The only real advise I've seen,that chimes a bell with me,is to spread the risk,over a basket of shares,common sense really.

[avinalarf]

contango said:

Other than having to start somewhere and dipping your toe in the water, what made you buy the stock you purchased.

Seasoned market participant, who is not doing much this week,,,, this and the next week are known for low liquidity. If you look back over the last few years there have been significant moves in mid August.
Partly because many people are away on holiday and those manning the desk have less experience, moves and volatility are magnified by thin volume, that tends not to make too many people smile when they get back from their break...... it feels more quiet than threatening this year....so far!

I have been wanting to get into the company for a long time,just been too tied up in my own business and life generally to get around to it.
As you know immediately after Brexit a lot of shares fell some picked up fairly sharpish.
I should have got in then but I was not prepared.
However the shares are trading circa 18% of their high of a year ago, looking to keep it long term.
The business has an excellent trading model and I obviously believe it's a fair bet,however nothing's for sure.
The money I'm investing in picking shares is only a reasonable proportion of my capital.

[avinalarf]

contango said:

What you say sounds reasonable, however, I am left confused by the "Day trading" thread title, if you intend to hold the stock for some time. I assume you have used an ISA allowance, if it is more a long term holding?

Day trading, short term and investing are completely different applications, apart from trading metrics you need to grasp, there are also the emotional and cognitive bias to consider when trading different periods.

,ho,ho ,ho...you may well ask.
Yesterday I started a Topic with the heading Share Dealing and it got little response apart from a guy called Steve and I'm grateful to him
So today I needed some advise and thought I needed a sexier Topic heading that might grab more attention and thankfully it's worked,a bit like MAN BITES DOG.
Anyway I was contemplating,in my virginal innocence, having a go at day trading but I soon realised that stamp duty and charges would probably knock out any gains.
Although I'm aware of its existence,I have not researched the Aims market,where one PHer suggested I could trade without stamp duty,so for the moment I'll keep my powder dry.

[avinalarf]

contango said:

What you say sounds reasonable, however, I am left confused by the "Day trading" thread title, if you intend to hold the stock for some time. I assume you have used an ISA allowance, if it is more a long term holding?

Day trading, short term and investing are completely different applications, apart from trading metrics you need to grasp, there are also the emotional and cognitive bias to consider when trading different periods.

"Trading metrics "....,,,,"Emotional and cognitive bias" ......what's that all about ......?
I've been in business all my life and what I do is look at an item and say to myself...."How much will my customer pay for that " and if I can see my margin I'm in.
Re bitcoins ,which to me are unfathomable hocus pocus.
I read that there's been some fraudulent activity that's resulted in a 36% loss of value.
What's that all about ?

[avinalarf]

av185 said:

Very difficult to make any serious money from day trading stock. My advice would be to hold a 'quality stock' for up to a month with the hope of making better returns.

Hargreaves do not charge for fund trading but are relatively expensive for stocks and shares trading. I trade funds on momentum and this has proved far more successful as a technique.

Thank you for the advice.

[avinalarf]

contango said:

Ok.....

Good luck with this..... having spent some time trading /investing professionally and also teaching in house investment bank grad training programs, I would honestly say you need to take your time, read and learn the market.
Aim is not for the feint hearted, despite apparent tax advantages.... You need to work out your goal and risk appetite. Aim is a market where a novice is likely to take any profit too soon and likely lose more than anticipated too often. I seriously wouldn't suggest anyone start trading there with limited market knowledge, this is PH and everyone day trades to keep the supercar in V nitro+.

Don't expect this to be easy, if you jump into trades sectors with bad risk/return profiles, you may well be disheartened losing your money, where as a steadier start will help you see opportunity when it is there, which is probably not as often as you hope.

As I say, having worked with new traders and investors, your initial approach is not inspiring too much confidence, which is actually meant to be helpful rather than a criticism.

Thanks Pete,I appreciate your advice.
I don't not expect to day trade any time soon ,if ever.
I will however try to extend my knowledge on the subject although reading your previous post the theory sounds a bit daunting.

[avinalarf]

The comments that you gents have made,added to my own feelings on the matter,have given me food for thought.
Breaking it down,whilst attempting not to oversimplify,it is apparent that the skills required for investing are often quite different than day trader.
An investor will research a company,study the balance sheet,where the company stands in the market place,how attractive it's "offer"is,the strength of its "brand" to access whether it's worth getting into,the Warren Buffet approach.
The "serious "day trader would need to have a different set of skills which would include a mathematic analysis of the market place and how underlying trends might affect share movements,in a short space of time.
I can also see that the "mindset"required and his appetite for risk are also important factors.
I read topics by guys on this forum that say " I've got a few bob that I don't know what to do with" so I'll do some day trading".
They then say "I don't care too much if I lose my stake".
That's absurd,doing business should only be about making a profit otherwise you might just as well just go to a Casino.

[avinalarf]

freshkid said:

But if you enjoy it more than going to a casino...and you learn something at the same time...what does it matter?

I don't go to the Casino,in fact I don't bet on anything.
Good luck to those that do but it's not something I really have a feel for.
My main interest is my business,which I enjoy,and taking a few holidays with the wife now and then.
A bit predictable,I know ,but that's me.

[avinalarf]

stongle said:

Bitfinex, a Bitcoin exchange got hacked and lost circa $60m with coins from participants accounts. Upto the hack it was the largest exchange as it allowed for margin trading (lending funds).

The exchange decided to mutualise the loss ("bail-in") across all participants / wallets each loosing 36% of their value. They have issued a Digital Asset; that at somepoint in the future "may" be exchangeable for shares in the HKG parent OR BitCoins (assuming exchange returns to profit). It all seems a bit up in the air.... Bitfinex were well know for having iffy security protocols so there is fair chunk of negative press re those maintaining accounts / wallets there.

As for investing in BitCoins themselves; well depends on if you are looking at speculative trading or value in Distributed Ledger Tech - DLT (the 2 are not the same). Each DLT needs a native coin; so there have been a number of different Coins spring up (and fail).

I value & believe in the benefits of DLT; but don't take the coins that seriously. I do punt Ether (native coin on Ethereum which I like given Smart contract capability) - BUT its a punt. Originally I looked at negative news correlations to Bitcoin; but that's not always the case (DAO a prime example of the issues - but bnnn.ought in more of the back of that). Its more a bit of fun, so prepared to loose my stake - but I'm up about 4k this year (TBH I'm 50/50 on cashing out for a weekend in Vegas or letting it run). I'll be looking at what R3 consortium come up with in the coming months.

Note... this is very brief summary of the issues (not a forensic deep dive into cryptocurrency trading)

Edited by stongle on Wednesday 10th August 12:07

Edited by stongle on Wednesday 10th August 12:08

Overtime I've read about bitcoins and how you mine for them,can you explain in simple language the process.
Also I don't understand how they are valued.
Our common international currencies the £ or $ or $, whatever,they are relatively stable in value and fluctuate but only relatively moderately,but the Bitcoin can swing wildly in its value.
Also can you go to a bank and exchange them for currency and how might a bank value them ?
Is it the same as any other commodity in that they are only worth what another person will pay for them ?
What function do Bitcoin perform that normal currency cannot.
And why are Bitcoin popular with the criminal fraternity ?
How do you know it's not a big scam ?

[avinalarf]

twinturboz said:

avinalarf said:

Breaking it down,whilst attempting not to oversimplify,it is apparent that the skills required for investing are often quite different than day trader.

Agree totally different ball game. It's one thing knowing what to look for in a setup and another to then manage that trade.

I think it was contango who alluded to it earlier there's also the emotional aspect you need to consider. You can give two traders the same buy signal in a stock and the outcome could be vastly different, just for example one may end up making a 2k profit and the other shaken out at the first sign of a loss even though the trade is the same.

I presume day traders have dealing strategy in their minds,as to the % profit or loss risk,when they buy and sell,would I be right in that ?
In the example you gave are you suggesting that one trader might always sell when the share loses say 5% ,whilst another just sits there hoping for a rebound ?
Or is it that the other trader has say a 10% loss threshold ?

[avinalarf]

stongle said:

I’m not evangelical about them, they are tainted. If you want to read more, Coindesk (www.coindesk.com), has a lot of information on Bitcoin and such.

They are very volatile: http://www.coindesk.com/price/#2010-07-18,2016-08-...

Originally I bought into Ether as a prop punt - taking a long position when someone explained the concepts of Smart Contracts in January. Latency is a problem; but there are a lot of (future) applications (oddly I see private blockchains having early value over public – totally against the anarcho-libertarian origins).

As I’ve said, application of the Distributed Ledger Technology / rail (and normally each DLT requires its own native coin) is more interesting to me than the coins gaining equivalence to a Fiat ccy (BoE produced some interesting literature on this). I was a Finance Trader for a GSIB, but now work on Financial product engineering (fancy name for regulatory arbitrage); so it’s all kinda interesting (although I don’t know the coding side of it). There have been a lot of interesting research on Blockchain impact to Banks (Credit Suisse wrote a paper recently). Worth hunting down.

Thanks,had a look at Coindesk,it'll take me more than a quick look.
However I will read up on it.
I would need to sit in a dark room with a spliff to get my head around this subject.
In ten months bitcoins have gone from a low of $393 to a high of $747.
How can one practically use it as a currency ?
I can understand how a drug dealer or Russian Oliagarchs would use it to launder money.
Is that it's " real" purpose / function ,a means of camouflaging wealth illegally gained or undeclared to the authorities ?
I don't see any other legitimate reason to need it,other than that or speculating on its future value.

[avinalarf]

twinturboz said:

Sure it's all on their individual strategy, appetite for risk etc. One trader may simply, as you said have a different stop loss.

But in the example I was giving even if the parameters where exactly the same, one may choose to exit after seeing the trade go up initially then come back down before it hit the stop loss, the other may stay disciplined and follow the plan exactly. The emotions involved can lead to rash decisions whilst your in that trade.

You can have a well defined plan with exact profit targets and stop losses, following that with extreme discipline is another matter, one that at times goes against human nature, no one wants to take a loss or admit they where wrong hence beginners tend to hold onto losses longer and take profits quickly, whilst it's the exact opposite that you want.

If the best traders in the world get 6/10 trades right, the idea of the game is to make sure those losses are small and the profits on the winning trades far exceed the losses, it's about consistent small profits not chasing the big trade.

I think many new to the markets think it's a get rich quick scheme or it's easy money and either don't put the effort in to research what works or simply give up or run out of funds before they get to a profitable strategy.

Thanks for that,it's as I surmised.
So I think that you're saying that in day trading discipline is vital to successful dealing.
It can't be that simple surely.
I presume you pick a share you fancy or maybe any share,it doesn't really matter as long it's volatile,
have a defined strategy of selling if the loss exceeds - 5% loss or selling when the gain reaches + 10% and sticking firmly to that policy.
It's then becomes a game of statistics doesn't it ?
Or am I missing something ?
I take your point about consistent small profits.
So it's more the strategy rather than the performance of a company.
A company can be solid as a rock but if there suddenly develops some volatily you buy and sell.
Surely you have to have an advanced dealing platform to deal that swiftly on quick movements,or is it just better to have automated stop or loss buy and sell criteria .

[avinalarf]

walm said:

You are sounding worryingly like you really want to get into day trading.
Don't!

I'm just enjoying hearing the experiences of others.
i have decided to play safe and buy some Bitcoins instead.

[avinalarf]

stongle said:

That's the problem with money, it makes you do things you ought not do......

In the UK in the period 2011 / 2014 , 44% of SME start ups failed, only 16% were fast growing.
If one was looking to start a business looking at those statistics might well put you off doing so.
All new endeavours have a risk attached,it is how one manages that risk that sorts the wheat from the chaff.
The skills required to start a business are different from those to scaling up that business.
Indeed I would suggest that someone successful at running a small,"hands on"business might well not have the skills or the mindset to scale up.

[avinalarf]

jonamv8 said:

R11ysf said:

jonamv8 said:

Thought I'd document my morning so far. 3 trades 2 wins.

11/08/2016 11:05 GBP GBP/USD DFT 1.29635 1.29797 = 16.2pts
11/08/2016 11:04 GBP EUR/USD DFT 1.11489 1.11441 = -4.8pts
11/08/2016 09:16 GBP UK 100 DFT 6826.8 6833.8 = 7pts

Up 18.4 points thus far. 2 were strategy based and one was a hunch on FTSE which I've watched for a long time.

What are the costs on that? How many points are you giving up in costs on a 16 point winner?

The cost was in the initial spread. 1 point on FTSE and 1.2 points on both Forex.

My FTSE was manually closed as I felt it had run it's course, however I could have hung on for a few more points but I had stuff to do.

My GBP/USD was auto closed as it hit my limit.

My EUR/USD was manually closed out as I felt I'd got it wrong so wanted to limit losses while the GBP/USD continued up.

A lot of jargon on here that I do not understand.......yet.
I need to read up a lot more on the subject.
However if you want to spend a few hours with me,explaining the basics,we can go for a curry after,on me.

[avinalarf]

twinturboz said:

Not sure where to even start to explain the process. As R11ysf says it's not simply just buying and having a defined risk, that's not going to prevent you from say getting stopped out 10 times in a row. It's a far more complex process than that and hence why most people tell you day trading or trading is a losers game.

If you study the best traders and look at their strategies in depth you'll see contradictions, one trader will say do this the other might say never do that. That's because there isn't a one cap fits all strategy, there's multiples ways of making money in the markets, the hard part for a beginner is to define their strategy.

Reading about the different strategies you come across for example the Darvas method that only buys new highs, O'Neil's CANSLIM that mixes fundamentals and technicals, you have momentum traders or Elliot wavers who use waves to figure out the stages of a stock. I guess the part you have to figure out is what strategy suits your personality for example you may prefer to swing trade on a longer timeframe as opposed to day trading.

For me personally as a technical trader, your right the company name to a certain extent doesn't matter the fundamentals doesn't matter instead what I'm looking for is a pattern. For most technical traders they'll have a portfolio of patterns that they know, ones that they'll have seen a million times before from hours and hours of screen time they'll have a rough idea of how they expect that pattern to resolve.

At that point, once you know what your looking for it just becomes a pattern recognition game. You enter with a defined risk if your wrong and see how the trade works. The big issue is getting to the stage where you recognise buy setups takes 1000's of hours and without doubt has cost you ££'s along the way.

Having said that as I said before that's just one part of trading once you know what your looking for you then have to learn the skills of managing the trade, learning yourself knowing your weaknesses and learning to isolate your emotions from your trading decisons.

Another common theme from the best traders you'll see it took them 5+ years of constantly trading and most of them blew up their initial stakes several times before they finally became successful, I guess to a certain extent you only learn the hard way in trading , though the pain of losing money.

Beginners start off with no strategy no defined risk they make money get cocky take bigger risks and eventually blow up. Or they chop between different strategies not taking the time to analyse what was wrong, was it the strategy or was it themselves that was the problem. I say that as someone whose been there and done that.

I don't think you are but don't be under any illusion that this an easy game to learn or that it's a fast way to make money, it's a long hard road and if you go through it I can guarantee you'll end up knowing yourself a lot better. But if you can make it and become consistently profitable then it gives you freedom after all you can work from anywhere just a laptop and internet connection.

The only real short cut I can see is if your lucky enough to find a trading mentor who can help cut the learning curve instead of having to go through the whole process on your own.

Thank you very much for taking the time to explain so much ,it's very decent of you.
I know from my many years in business,that there are no short cuts,and that it's almost impossible to teach another the road to successful trading regardless of the commodity.
You cannot put your head on their shoulders.
However many books you read,or lectures you go to,its not the same as putting your own money on the table.
We each have a different approach to how much exposure to risk we are comfortable with and this is an important part of the equation.
The experiences,both the gains and the losses,go to shaping the way in how we run our own business.
So many other things ,such as the business contacts you have cultivated,and the quality of the staff you employ,all help to the success of the business.
The more knowledge one has the luckier one becomes.
You can be my mentor.

[avinalarf]

jonamv8 said:

List the jargon I used and I will explain on each one for you

That's very decent of you,but I feel I must set aside some time to read up a bit.
Otherwise you might find it tiresome,me asking what's this and what's that.