Can you earn a good return on stocks by day trading long term?

Question

I have never traded before and I was wondering if you could make a good profit. Or do you have to day trade?

I will not say whether I have 3 nipples or not...That's for me to know and for you to find out...

Answer 1

Theoretically, day trading COULD be highly profitable. One approach might be to by shares in large volumes so that you are spending, say, $5,000 per transaction. If the price of the stock in question is $5.00, thats a thousand shares of that company. Every cent increase in price per share would gain you $10.00, so if the stock went from $5.00 to $5.25 in one day, and you sold the stock the same day you bought it at those price points, you'd gross $250.00. Thats the simplified version, though, because that doesn't account for such things as capital gains taxes you would have to pay on that short term gain, nor does it account for commissions (if any) you would pay to your broker. The primary risk with this scheme is that the price of the stock in question could just as easily go from $5.00 to $4.75 (losing $250.00) or even lower, so your risk tolerance would have to be pretty high. It can work, but as others have said, its probably more luck than anything for such a short time period of investing.

Answer 2

In day trading you must count how much costs you must pay for each transaction. If you play with small sums, there is a risk you won't get enough profits to cover the costs.

I have about 20 years of experience as investor. I prefer long term investments. Low P/E is a good sign. When it's lower than of other companies at the same market, it's a sign to buy that stock. But also look how high the stock value is ( price/own equity ). You should also look for reasons why the P/E is low.

I look for stocks of companies that are undervalued. Usually a company that has suffered losses but is about to improve its result in the future. I buy at bottom price, just before there come positive analysis. Some of such stocks I bought last december have risen with about 40%, and the analysis now say that they will still rise. Again, I was faster than the analysis.

Best way to learn investing is to start doing it. You can start by reading analysis. Maybe your broker gives you recommendations. Choose a good one then !
As more advanced investor, you learn to know the essential information from news and reading other public information, and start making your own analysis before others. That brings you nice profits.
I suggest you should spend the time for that instead of sitting by the computer and doing day trading.

Answer 3

As a rule don't daytrade. The market is extremely unpredictable over the short term, and you have to pay commissions every time you buy or sell a stock. Paying $20 to get in and out of an investment can add up very quickly if you flip your investments over constantly.

In general the best strategy for most investors is to buy mutual funds or exchange traded funds and just hold them. For example if you already have a brokerage account you can just buy SPDR S&P 500 funds (ticker symbol SPY). Just sit back, relax and let the stock market do all the work for you. I wouldn't invest in individual stocks unless I was really interested in finance and had a lot of time to devote to research.

Answer 4

Day trading and long term trading are at opposite ends of the spectrum. Day trading is not suitable for beginners. Start with a buy and hold approach. If you are buying shares rather than mutual funds, use stop losses. Let winners run, and cut losers. If you buy and sell too frequently you will lose as much in charges and stamp duty as you make in profit.

Answer 5

Some people earn a very good return trading stocks, day trading or otherwise.

A lot of people lose money trading. It takes knowledge, discipline, and a good bankroll to even have a chance at success.

Read and study a lot and try to find a system that works for you.

My blog: http://covercall.wordpress.com/

Answer 6

Well having capital gains inside your RRSP is definitely not good strategy. you do not have any 50% inclusion rate. That should all be outside of RRSP at least late in your work life. You do not have the option to have some investments treated as trading with other investments getting the 50% inclusion rate for capital gains. So, I expect you would be best to stay with 50% inclusion rate for long term and 100% for short term. Recently a lot of investors have discovered that leverage works both ways, fast up, fast down. that says we can be burned by using tax efficient leverage.

Answer 7

Be it daytrading or long term, always do some research about the economy and market trend.

Never, never, never, ever invest against that main trend, even if its for day trading for a few minutes.

Answer 8

do you really have 3 nipples? i'm sorry i totally disregarded the wuestion, but that caught my eye.