Any traders here? Is it hard for a beginner to earn 50 bucks a day?

[Arkitech]

I've always wanted to get into trading but never really had the time for it. My work schedule allows time for me to do a little homework on the subject and I'm in the beginning stages of my research. My goals are fairly modest, I'd like to earn just a few bucks a day. Just enough to maybe pay a bill or two every month. I figure this way I can decide if like trading or not.

I've been told don't invest any money that I can't afford to lose, so I'm well aware of the risks.

So a few questions for you guys who do trade. Do you ever invest in penny stocks? How much effort and time is required to earn about 50-200 dollars a day? Are there any websites that will let me create a training account to get a feel for trading? What sites can I go to learn the basics of trading?

 

[Ghiedo27]

There are a ton of different ways to trade. I've checked out foreign currency exchange (forex) personally, so that's the perspective I'm coming from.

The biggest obstacle to trading with a small account is equity management. The general rule is to risk no more than 1-2% of your account on any one trade. You need to be able to handle 10 losses in a row financially and emotionally while still placing enough trades to 'work' your trading edge and play out the probabilities.

Even if you have a perfect understanding of the market there's enough volatility in most markets to stop you out of your position for a loss. The vast majority of people who open a trading account do very poorly. In fact, most brokers don't even make the trades that you order. They just bet against you directly. They do good business doing that, too. Just something to think about.

 

[tynopik]

It's easy as pie to earn $50 in a day

The hard part is not losing $100 the next

 

[amdhunter]

There are a ton of different ways to trade. I've checked out foreign currency exchange (forex) personally, so that's the perspective I'm coming from.

The biggest obstacle to trading with a small account is equity management. The general rule is to risk no more than 1-2% of your account on any one trade. You need to be able to handle 10 losses in a row financially and emotionally while still placing enough trades to 'work' your trading edge and play out the probabilities.

Even if you have a perfect understanding of the market there's enough volatility in most markets to stop you out of your position for a loss. The vast majority of people who open a trading account do very poorly. In fact, most brokers don't even make the trades that you order. They just bet against you directly. They do good business doing that, too. Just something to think about.

What do you mean? I'm a noob too.

 

[Skeeedunt]

Well 50-200 bucks/day is more than most people earn working 40 hours a week, so I'm guessing it will be easy and relatively low risk for you to make that much in your spare time with no training and no general idea what you're doing.

 

[rcpratt]

That's meaningless unless you tell us how much you're investing.

 

[Imp]

It's easy as pie to earn $50 in a day

The hard part is not losing $100 the next

That's meaningless unless you tell us how much you're investing.

These two. Remember what 1% of your "investment" money is: 1% of $100k is $1k, 1% of 10k is $100. Gives you an idea of what kind of money you need and/or what kind of volatility you need.

Get a high frequency trading algo and a lot of capital, then you'll be set...

 

[Crusty]

On any given day I trade with an account having a buying power over $5,000,000. Biggest daily loss was around ~$30k, biggest daily gain was around ~$20k, but on the average we make money.

Granted, this is all completely automated, no humans involved except for the programming. The algorithms also only run for a small fraction of the day while it's the most highly profitable using our strategies.

 

[kranky]

Was going to write a long reply explaining why this is very likely to not work out, but I'll just say it's very likely to not work out. Less than 5% of day traders are profitable after a year.

Trade on paper for a few weeks just like you would do it for real. Make sure you account for all your commissions. Then you'll have an idea whether it makes sense. Remember, you have to be able to make money in down markets too.

 

[Miramonti]

n/m

 

[OverVolt]

Yea the payout is not like a steady $50 a day unless you invest in bonds or something. Its more like

-$50
+$100
-$150
+$75
-$50
+$125

Hooray you made $50!!!

And it takes a certain type of control over your emotions to stick to your strategy during all the turmoil. If you bail on your own strategy you will likely stop at the -$150 and get screwed.

 

[Imp]

Was going to write a long reply explaining why this is very likely to not work out, but I'll just say it's very likely to not work out. Less than 5% of day traders are profitable after a year.

Trade on paper for a few weeks just like you would do it for real. Make sure you account for all your commissions. Then you'll have an idea whether it makes sense. Remember, you have to be able to make money in down markets too.

Few weeks is too short. I started trading in Fall 2010 in the midst of a rally. EVERYTHING was making money no matter what I threw it into at that point. The going was good until January, then I had a shit year that wiped all my winnings out. Dealing with taking your first couple thousand dollar loss is probably the reality-check moment. I've finally learned some discipline 2 years later.

 

[nanette1985]

I wrote some software for a buddy who's into trading. He's done really well and I enjoy the chunk of change he sends me every so often. He's always bitching about how awful things are. But he's got lots of money. He's a stock - trading- marketing fanatic. Knows lots about the business and really cares.

No advice from me - I don't understand any of that stuff. I just know how to code.

 

[overst33r]

you might as well go to the casino.

 

[silverpig]

It sounds like you just want to gamble. The odds are better than in Vegas, but still...

Take the $5k or whatever you were going to invest, open up a Scottrade account, put half into an equity ETF, half into a bond ETF, and then register for one of the play accounts (if they have one) where you get fake money. "Trade" with that and see how you do.

After 2 months, compare how much you made in the fake account vs the real account.

 

[OverVolt]

Trading is as much a game of emotion as it is knowledge.

 

[chusteczka]

...
Take the $5k or whatever you were going to invest, open up a Scottrade account, put half into an equity ETF, half into a bond ETF, ...

This is actually a good strategy so long as you keep it balanced. Select a proportion; 50:50, 60:40, 70:30, stocks:bonds. When the market rises, switch from the stocks to bonds. When the market drops switch from bonds to stocks. Maintaining your proportions along with the market will ensure you buy low and sell high.
http://www.smartmoney.com/invest/st...ented-a-smartmoney-master-plan-1306599592244/


If you want to purchase individual stocks, stay with companies you know. Become familiar with their price history and read as much on them as you can. When you see the price drop 6% or 8%, or lower than you thought it could ever go, then buy and hold. Hold for several months or a year if need be. When you see the price rise 7% or 8%, or the price goes higher than you thought possible, then sell.

If less than 5% of day traders make a profit, then this second strategy has kept me in that profitable 5% group these last few years. But I am definitely an amateur at this and in no way a professional or knowledgeable stock investor.

smartmoney.com - Best and Worst Brokers of 2012

 

[JonathanYoung]

This is not investing, this is speculating.

 

[Crono]

Investing and trading is for people who manage wealth.

If you want to earn another $50 a day you are better off earning it with a part time job.

 

[OverVolt]

With only 10% of hedge funds beating the S&P 500, what are these professionals/experts you speak of? lol.

AFAIK a study was done and a monkey throwing darts at stock tickers had beaten Jim Cramer. And he has no regrets about going on TV blasting his opinion. You shouldn't need a disclaimer.

Your strategy is a good one, its hard to stick to your plan emotionally if you are on the wrong side (falls while you are holding, the best move is usually hold until it at least comes back up some, even if its for a loss still)

Which is why you diversify, something should be doing well, others not well, and you should put just as much thought into saving money from the bad picks as you do when thinking of when to sell off your good picks. (hint: while things are still going well )

You have to develop a bit of a thick skin and cut yourself alot of slack. It's not going to skyrocket just when you bought, and its not going to crash just after you sell. Don't beat yourself up over selling a little too early or buying a little too late, or else you will go crazy.

 

[Ms. DICKINSON]

Get some practice @ http://www.updown.com/
I think they give you a million fantasy dollar to use.

 

[chusteczka]

Such naysayers bug the hell out of me.

Take the lion's share of your investable money and invest it in one or more longterm mutual funds. Let's say, "invest" for the long term everything except for $2500 - $5000.

Then take that $2500 - $5000 and put it into 2 or 3 companies you like when you see their price drop to a point you want to purchase. Then just hold it and forget about it. Check the stock price once a month or once a week just to keep up with it. Read the associated news on that company. Watch the company, see what happens with the stock price and your money, and see what you can learn from it. This initial phase can easily take 3-5 years.

Then find more companies you like, one by one, and add them to the mix when you want to put more money into this trading account.

Watch the market to see how it behaves according to company news, politics, seasons, weather, and such. Consider it a learning opportunity and remember, school is expensive.

That phrase serves me well and reminds me to learn from my mistakes in life.
"School is expensive."

 

[DaveSimmons]

> Such naysayers bug the hell out of me.

Hopefully you realize that you're one of us naysayers. since you recommended a buy-and-hold strategy instead of day trading

I buy and hold index funds forever, so I'm no help with this gambling idea aside from recommending that you only do it with money you're willing to lose. Because the odds are that you will lose it.

 

[OVerLoRDI]

Such naysayers bug the hell out of me.

Take the lion's share of your investable money and invest it in one or more longterm mutual funds. Let's say, "invest" for the long term everything except for $2500 - $5000.

Then take that $2500 - $5000 and put it into 2 or 3 companies you like when you see their price drop to a point you want to purchase. Then just hold it and forget about it. Check the stock price once a month or once a week just to keep up with it. Read the associated news on that company. Watch the company, see what happens with the stock price and your money, and see what you can learn from it. This initial phase can easily take 3-5 years.

Then find more companies you like, one by one, and add them to the mix when you want to put more money into this trading account.

Watch the market to see how it behaves according to company news, politics, seasons, weather, and such. Consider it a learning opportunity and remember, school is expensive.

That phrase serves me well and reminds me to learn from my mistakes in life.
"School is expensive."

There is a fine line here. Checking it all the time just stresses you out and makes you do stupid things. Not checking it at all can leave you waking up to your money gone.

The above advice is decent if you are INVESTING in well established corporations with a solid business plan. But you mentioned TRADING with a goal to make money daily. Meaning we are talking day trading right?

Day trading is very difficult, simply because there is so little information to go on. Most day traders resort to math voodoo (technical analysis), especially in currency markets. Whether or not you think TA is a good way to predict, you have to figure out. I wrote my senior paper on how TA is a self fulfilling prophecy. Some triangles form in an alignment with Jupiter? Price is going up! Buy buy! Look we were right! (gross over simplification)

So if you go the trader route backed by TA, keep in mind many other people are as well and you have to play the herd. Stay one step ahead of what is popular.

 

[Ghiedo27]

In fact, most brokers don't even make the trades that you order. They just bet against you directly.

What do you mean? I'm a noob too.

A broker's job (in Forex) is to hold your money and exchange it for foreign currency. There's a "spread" that is supposed to cover their cost trading dollars for yen so you can trade yen against the British pound or the other way around. In theory, they are only needed to help trade your money with someone on the other side trying to make the opposite transaction.

In practice, most of those institutions only trade money directly between you and them and never touch a foreign currency. So every trade you make is a bet against them. If your trade goes well they put the money you would have made on the trade in your account from their own funds. If your trade loses they are the ones that profit from it. Your money never leaves their business. This works because 1- they always have the advantage of the spread (the difference between the sell and buy price) and 2- most traders make losing trades.

You also have to consider that brokers also provide the price feed that determines your profit or loss. Now, they don't just make these price feeds up, but if you're close to getting stopped out you are vulnerable to a little spike in the wrong direction and there isn't much you can do to prove fraud. Some foreign nations actually have rules preventing broker's betting against you directly to prevent that situation. The US, does not.