Day Trading Rules

Everyone refers to the adage, "Buy low. Sell high." However, Warren Buffett coined the rules for day trade, "Rule No.1: Never lose money. Rule No.2: Never forget rule No.1."

During a time in my life I engaged in day trading to pay off basic bills. "Buy low. Sell high," was the name of the game and it pays. Later this application no longer worked. Many financial advisors want to sell mutual funds, while encouraging people to invest in the market. Previously, this worked. When a company goes bankrupt, investors receive nothing. Therefore, stock trade is risky and there is a chance to lose money.

People investing in stocks should know stock prices relate to quarterly reports. If the company's gross revenue exceeds their expenses every year, it is a solid company. The market will turn around. Any corporation's stock, still in business, will go up. This is something for long term investors to think about; however, day traders are a rough and tumble group who brag about the percentages they make from trades.

While in college I invested $2,225 in an up-and-coming Canadian diamond corporation. Noticing they were endorsed by royalty, I decided they would make good on my investment and they did. Though they would not open until 2010, and many other Canadian diamond corporations went bankrupt, they were consistent.

Choosing the dividend option, after a year it was time to start buying and selling. A trend developed over a couple years. It went up in about autumn and down late winter. Logically buying late summer and selling around February is the best option. As a new company, the price rose and fell to provide small sales.

Looking at quarterly reports, they already started selling rough sample gems throughout the year. By the third quarter every year, they successfully generated income and investors went wild.

This was fun. The greater story, related to today's market, is a different tale. As a person who likes investing in penny stock, I found a company selling shares for around $6. They had a longer history and were not doing well. Deciding to take a small part of my gains, I bought ten shares. The company went bankrupt and it didn't matter. For less than $70 I took a chance on them. In relation to the total portfolio, I didn't lose money. It was risky and consequently helped the owners of the company.

When people buy and sell stocks, remember to invest in different types of companies. Sometimes it takes a long time before seeing a significant reward; however, buying a maximum of 250 shares between several companies increases the chances of one paying-off when it is important. Long term investors should also consider the impact of selling stocks on a company by selling fewer than 250 shares at-a-time when retiring.

It is relative to how much a person can afford. A quarter gain on 100 shares is $40. A dollar gain on 50 shares is $50. Pay attention to how much it costs to buy and sell shares. Scottrade.com allows a person to open an account with $500 and each trade costs $7, totaling $14 to buy and sell. Therefore, there is no profit without covering the cost. In addition, "Triple A" stocks are beyond a sensible price range when investing $500. Review the company thoroughly.

Related Article
Beautiful Model
Citizens of the United States
Dreams and Dollars
Retirement Edification
Unsanctioned Financial Advice