Help me understand short term day trading?
I’m looking to better understand how I can potentially make money in the short term (like, very short term), buying and selling small quantities of stocks. Not looking for big investment approaches, talking like $500 starting out or less.
Example: I buy 100 shares of stock ACME which I pay $.50 per share plus a commission of $15 for a total expenditure of $65. Then, later that same day, the stock rises to $.80 per share, so I sell all 100 shares plus pay a commission of $15 for a total profit of $30. Does this work? I understand there’s alot involved with choosing which stocks to invest in, but in theory is it this simple?
I’m looking to get started using something like etrade but a service that only requires like $500 minimum to get started, or possibly using Sharebuilder.com?
Is it possible to use Sharebuilder, which doesn’t require a minimum account opening balance to day trade and make money?
I’m not looking to reture here, just make a few bucks each month. Thanks!
If you want to make some bucks each month, open an online bank account and put the money there. Buying penny stocks is very very risky…. i.e. there is a big probability that you will end up with nothing.
Penny stock are impossibe to predict or analyze, since they trade on very small volume and can be easily impacted by any sizable participant…
If a online saving account is too conservative for you, then buy an ETF (Exchange Traded Fund) and hold it for the long term…
But forget about penny stocks and short traiding, even more now that the market is so volatile
best of luck
Comments
well for a stock to go from .5 to .8 in a day, that is a 60% increase. i would be willing to bet that anyone would be happy with a return like that, let alone a day trader. day trading usually has people trading for a .25 to 5% gain, if they are lucky. the key to day trading is that you need money to make money. and a lot of brokerages know this. with any regular trading account, there is a limit to how many round-trip trades you can make during a week (round trip means buying and selling the same security). If this gets recognized by the brokerage, a lot of times they will send you a warning saying that you have qualified as a day-trader. at this pt. they could cancel your account or penalize you monetarily (because many times there are minimum account values in the range of $25,000 ie. that need to be met) but most likely they will just warn you to cut your activity down. E-trade has really quick settlements and i have heard of ppl getting away w/ the day-trading thing over there, but in general it is hard to do with $500 or so just because one round trip trade could easily cost you 5% of your capital alone – meaning that the security you trade in must gain at least that much to break even – which is rare in day-trading unless you stumble upon a news feed before anyone else does 
References :
Open a brokerage account at Scottrade with $500.00
Sharebuilder is too expensive for you at $15.95
Scottrade is only $7.00
References :
http://www.scottrade.com
March 19th, 2010 at 4:48 am
If you want to make some bucks each month, open an online bank account and put the money there. Buying penny stocks is very very risky…. i.e. there is a big probability that you will end up with nothing.
Penny stock are impossibe to predict or analyze, since they trade on very small volume and can be easily impacted by any sizable participant…
If a online saving account is too conservative for you, then buy an ETF (Exchange Traded Fund) and hold it for the long term…
But forget about penny stocks and short traiding, even more now that the market is so volatile
best of luck
References :
Investor