Your Questions About Successful Traders Make

Thomas asks…

Hello. How much does a stock trader make per transaction will determine him/her as successful?

Hello. May I ask how much a trader makes will determine him/her as successful? $1000? $2000? And normally, when does a trader make another transaction after making a profit?

John answers:

 
. . . . .. . . . . . . . . . . ,.-‘”. . . . . . . . . .“~.,
. . . . . . . .. . . . . .,.-“. . . . . . . . . . . . . . . . . .”-.,
. . . . .. . . . . . ..,/. . . . . . . . . . . . . . . . . . . . . . . “:,
. . . . . . . .. .,?. . . . . . . . . . . . . . . . . . . . . . . . . . .,
. . . . . . . . . /. . . . . . . . . . . . . . . . . . . . . . . . . . . . ,}
. . . . . . . . ./. . . . . . . . . . . . . . . . . . . . . . . . . . ,:`^`.}
. . . . . . . ./. . . . . . . . . . . . . . . . . . . . . . . . . ,:”. . . ./
. . . . . . .?. . . __. . . . . . . . . . . . . . . . . . . . :`. . . ./
. . . . . . . /__.(. . .”~-,_. . . . . . . . . . . . . . ,:`. . . .. ./
. . . . . . /(_. . “~,_. . . ..”~,_. . . . . . . . . .,:`. . . . _/
. . . .. .{.._$;_. . .”=,_. . . .”-,_. . . ,.-~-,}, .~”; /. .. .}
. . .. . .((. . .*~_. . . .”=-._. . .”;,,./`. . /” . . . ./. .. ../
. . . .. . .`~,. . ..”~.,. . . . . . . . . ..`. . .}. . . . . . ../
. . . . . .(. ..`=-,,. . . .`. . . . . . . . . . . ..(. . . ;_,,-”
. . . . . ../.`~,. . ..`-.. . . . . . . . . . . . . . … . /
. . . . . . `~.*-,. . . . . . . . . . . . . . . . . ..|,./…..,__
,,_. . . . . }.>-._. . . . . . . . . . . . . . . . . .|. . . . . . ..`=~-,
. .. `=~-,__. . . `,. . . . . . . . . . . . . . . . .
. . . . . . . . . .`=~-,,.,. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . `:,, . . . . . . . . . . . . . `. . . . . . ..__
. . . . . . . . . . . . . . . . . . .`=-,. . . . . . . . . .,%`>–==“
. . . . . . . . . . . . . . . . . . . . _. . . . . ._,-%. . . ..`

Chris asks…

How do Day Traders make money?

And what does the term “Day Trader” mean? I heard some one refer to people that generate income from trading stocks as a “Day Trader.” Anyway, heres my question How do people generate any reliable income from trading stocks? I have a basic understanding, very basic of the stock market. I use to visit etrade & just watch the dow go up & down. But I have no experience & haven’t read anything about it. I watched this documentary, and seen this guy who was really rich. I read later in an article that he is a “Prosperous Commodities trader” So now here i am trying to figure out how he makes money. Like what is the process? how do these guys recognize opportunity in stocks? And at what point does your opinion count in a company, as a share holder? Please, if anyone can educate me on this. And maybe suggest a book or books, or websites w/good info on this? I have read Rich dad poor dad, and I am now going to be an entrepreneur, I have just quit my job to pursue my entrepreneurship & I am 22 years old in the Los Angeles area. Please, all information, suggestions, advice! Everything! I know I have to be a good listener to be successful, so here I am, I will soak up all the information you provide. I need all I can get, I will read pages & pages of what u have to tell me, you will not waste your time, typing up long answers. Thank you very very much!

John answers:

Read ALL of the threads at elitetrader.com as a starting point

David asks…

How do salaried stock traders (day traders) benefit society?

For every person taking a position on a stock, there must be someone exiting that position. Either way, someone loses. I mean if I buy a stock from someone today at $40 and it goes up to $50 by tomorrow, I’ve made $10 while the other person lost the opportunity to make $10. Same thing goes for anything from options (writing a call vs. buying a call–someone necessarily loses from this contract, only the clearing house/broker gains regardless) or CDSs or any other security or derivative. Sooo if you’re a successful trader, sure you make money for yourself, but for most of the money you earn, someone will lose most of that amount or lose the opportunity to earn it. So how do traders benefit society? Although I’m studying to work in finance myself, I believe that these traders would do more good shoveling snow or building something, as controversial as this is lol. Is there something wrong with my logic? Thx
No, I said that the second person–unbeknownst to him– relinquished the ability to make more money. No value is created through the fact that I managed to pick the right stock at the right time. It IS true that one person or both people lose in most derivatives contracts

John answers:

Ok i’ll bite (read it all if you actually wanted an answer):

say a person buys stock at an IPO or issued by the company (this is where stock is created), the company is raising money (lets say to buy some machines or factories or something), the company get the money and if all goes according to plan, expands operations, hires people, sells more goods, then pays investor dividends on their stock, a cut of the profit earned, investor gets return on investment – everybody wins. (this is the use of having stocks at all)

lets say years later this investor decides he doesn’t want to own this company’s shares anymore (maybe he likes growth companies, maybe he just wants to spend the money).. He decides to sell the stock but how long will he have to wait until he finds another long term investor to buy his stock (if there are only long term investors in the market), like selling a house or car – weeks!… Enter the trader (exactly like the word ‘trader’ means in trading rugs, spice, used cars, and everything else), the trader says I’ll buy your stock for a little less than I think I can resell it for in a week, you can sell it now instead of waiting a week and I’ll take a little cut from you now, and _try_ to take a little cut from the guy I sell it to in a week. If the trader is successful they have made a small gain, and in exchange the investor had someone to sell to when they wanted to sell, and the other investor had someone to buy from when they wanted to buy.

This is the traders function: liquidity. The trader takes on risk in exchange for gains (if they are good at it) so the investor can buy or sell stock quickly. There are people trading who are trying to resell stocks in seconds, others in minutes, others in hours, others in days, others in weeks, months, years – each is taking on a different cut of the risk and gains (if they are successful) and providing liquidity to other traders and eventually the long term investor.

E.g. A used car lot is a good example of a trader, you want to sell: they are always ready to buy (but at a lower price than if you waited/searched).. You want to buy: they are always ready to sell (but at a higher price than if you waited/searched).

The other function: price discovery I would say it’s more for the ‘speculator’ and not ‘trader’ or ‘investor’ – i’ll use the example of commodity speculator… Let’s say a speculator foresees that oranges/gold/hogs or whatever are going to be worth twice what they cost today a year from now – so the speculator starts buying it up (hoarding it) and bids up the price, depending on how many speculators and how much money is doing this the price increases accordingly (as a result of the speculators now.. Not the shortage that happens a year in the future) – two things happen as a result of this, higher price attracts more investment to producing the commodity today instead of waiting a year from now (e.g. Tar sands production when oil was high) – high price is a ‘signal’ to investors/business, the other is that the speculators are effectively saving the commodity for everyone else in the future – making it more expensive now when people don’t want/need it as much, and _cheaper_ in the future when it is in shortage when they sell it a year from now (they are saving for everyone else’s rainy day).

E.g. Say you have plenty of water today (water is cheap), and drought next year (water very expensive)… The speculators, if they foresee this, buy up water today (increasing the price a little), and sells it to you next year when you _really_ need it (of course at a higher price, but cheaper than if there were no speculators) – the speculator has transported water ‘into the future’ for you.

Derivatives = people buying and selling risk, getting rid of risk they don’t want (at an expected loss) or taking on risk with an expectation of profit.

And of course there is the ‘casino’ aspect.. But that is the system sorting out who is actually good at this, and if you are not you eventually lose enough of your capital that you go do something else for a living (and the world benefits from that too when only the best traders/speculators remain to serve the above functions) – why the bailout was bad (not even mentioning the cost): you kept the people that were bad at this in the game, making the whole system less efficient. 🙁

Joseph asks…

How can I make my OotM World Finals experience the best it can be?

There is only 4 days until I leave from california to Maryland. Everyone on my team is really excited, but we still have some questions.

1. (same as main question)
2. How can I be a successful pin trader?
3. How crazy should we be when dressing up for spont?
4. What are buddy teams?

John answers:

Well, im going to the worlds too:

Question 1: Do LOTS of sightseeing. We’re going to an aquarium, Washington D.C and on a Duck Tour. (I’m thinking these places will be good to get souvenirs from)

Question 2: Being a successful pin trader means trading wisely and not spending 15 minutes on one trade. If you move quickly for sure you’ll get lots!

Question 3: I wouldn’t bother dressing up for spontaneous. The judges won’t give you a high score for your apparel. Don’t try and impress them, (no offense) but it won’t work.

Question 4: Buddy teams are international teams who may need help around the World Finals. It’s too late to request a buddy team, beleive me, we tried forver ago and got rejected. It’s a very hot commoditee.

I hope I helped!!! P.s good luck!! (what div. And problem???)

Michael asks…

is there such a thing as a successful day trader?

i know thousands do it……anyone make any money?

for that one person who does, i have tons of time to study, where do i start?

John answers:

Day traders make a comeback
By Matt Krantz, USA TODAY
Apparently, it takes more than a nasty bear market to scare off day traders for good. After being all but wiped out by a near-record bear market and crash of Internet stocks, day traders are sheepishly reappearing.

A day trader keeps close watch on her stocks at a Falls Church, Va., firm in 1999.
By H. Darr Beiser, USA TODAY

This short-term investing strategy of trying to make money from rapid shifts in the market, which became a national obsession during the bubble, is making a Lazarus-like return thanks to the rising stock market.

“A lot of day-trading activity has picked up,” says Henry Robertelli, partner at investment management firm Axius Holdings.

This time, though, day traders are different — in fact, many are even dropping the day-trader moniker for more professional sounding names, such as semi-pro traders or swing traders. And the number of day traders is still well below the peak in 2000.

But whatever you call them, brokers and other firms that cater to these hyperactive traders are seeing a pickup in their business:

•Online brokerages. The trading activity of active traders jumped 42% in the second quarter vs. The first quarter at E-Trade, which is one of the online discount brokerages to which day traders gravitate. That’s up from the 10% trading activity increase in April over March, says Jarrett Lilien, president of E-Trade Group. Walk-in traffic to E-Trade’s financial centers is up as well, he says.

Meanwhile, the average number of daily trades by active traders at Schwab and its CyberTrader unit during the second quarter jumped to 69,500, a 28% increase from the first quarter.

Perhaps even more telling of the swelling interest: Customers at CyberTrader, the Schwab unit that caters to active traders, signed onto their accounts 500,000 times in June, up from 300,000 in March, says Vincent Phillips, senior vice president of products and technology. CyberTrader also has enjoyed a 15% increase in the number of trades per day, and the account base has grown by 5% this year, he says.

And at TradeStation, a brokerage that caters to active traders, the number of accounts in the second quarter jumped 98% from year-ago levels to 10,115, and the average number of stock trades per day soared 111%. The pickup is a sign of the return of day traders, says Richard Bove, analyst with Hoefer & Arnett. “Nobody likes that term (day trader), but that’s their customer base,” he says.

•Day-trading chat rooms. Since day traders often work solo in their own homes, they congregate electronically in Internet chat rooms. Chat activity tends to directly track trading activity.

“Volume has picked up,” says Jea Yu, founder of one such electronic watering hole, UndergroundTrader.com.

Yu says the number of members on the site is up 20% from when the market hit bottom last year. But membership, he points out, is still 50% below the high in 2001.

•Day-trading specialty firms. Day trading has picked up 15% from the year’s low at the 40 day-trading centers run by Bright Trading, founder Don Bright says. “Since March, it has been good,” he says, adding though that volume is still 25% below the peak in 2001.

But while the amount of day trading is rising, the day trader of 2003 is very different than the day trader of the late 1990s bubble — and a potentially less disruptive force on the broader market.

These traders are like Marlene Colean, 66, who three months ago kicked her trading into overdrive. From her home office in Fort Pierce, Fla., overlooking the Indian River, Colean trades roughly 8,000 shares a day and claims she’s seen a 52% return since March.

But unlike many day traders of the late 1990s, Colean has discipline. She is keeping her day job as a Realtor at the firm she owns. Only on busy trading days does she ask her son to look over things at the office until she arrives in the afternoon. And she sticks to strict rules to prevent catastrophic losses: She sells a stock before it falls even 1% from the price she paid. “I’m spending more and more time trading,” she says. “It’s addictive.”

This time day traders are quasi-professionals who stick to strict trading rules and prefer exotic trading instruments to simply trading plain vanilla stocks, Schwab’s Phillips says. “These semi-pro traders have a specific strategy. They’re not just in it for the quick buck,” he says.

But that’s partly because many of the tricks of making a fast buck, such as investing in IPOs, died along with the bull market, says Lynne Benson-Hernest, who has split her time as a day trader and chiropractor since 1995.

And that’s why most don’t expect day trading to return its former glory anytime soon. “Yes, activity has picked up a little bit,” says Ray Johns, CEO of trading newsletter DayTraders.com. “But not enough to jump up and down over compared to a few years ago.”

Powered by Yahoo! Answers

This entry was posted in Uncategorized. Bookmark the permalink.

3 Responses to Your Questions About Successful Traders Make

  1. Pingback: Your Questions About Successful Traders Make « tradingsecrets1

  2. Hi there! Greetings fellow internet marketer. Found your blog on a longtail search on google. Wanted to let you know about my new plugin SEOPressor for WordPress blogs. It’s been shown to dramatically increase your rankings in the search engines by automating all your on-page SEO! With built in ratings and a crazy simple user interface getting ranked on Google has never been easier! Try SEOPressor today! Right now I’m offering it to you for just $1/day! Try it out here: SEO Pressor Thanks & happy blogging!

  3. Good post. I be taught something more difficult on totally different blogs everyday. It is going to always be stimulating to read content material from different writers and observe slightly something from their store. I’d prefer to use some with the content material on my blog whether you don’t mind. Natually I’ll provide you with a hyperlink on your internet blog. Thanks for sharing.

Comments are closed.