Day Trading for Beginners - any tips for getting started?

[gull]

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Well with such sage advice (and thanks for it!), can anyone suggest a method for starting a little investment portfolio? Like I said, I have some money and want to diversify. I'm open for suggestions, I just don't know how to start.

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Good job for taking initiative and getting started. You're doing better than 90% of the people in the world. I would echo what Jeff W wrote above. The best way to invest is to avoid high-fee, high-taxed strategies. Index funds (or index-tracking ETFs) are the best way to invest your money. Index funds are great for a couple of reasons. They offer the returns that the stock market does (more than 10% per year, historically). However, they are have less risk than individual stocks. Movements of stocks are uncorrelated to a degree, so adding more and more stocks to a portfolio will decrease your variance while keeping your EV the same. It's works similarly to playing lots of hands in poker. Funds that track indexes are better than actively managed funds. They have lower expenses and are generally more tax-efficient. In aggregate, actively managed mutual funds trail the market's level of returns. In addition, it's impossible to pick the funds that will outperform in the future. Here are some websites that might or might not help you:

http://www.diehards.org/forum/index.php (the 2+2 of investing; many published authors and professionals post there)

ifa.com (this website has a very fancy, and very thorough guide to index funds)

iwillteachyoutoberich.com (this is a blog that has some very well-written introductory articles)

altruistfa.com/readingroom.htm (this webpage has many links to research papers; it has some advanced stuff, but it's more easy to navigate than the archives of a finance journal)

[DiVenuti]

Heres some good software to start off with which is free:

http://www.quotetracker.com/index_nn.asp

http://www.mbtrading.com/ ( get demo account)

[snowbank]

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Don't bother day trading. You'll get a better return for your money at the casino - and at least they sometimes give you free drinks.

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I find it hard to believe that people on a poker forum can be this closed minded, when the game that we play is the game that everyone else says, "don't, you'll lose your money." It's my understanding that a very small % of poker players win, and that number is very similar to the number of traders that make money.

Trading is something I've been interested in at least finding out about, to see if I have an interest in it. I've seen a lot of these replies on the forums saying how "everyone loses, you'll go broke." That's what everyone told a lot of us when we started playing poker. If there's anyone besides the haterz out there, who know a good deal about making money trading, or know of people who make a lot trading I'd be interested in at least learning about it as well if anyone has info.

[kimchi]

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Don't bother day trading. You'll get a better return for your money at the casino - and at least they sometimes give you free drinks.

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I find it hard to believe that people on a poker forum can be this closed minded, when the game that we play is the game that everyone else says, "don't, you'll lose your money." It's my understanding that a very small % of poker players win, and that number is very similar to the number of traders that make money.

Trading is something I've been interested in at least finding out about, to see if I have an interest in it. I've seen a lot of these replies on the forums saying how "everyone loses, you'll go broke." That's what everyone told a lot of us when we started playing poker. If there's anyone besides the haterz out there, who know a good deal about making money trading, or know of people who make a lot trading I'd be interested in at least learning about it as well if anyone has info.

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Trading can be profitable, but this guy is a beginner. I doubt he knows much about mutual funds/bonds/longer term trading.

Why would you suggest he skips the profitable (and beatable) low-stakes games and ploughs straight into the high-stakes where he will be against the pros.

If he wants to try trading, then I would suggest longer term trading starting with stocks. If he can beat that, then he can start increasing his opportunity advantage (assuming he has an edge) by decreasing his timeframe for trading.

For even the pros, a live quote screen is just an international one-arm bandit which they pump money into to relieve the boredom of longer-term trading (which is quite boring - like grinding the low-limits).

I stand by my initial recommendation to avoid playing the day-trading game for the OP. It's not closed-minded, it's sensible advice. I would have elaborated on my post, but I didn't feel it was necessary.

Did you start you poker career playing $2000NL? Or were you too open minded not to? Poker, like trading, can be very profitable. But you need to start sensibly. Beginning with day-trading in not sensible.

[jthegreat]

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I find it hard to believe that people on a poker forum can be this closed minded, when the game that we play is the game that everyone else says, "don't, you'll lose your money." It's my understanding that a very small % of poker players win, and that number is very similar to the number of traders that make money.

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Since the daily movement of the stock market is essentially random, it's a bit different than poker. You can't really calculate your pot odds with a random market.

[Statutory]

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I find it hard to believe that people on a poker forum can be this closed minded, when the game that we play is the game that everyone else says, "don't, you'll lose your money." It's my understanding that a very small % of poker players win, and that number is very similar to the number of traders that make money.

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Since the daily movement of the stock market is essentially random, it's a bit different than poker. You can't really calculate your pot odds with a random market.

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The randomness is in the deal.
(I'm on the don't day trade side fwiw)

[pig4bill]

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Well with such sage advice (and thanks for it!), can anyone suggest a method for starting a little investment portfolio? Like I said, I have some money and want to diversify. I'm open for suggestions, I just don't know how to start.

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Here's my bit of sage advice: Don't look for trading advice on a poker site, because most of the people here don't have a clue. Most of what they know, they learned in this forum from other clueless posters. Would you go to a trading site to ask for advice on how to handle a re-raise from an out of position limper pre-flop when you hold AK on the button?

That said, let's look at the basics. Do you have 30 grand? The minimum account size, by regulation, for daytrading is 25 grand. You'll need some extra for drawdowns and incidentals. If you only have 7 or 8 grand you can't daytrade stocks, but you can daytrade futures. Many similar concepts apply between the two. If you're going to do stocks, pick up a few books on daytrading and technical analysis. Forget about books on mutual funds or bonds or "value investing" because you won't be messing with any of that. You have a mountain of stuff to learn, so don't waste your time on irrelevant stuff at the beginning. Join a pay site or two like thestreet.com. The fastest way to learn, although probably not the best way, is to join a pay chat site like Pristine. It will probably cost you between $200 and $500 a month, depending on which services you sign up for. They may not be so great at making you money but they'll show you how things work. Once you've got the basics down, you may want to kick them to the curb and strike out on your own or look for trade advice elsewhere.

If you live near Vegas, go to the Money Show next month. It's free and they have both a trade show and educational symposiums. Prepare to be overwhelmed.

[BionicComma]

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Well with such sage advice (and thanks for it!), can anyone suggest a method for starting a little investment portfolio? Like I said, I have some money and want to diversify. I'm open for suggestions, I just don't know how to start.

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Here's my bit of sage advice: Don't look for trading advice on a poker site, because most of the people here don't have a clue. Most of what they know, they learned in this forum from other clueless posters. Would you go to a trading site to ask for advice on how to handle a re-raise from an out of position limper pre-flop when you hold AK on the button?

That said, let's look at the basics. Do you have 30 grand? The minimum account size, by regulation, for daytrading is 25 grand. You'll need some extra for drawdowns and incidentals. If you only have 7 or 8 grand you can't daytrade stocks, but you can daytrade futures. Many similar concepts apply between the two. If you're going to do stocks, pick up a few books on daytrading and technical analysis. Forget about books on mutual funds or bonds or "value investing" because you won't be messing with any of that. You have a mountain of stuff to learn, so don't waste your time on irrelevant stuff at the beginning. Join a pay site or two like thestreet.com. The fastest way to learn, although probably not the best way, is to join a pay chat site like Pristine. It will probably cost you between $200 and $500 a month, depending on which services you sign up for. They may not be so great at making you money but they'll show you how things work. Once you've got the basics down, you may want to kick them to the curb and strike out on your own or look for trade advice elsewhere.

If you live near Vegas, go to the Money Show next month. It's free and they have both a trade show and educational symposiums. Prepare to be overwhelmed.

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This kind of advice is why I started in the investment board on a poker forum. By posting this thread I'm now armed with a plethora of good links, reading suggestions, and opinions that are more trustworthy than what I might find on at random on the internet or in the bookstore on my own.

[Chrisman886]

I've been trading for a good length of time now, and I can say that if you start out daytrading equities you will almost for sure fail. Daytrading, especially equities, is one of the most difficult trading activities you can participate in, in my opinion. Without a great deal of previous knowledge or quality training you have an extremely poor chance of being profitable. If you are considering active trading I would suggest "swing" or "position" trading first, which is holding positions for days/weeks instead of minutes/hours (daytrading) or months/years (investing). I know of a quality subscription website that will give you an education (not just stockpicks) which will start you in your trading journey. PM me if you want to know about it. Also, as Alexander Elder says, you must pay your "trader's tuition" as a novice in trading. You will lose money initially, almost guarenteed, because of poor decisions you will make. But you will learn from them and you will look back on them and be thankful that you made them so you could learn from them. Good luck.

[jthegreat]

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The randomness is in the deal.
(I'm on the don't day trade side fwiw)

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Sure, but in poker you get multiple deals. The stock market gives you one.