What I do is, as long as the stock price drops, I keep on buying. As long as it is increasing, I sell. I just don't buy or sell all of them; I just do it as it increases/decreases.
tldr: You won't make money day trading. Invest for the long term taking into account tax considerations and your risk appetite. I have and it has served me well.
In general I've learned that reducing fees [0] and thinking carefully about how to allocate investments across asset classes [1] is a much more successful strategy than picking individual stocks. Also try to hold on to investments for more than a year so you're taxed 15% on the profits rather than 30+% [2].
First thing you'll want to do is consider your asset allocation. I haven't used this tool myself, as I used an advisor, [3] but I consider Vanguard trustworthy as they are owned by their customers and have a good reputation. The purpose of a tool like this is to get a feel for how much you should be investing in equity vs bonds, vs real estate vs other exotic investments (hedge funds /private equity). I took a similar test through a financial advisor years ago and found it useful.
Over the last 9 years, I've invested roughly in this order of priority:
1) 401k for company matching & tax benefits - total profit of ~70k over the years. Starting from 0 balance 9 years ago, but recently have been maxing out contributions at ~17k per year 2) Exchange Traded Funds - SPY, DXJ, HEDJ. Essentially diversified, low fee investments in the US Stock market, Japan stock market and Europe. Total profit of ~30k over the years. 3) Bought a house, which I ended up renting. On paper profit of ~100k, but transaction costs (costs to buy and sell) eat into a large part of it. Long term it's a good plan. 4) Invested in a few individual stocks, lost a few hundred dollars. 5) Invested in options on a few individual stocks, lost ~3k. Learn about time decay before doing this.
Hope this helps!
[0] http://www.cfapubs.org/doi/sum/10.2469/faj.v66.n2.7
[1] http://www.sec.gov/investor/alerts/ib_fees_expenses.pdf
[2] https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_Unite...
It's going to sound like a stale and naive quip but buy low and sell high. I look for deals. Sometimes that's an IPO with a nice finance sheet. Sometimes it's a huge correction on a popular mega-corporation.
Weather you're a value investor or a growth investor the goal is profit, right? What works for me is knowing what I'm investing in. I'm familiar with the products or services.
It's a fun topic. There's lots to read out there. Sturgeons Law holds in full effect. 90% of all of it is total crap. All you need is probably at your local library.
Here's some homework. Look up these terms:
dead cat bounce, double top, exponential moving average, don't fight the tape, upgrades, channel, channel up, channel down, wedge, triangle, insider selling, dividends, oversold, ticker, forex, a falling knife has no handle, FUD, Irrational exuberance...
fun time 45 min talk on the basics: https://www.youtube.com/watch?v=WEDIj9JBTC8
https://www.youtube.com/watch?v=v6ciY8u04Kk
If you still want to day trade after watching these, then I guess get yourself to NY or London etc. and try and get a job like that.
> One reason I like startups is that they represent a middle way: you can get some equity or ownership in a business that might turn out very well, but you also get a salary.
Yeah just search HN for the horror stories. Enough said.
Work out if the EV is better working for big corp and using your extra salary to buy shares. But...
> Can you guess what happened next? The dot com crash happened, and shares of Cisco plummeted to $12/share.
Yes you need a portfolio.