Hi, I have always been interested in 'trading' for money. Since the pandemic hit and the interest rate on my savings account sunk I decided it was time to take the plunge into learning about what day trading is, the ins and the outs, and how to make money without a whole lot risk.
The way I decided to approach it is that I only buy long positions, i.e. I buy first, and then sell later for an improvement. I do not 'short' stocks, i.e. I do not sell the stock first and then buy it for a lower price afterwards. Also I do not buy with leverage. In my studies I found that if you short a stock the potential down side is limitless, because since you first sell the stock and then buy the stock later at a cheaper price you are betting that the stock will go down, and if it doesnt go down but instead goes up there isn't a limit to how wrong you can be. At least if you buy first with the intent to sell later it can only fall to zero. so your only potential loss is the money you paid for the shares.
If you buy with leverage or borrowed money from your brokerage you then become affected by PDT rule and need to keep a certain amount of the account liquid in order to not have your account froze. Buying with leverage also means that the time for the money to settle into the rest of your ballance is better but it also means that if you take a bad position your can then lose so much more, and it isn't like you can just simply stay in your position since now you are subject to the broker placing a 'margin call'.
Right now I also am not placing orders for stop losses or puts or anything other than a simple buy stock at market and then later sell the stock for a profit. That mean that ya I can still get into a bad position on a stock but it also means that as long as the company doesnt go under and I lose the entire investment nobody can bother me for anything and the position just becomes a longer holding than I would like.
Stocks go up and stocks go down. I buy at the down and sell at the high.
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