Wednesday, March 10, 2010
"So let me get this straight…" said the tuxedo-clad gentleman as he cut into his filet mignon. "You trade stocks?"
"That's right." I said.
"For a living?" he asked.
"Right again." I replied.
"So you have no customers, no employees, no product, no inventory, and no marketing to deal with?"
"None of that," I responded. "Plus, I can do it from anywhere in the world just about any time of the day."
"It seems to me," the gentleman continued, "that you have a dream job."
This conversation plays out nearly every time I attend one of those rubber-chicken charity dinners we all hate being invited to but attend anyway. After the obligatory introductions around the table, we proceed with the "So, what do you do for a living?" line of questions.
I always end the evening feeling like I have the best job in the world. And I do. I'm a day trader.
Every morning, I wake up, turn on my computer for a few minutes, pocket a little cash, and call it a day. Often times, my workday ends by 10:30 a.m. Then I'm free to hang out with my family, play a little golf, or do anything else I feel like doing.
Whenever I stick around past 10:30, it's not because I have to. It's because I want to... because the opportunity to make money is just too great to pass up.
By day trading stocks and options, you can make as much money in just a few minutes as many hardworking folks make in a whole day.
Of course, day trading has gotten an undeserved bad name.
Prior to 1998, hardly anyone even thought it was possible to profitably trade stocks for a few hours each day. But then came the Internet mania of 1999-2000, and day trading went mainstream.
The lure of making easy money buying stocks in the morning and selling them in the afternoon was irresistible. It was enough to make otherwise reasonable people leave their productive jobs and seek their fortunes by churning their investment accounts. Online brokerage firms made it look easy by advertising, "He's got money coming out of the wazoo..."
It was a bubble destined to burst. And it did.
Following the debacle of 2000, anyone who mumbled the term "day trader" was looked at with suspicion and ire. Too many people lost too much money playing that game, and they have yet to recover.
But most people weren't actually day trading in 1999. They were gambling.
They'd line up beside the hot roller at the craps table and cheer as the dice repeatedly hit the point. But as any pit boss will tell you, the hot rollers always flame out. And it usually happens after he's covered every number on the table and when everyone has the most to lose.
Profitable day traders don't gamble. They find a way to recognize a temporary mispricing in the market and then capitalize on it.
But you have to be smart about it. You can't just turn on a computer, click a few random buttons, and wait for the cash to roll in. It doesn't work that way.
need to have a systematic plan of action – a strategy that allows you to spot key turning points in stock prices and profit as the trades move in your direction.
There is a viable way to day trade stocks and options for profit. I know, because I've been doing it for 25 years. I'll share part of that plan with you tomorrow.
Best regards and good trading,
Apple passes $200 billion... yesterday's 3% jump pushes tech giant to its all-time high market cap.
Mega insurers Prudential, Travelers, and MetLife reach new highs... fund KIE up 164% in 12 months.
Restaurant rally continues... Yum, PF Chang's, Darden, Chipotle, and others at 52-week highs.