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DAY TRADING

DAY TRADING. Carli Stefanacci Dr. Volpert November 13, 2000. Opening Joke. What’s a day trade gone bad?. Answer. An investment (okay, bad joke). 2-3 trades per month Orders placed through an online broker Time is not crucial

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DAY TRADING

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  1. DAY TRADING Carli Stefanacci Dr. Volpert November 13, 2000

  2. Opening Joke • What’s a day trade gone bad?

  3. Answer • An investment (okay, bad joke)

  4. 2-3 trades per month Orders placed through an online broker Time is not crucial Concerned about companies future, past, balance sheet Regular PC 100-300 trades per day Orders placed directly Time is extremely crucial Concerned about stock prices, nothing else High -tech equipment Online Investor Vs. Day Trader

  5. Day Trading: Defined • History • founder: Harvey Houtkin’s • SOES bandits • Day trading: trading within the time frame of one day, entering and exiting positions within a day but always closing out trades by the end of the day, win, lose, or draw.

  6. Why Day Trade? • For a change of pace • People believe it is an easy way to make a quick profit for: • retirement • child’s education • Easy access • Anyone can do it!

  7. Who Day Trades? • Anyone! • Teachers • Lawyers • Doctors • College dropouts

  8. Before Trading... • Most importantly, become educated • Many web sites dedicated to training: • traintodaytrade.com • daytradingonline.com • Classroom courses • Harvey Houtkin’s All-Tech Investment Class • Winning isn’t possible all the time! • Even the best lose

  9. Open an account with the firm with your own assets Simply a customer of a day trading firm Organized as limited liability companies (LLC’s): meaning day traders are part owner of the firm and allowed to trade using the firm’s capital Organization of day trading firms

  10. Getting Started • Usually day traders begin with $50,000 to $100,000 • Most day trading firms require a minimum of $25,000 to open an account • Begin trading in lots of 200 shares

  11. Equipment • Get the right equipment • A new computer with a large screen • Windows NT: lots of memory, will allow for multiple windows to be open • Multi-monitor set-up • Direct internet connection • Separate and multiple phone lines • Television

  12. Trading Example • Bid price: $64.375 • It is offered for $64.75 • Investor buys 4,000 shares of the stock at $64.4375 (total cost: $257,750) • Seconds later, investor sells those 4,000 shares at $64.6875 (total sale: $258,750) • Profit: $1,000

  13. How To Succeed • Don’t get greedy • Develop a financial plan before trading • set a daily limit to profit and losses • Get out when you can, not when you have to • stay in control, don’t let the market control you • Trade when the market is moving • don’t try to ‘move’ the market

  14. More Tips • Employ low tolerance, high velocity (LTHV): get in and out quickly with little tolerance for big losses • Know when to get smaller • No overnight losers • Know the stocks • know their past and know how they react

  15. More Tips • Trade the truth • Trade on what is happening, not what you want to happen • Realize the importance of timing • Become disciplined • Control the market • Don’t get attached to the money • Don’t get emotional

  16. Success Stories • Barry Brautman • 34-year-old former accountant seeking an exciting career in day trading • Lost for two months straight, but now is profiting • Nancy Sy • 42-year-old credit specialist • Went from $39,000 to $100,000 in two years, and plans to be a millionaire in 5 years

  17. Horror Stories • Heather Cameron • 36-year-old day trader • Lost $400,000, her town house, and her fiancé • Mark Barton • 44-year-old ex-chemist, turned day trader • Lost everything and went on a killing spree, killing 12 individuals, including his kids, wife and himself

  18. Able to take advantage of spreads Minimal concern about overnight news Immediate feedback and results of the days work Holidays and weekends off Unlimited vacation time Access to Level II quoting system Advantages

  19. Constantly fluctuating and very volatile Requires constant supervision Need for strong discipline when dealing with losses Unlimited risk Extremely addictive, like gambling Disadvantages

  20. Skeptics believe that: Just a phase unpredictable will die out Advocate believe : a revolution career of a new generation some believe that in the future the only way one will be able to trade is electronically Future

  21. Do You Have What It Takes? • Fantasy day trading site • www.virtualstockexchange.com • www2.sportsrocket.com • Day trader quiz: • http://www.traintodaytrade.com/train/psychology_test.html

  22. Questions?

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