Advanced Stocking Techniques
From Day to Day as a Daytrader
Many people have asked the question: What is Daytrading?
Put simply, it is Day Trading. Too simple?
Daytrading is the buying and selling of a stock on a daily basis. Or maybe 2 days. Or maybe 3. The point is, it is the act of buying the stock and selling it as quickly as possible for as much profit as you can get.
Now there is an extremely common misconception among non-daytraders. Many people seem to believe that a stock has to be at a high price for one to daytrade it. The truth of the matter is, I could buy a stock at 15 and sell it at 17 later in the day and it would be called daytrading. There would be exactly the same amount of risk if you had bought it at 15 and held it to 60.
So we know daytrading doesn’t have to be risky. So why do some people still buy high? The real reason is because we want it to be like that. No pain, no gain. The riskier it gets, the better the payoffs if you do it right.
Here’s how I got there.
Typically a stock will move anywhere from -20% to +20% in a single day. This rise is usually capped at about 50 points for the very high stocks. In a bit, you will see why I use the percentages.
An extremely important figure we must note in our daytrading is the 1000 stocks per day limit that we have placed on us. This not only limits the amount of money we can spend, but also the amount of money we can make.
There are 2 stocks. One is at 15, and one is at 100. Let us assume that we can buy up to 2000 stocks per day. We buy 1000 shares of stock A at 15 and 1000 shares of stock B at 100. Both of them rise by 15%, after which we sell.
Stock A costs 15,000NP. A 15% profit (+2 points) would give us 2000NP pure profit.
Stock B costs 100,000NP. A 15% profit (+15 points) would give us 15000NP pure profit.
So as you can see, the number of raw points the stock moves up affects our profit. Stocks at a higher price tend to move more points in one day than stocks at a lower price. But imagine for a minute that you could buy as many stocks in a day as you would like. If you had bought 10,000 shares of A instead, that would give you a profit of 20,000NP. That would give us more profit than stock B for much less risk. But alas, there is a 1000 a day limit, forcing us to stick with stock B to make the most profit.
But you’re probably like “So... umm... you would do all of that – go through all of that drama – to make 15k? I could make that in 30 minutes, no risk involved and no calculations by playing games. Even better, I could restock a few items to make that easy. Where is the real money at?? What is all the fuss about daytrading really about?”
You haven’t seen anything yet.
At 7:00am on the morning of April 13th 2007 POWR peaked at a whopping 861NP per share. At that point, in the space of 24 hours it could move as much as 50-60 points per day. That was the equivalent of 60k a day.
Not bad for a day’s work, eh? But that was on a good day. But you had to be willing to cough up 800,000NP+ to be held in escrow.
But can’t we make more than that by selling at 60+? Not really. Nothing in the stock market beats 60k a day. But you must ask the question. Why do we play the Stock Market? Why don’t we restock, or play games?
For a single person it may be different. But I am sure that I speak for many when I say that it is because I can double or triple my investment with very little effort. Yes the stock market is slow, but it is also a blessing. Because of this snail’s pace we can check up on our stocks as little as once a day. Daytrading removes this luxury – we have to constantly check our stocks.
In addition, with the randomness of stocks we can pick any stock to buy on mere whim, not even taking us a minute a day. With daytrading we must put more effort into getting the right stock.
So now you know that the 15-30 or 15-60 methods are a lot easier than daytrading. But what if we wanted a faster profit? I need money. And ASAP too!! There is an option that you have.
No, it is not daytrading.
Or anything to do with the stock market as a matter of fact.
Ever heard of restocking?
Let me tell you why restocking is a better option.
I buy a stock. Check back every 30 minutes for the next (??) hours until it goes up. Sell for a minimal profit.
Buy the goods in a store. Put it in your shop. Snap your fingers, say “Alakazam”. Profit. Skadoosh.
Ever heard of a stock crash? “Every stock that has risen so far has fallen eventually. That is, except for POWR.” Will it fall eventually? Yeah, it will. But we don’t know when. But when it does... prepare to wait. Because you’ll be waiting. Very long.
Do I have to repeat myself? Buy the goods in a store. Put it in your shop. Snap your fingers, say “Alakazam”. Profit. Skadoosh. One shot. No holding. No regrets. Instant profit. Item prices can’t crash in what was it... 30 seconds?
So I believe I have made my opinions very clear. I would like to highlight here two methods that are attractive money making ventures.
One is the stock market. 15-30 and 15-60 methods are very effective. Number two is restocking your shop. This is if you can’t wait.
I hope you note that daytrading is not listed here. It is not an attractive money making venture. Daytrading is for fun – a game of luck and chance, but nothing more. Other games you may be interested in are the Wheel of Excitement and Dice A Roo.
Young investors, please stay away. Leave it to the experts.
For my entire archives, please visit http://www.neopets.com/~Torrenzara
For the main page, the full stock market directory, please visit http://www.neopets.com/~Stock_stats