Your Questions About Paper Trading Stocks

Richard asks…

automated stock trading ?

i have a MLA paper due tomorrow and it has to be about how automated stock trading has had a effect on the world does any one know of a website i can go for a 6 page paper of this

John answers:

You might try searching for Congressional investigations into Wall Street trading practices and also any investigations by the office of the New York State Attorney General.

You won’t find anything on the investment bank web sites because their automated trading systems are all proprietary.

Hope this helps
Jerry-the-bookkeeper

Joseph asks…

why not a special tax on trading income and profits?

With the advent of electronic trading, paper profits are being made by traders who can move markets and ruin companies by their trades. These efforts provide no jobs, add no productivity, and distort the money supply and wealth. These are the causes of most of the income ineqaulaity that is being talked about. Trading should be done for long term investment not for quick gains. Companies can not make long term decisions that could harm the current stock price and its ability to borrow. I dont like the tax but we need to stop the markets from putting us all at risk and providing no economic benefit with today’s trading strategies. So far that trading has caused the tech bubble, the housing bubble, and now the soveriegn debt bubble. How many more till we get it under control?

John answers:

Trading does help in making markets more efficient and making the raising of capital easier and it does create a few jobs. That being said, these profits could just as easily be taxed at ordinary income rates of up to 35% rather than 5% – 15% and excluding them from the 25% alternative minimum tax.

Mary asks…

When DIY stores cease trading, and there are other branches nearby, is it common for all stock to be …?

…transferred to the other branches. I’ve just discovered my local FocusDIY store has closed down and am wondering if I missed out on some fantastic price reductions!
I didn’t see anything about it having a closing-down sale in the local papers.

John answers:

My local Focus has closed down in Blackpool about 6 months ago, they did have a closing down sale which was advertised in store for about 2 months before it shut, although when I went, it only seemed to rubbish that they were selling off, such as weird paint and novelty paint brushes.. I think its the kind of stuff they can’t send back to the manufacturers.

Sandra asks…

sell at close?

I’ve been paper trading/investing and today just for giggles.. I took the 19 stocks I’ve been watching. wrote down thei open value and then at close I wrote down their close value. If I had 100 stocks of each and sold all just at close I would have cashed in at $495.40 profit minus brokerage fees. Of course I would have had over $70k worth of stocks and blindly selling them at closing.
On the flipside, if I sold my 4 under $10 stocks I would have lost $28 today and traded with all of $1700 is stocks.
My question is, since traders and investors all have unique trading/investing patterns/techniques is it unheard of a individual doing this.. maybe buying stock on at open on monday and selling at close on friday or selling at the end of the year for a little christmas bonus?
hadnt really thought of short term tax. I’m not really doing a happy dance yet. I was more flattened by th fact I would hav used $72,000 to make $450 ! I know if I had made wiser buy/sell decisions I could made a wider profit margin.. But this little paper exercise kinda made it real for me..

John answers:

It’s no secret that online trading can be a very lucrative yet highly competitive field, and the truth is that the stock market doesn’t care if you are an experienced or a beginner trader.

The rules and the opportunities are the same for everyone, so either you are going to make money when you pick a stock and make a trade or you are simply going to lose it in favor of the more seasoned ones, especially in a down market.

The are a lot of books on the subject that pretend to help you, however many of them where written 5 or 8 years ago and that kind of makes them obsolete in this constantly changing field.

There are also many “fantastic” stock systems and trading software programs out there, but do they really deliver profitable results in today’s market conditions?

Keep always in mind that a good trading method is simple and practical. Complicated stock systems will always make you slow in your decision making process or confuse you from the start.

Fortunately there are some practical stock trading sites on the web where you can access proven trading strategies that are easy to implement. One of those sites is http://www.MomentumStockPick.com

They focus on stock trading methodologies that can help you identify and take advantage of certain stocks with momentum, while limiting your risk.

Visit them today and learn how to Pick Good Stocks in a Down Market.

Paul asks…

What is my profit on selling these shares?

Alright, so I have been researching the basics of the stock market to include the terminology and principles involved. After doing some research, I decided to do some “paper trading” until I am ready to actually start investing. I still have a long way to go but here was my scenario today (hypothetical).

I invested in ZGNX at 2.51 per share. I purchased 1900 shares which cost me $4769. Keep in mind I was looking for volatile, short term stocks to sell quickly. At the end of the day, the price per share was up to 2.70, however; the bid price was 2.61. If i were to sell the stock at the bid price of 2.61×1900 shares, this equals out to 4959. Take my initial investment of $4769 and subtract it from what I would sell the shares for which is 4959 and that is a $190 profit.

Are my calculations accurate? Or am I missing something important in the process? If this holds true, $190 for a days work isn’t bad.

John answers:

Yes, your calculations are correct, except for the fact that you did not deduct your buy and your sell commission from that gross profit of $190. Yes, you are right again that profit is not bad, but in the long term you will find that the price at the of the day is actually on $2.41 and you lost $190 plus 2 times the commissions.

With your specific example though, where the bid is at $2.61 and the ask at $2.70, it is not unusual to get your trade executed somewhere in the middle, say at $2.65 and that works in your favor.

In day trading you also need to invest in stocks with a high trading volume and hopefully big volatility.

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