BossHK Posted January 11, 2012 Posted January 11, 2012 How about binary options? Basically I don't know much about these things, but just out of curiosity: Wouldn't it be possible to use roulette-kind of "betting" system to get money? I mean, brokers are connected to live world wide happening things, so they can't kick or block you based of what you do. For example: "Bet" 10$ for oil to go up, wait 15-60min and see what happens. If it went up, you get 160%-180% roi, if it went down, you lose your money. So, if you lost your money, "bet" 3x that amount somewhere and see what happens. Repeat untill you "win". Use small "bets" and you still have money to put in. I mean, what are chances that you lose like 6 time in row? Especially if you even know something about whats going on around world. So, your thoughts about this? Quote
PHANTASM Posted January 20, 2012 Author Posted January 20, 2012 How about binary options? Basically I don't know much about these things, but just out of curiosity: Wouldn't it be possible to use roulette-kind of "betting" system to get money? I mean, brokers are connected to live world wide happening things, so they can't kick or block you based of what you do. For example: "Bet" 10$ for oil to go up, wait 15-60min and see what happens. If it went up, you get 160%-180% roi, if it went down, you lose your money. So, if you lost your money, "bet" 3x that amount somewhere and see what happens. Repeat untill you "win". Use small "bets" and you still have money to put in. I mean, what are chances that you lose like 6 time in row? Especially if you even know something about whats going on around world. So, your thoughts about this? Nice to see some discussion on this topic from BossHK (I've seen your tutorial on many sites). I am currently trading options, mostly. Currently what I do is bet both directions with a three-month expiration. Then wait as the market bounces up and down over the three-month period you can cash out either option hopefully before they expire. So if you have a stock running at $50 a share you buy call options at $55 and put options at $45 and wait for the stock to move. You have to do this with something volatile that will bounce up and down a lot. When the price is met, you exercise the option and double or triple your money. You may take a loss on the other direction, but you want to keep your range tight (within + or - minus ten percent is best) so you are likely to hit one target before the expiration. One thing to watch is the 200 day moving average for every stock and when you see a stock begin to trade at the top or bottom of the range it is a good sign that it will bounce back the other direction, so you can place options accordingly. For example, you would want to place "put" options (short options) on a stock or underlying asset as it approaches the high end of its 200 day moving average, since a lot of longer-term investors (think months as long-term investors lol) will sell a stock as it approaches the peak of its 200 DMA. And vice versa, you will want to place "call" options (long options) on a stock or underlying asset as it approaches the trough of its 200 DMA (if the stock had good fundamentals and is likely to retain value). It's just like betting on a yo-yo really. If you want to get more return than a stock, but less risk than an option, there are always ETFs. These are Exchange Traded Funds, where they have basically created a "stock" (it's not really classed as a stock but you can own it like an equity) that offers a degree of leverage (2X or 3X usually) on the day to day volatility of the underlying asset. Here is more info: http://www.option-in...onstradeetf.htm Good luck and try not to lose your money lol. Quote
TulsaGeoff Posted January 20, 2012 Posted January 20, 2012 Im itching to try. I need the cheapest trading with buy and sell options. Quote
KITE Posted January 20, 2012 Posted January 20, 2012 Interesting reads, Im actually ForexTrading myself (just went live, demoed a long time it isnt easy). Im working on Automated trading, I'd love to have my own script running here, grabbing pips on the way Forex is awesome with leaverages up to 500:1 Quote
BossHK Posted January 20, 2012 Posted January 20, 2012 (edited) I am currently trading options, mostly. Currently what I do is bet both directions with a three-month expiration. But how about what I wrote, the binary options? The cheap ass method? At binary options you have 2 choises to put money on, either to 'call' or 'put'. Basically it goes as 1. you choose the asset(gold, oil, currency pair...) 2. You choose "call" if you forecast that an asset will rise above the current market rate at a certain expiring date/time, or "put" if you think that the future price will be lower. 3. you enter the amount of money you want to invest/bet and choose expiring time(usually short, like 1h). So using the method I mentioned, isn't it possible to get some money during the day? I mean, if you bet with low amount of moneys like 10$(lose)-30$(lose)-90$(lose)-270$...when you 'win'(aka predicted right and get your moneys), you start it over from 10$. So you don't need that much capital to start with(like 10+30+90+270+810 (+2430)=1210 (=3640). Usually you can even see what other traders are betting, 'traders trend', so you can for example always bet as the trend goes. I mean, how many times the trend can be wrong in a row? Dunno, but I don't think its that many times. So basically even the guy who doesn't know a shit about trading, could make money. For example one binary option platform: http://www.empireoption.com/ Edited January 20, 2012 by BossHK Quote
PHANTASM Posted January 21, 2012 Author Posted January 21, 2012 I'm not experienced in binary options, so I don't have any advice on them. It looks like you could easily lose your money if you guess the wrong way (like any other investment). One thing I noticed from the site you linked is that these options expire in five days (Jan 27th). Which is odd to me because the vast majority of options expire the third Friday of every month (i.e. today for January 20, 2012). So these options are traded completely differently. I don't know anything about this type of option. Sorry. Perhaps you could explain it better. And why bother betting $10 or $20? Not worth the trouble to file all the taxes unless you are making at least $10,000 a year profit. Quote
PHANTASM Posted January 21, 2012 Author Posted January 21, 2012 If you want to look at options here is the main source I use for checking the prices. This is the yahoo finance page for SPY (the S&P 500 Index fund). This will give you an idea of the complexity and what kind of creative bets you can make. http://finance.yahoo.com/q/op?s=SPY+Options Quote
Antichrist Posted January 21, 2012 Posted January 21, 2012 Here's a bump of an old thread that actually contains good information, and a thread I haven't seen yet either. I've always wanted to start trading, but never really knew much about it to be willing to take the risk. I even went as far as contacting a broker (ScottTrade) to inquire about more information, and wasn't willing to invest at the time, as they had a $500 minimum, and I didn't seem to be very in control of my money. It seemed more like I give them $500, and they do what they want with it. It's 4:45am, so I'm going to have to read this again later when the coffee kicks in, since most of what I just read has already been forgotten, but I have a couple questions.. With what broker/company would you suggest that a novice like myself use in order to start trading? What is the minimum investment I can start with to get into the swing of trading and get some practice, while at the same time minimizing my risk of taking heavy losses? How do you feel about Jim Kramer? I've watched his show a lot in the past. His energy on the show really gets me pumped up to start investing, but then reality sets in, and the fact that I know virtually nothing about trading keeps me from taking the first step... How many hours per week/day would I have to spend researching, and making my sales and purchases? Assuming that I (hopefully) make money selling some stock that I own, do the gains, as well as any dividends that I may earn have to be reported on my yearly tax forms? If so, who do I get the W-2/financial statement from? Is it sent automatically? Or do I have to keep my own records? Thanks in advance. Quote
PHANTASM Posted January 21, 2012 Author Posted January 21, 2012 @ Antichrist Scottrade is a good site, I have had an account with them for many years. You have to get a cashier's check to deposit money with them. They will put it in your account and you can start buying and selling stocks or ETFs right away. One problem I had with Scottrade was that if I made too many trades in a given week they would freeze my account and send me nasty letters telling me I wasn't allowed to do so much trading. There are SEC rules regarding what kind of trading you can do with certain account types. You can open a basic account with $500, or get a margin account with $2000. With the margin account they will match your money with a loan at 8% if you have decent credit. So this doubles your purchasing power. First thing you want to learn is how to set up limit orders, so you don't get hosed when a stock drops 50% overnight for no reason. Use stop orders to automatically sell stocks if they drop a certain percent. I used to have it set at 10%, then I dropped down to 5%, then as I got smarter I dropped it down to 2%. So if I have $20K in a stock and it dropped 2% I only lost $400. Much better than losing $2000 lol. This totally depends on the volatility of the stock, obviously some stocks bounce around a lot and if you set the stop order percentage too low, then you are selling and locking in a loss when it will just go back up where it was anyway. You have to study the day-to-day volatility of whatever stock you focus on so you know where to assign your limits. I prefer to trade financial stocks like Citigroup, Bank of America, AIG, FNM, etc. The reason is that these stocks are basically too big to fail, so you don't have to worry about bankruptcy, and they are intimately connected with the current political events in the US, so they are highly predictable. Best source for day to day political information in the US is the wall street journal. I read wsj.com every day. If Ben Bernanke clears his throat they will report it, and I will know which way to bet. Watch the yield on the US Treasuries. If they go up, the stock market in general goes down, and vice versa. So you can predict an index fund that covers the entire market just by looking at the day-to day fluctuations in the treasury bond yields. Scottrade has some great information on every stock, you can read what all the insiders are doing and what kind of SEC disclosures are being filed. This data is connected to every stock they list. After you get really good at predicting one stock, you can start to see the patterns of its behavior. Then you can get involved in options and make more money. Opening an option trading account is a bit harder than your basic retail customer stock account. They may require you to have 25K in the account, and have a customer history with them first. When you sell the stock you will have to pay taxes, but only on your profits after subtracting your losses. You will need to file Schedule D whether you make money or not because all sales are reported to the IRS. Short term capital gains are taxed the same as income. Long term gains (held over a year lol) get a lower rate. They will come after you if you sell stock but do not file your schedule D, even if you lost money that year. You can get your tax information mailed from Scottrade, or you can print your annual gain/loss statement directly from your Scottrade account. If you use a tax preparer be sure to tell them you daytrade. Turbotax does not do a great job of prompting users for daytrading info, so be aware that you need to file a Schedule D even if you lose money. Jim Kramer is great, he is a perfect contrarian indicator. If he says buy, then sell, and if he says sell, buy it. Quote
Antichrist Posted January 22, 2012 Posted January 22, 2012 Great information again. Thanks a ton bro. Based on what I've learned, and weighing my own inexperience, I signed up with ING/Sharebuilder, which has no minimum. I still have the benefits of market and limit orders. And I can upgrade my basic account to also allow me to work with options trading and such. I'm going to start small, $100 to learn, and practice, so if I lose it all, it's no big deal. Losing $500 is a bit bigger of a hit for me. I'll be reading your tutorial a couple more times this weekend, as well as looking up companies with shares in my price range, and will make my first purchase at some point next week Quote
The Dude Posted January 31, 2012 Posted January 31, 2012 I dont know hows that in the US, but in Europe, you cant do daytrayding with 100dollar, since then you see all your money dissapear paying the guy who's gonna trade it for you. We have a min. trade-fee and we also pay money for a (bank)tradingaccount. I'm not an expert in it, but as far as I know this is the way it also works for daytraders. About that beeing too big to fail --> ok, smaller chance, but nothing is too big to fail. Have peace with the fact you can loose money, or leave it. Ok daytrading isnt the same as standard trade, but still... RIP Lehman Brothers and Merrill Lynch, they were big too. At this moment we are in the middle of a crisis, this is making it harder. Also even a good working company can choose to give out more shares, and when this news reaches you, you'll already lost lots of money. If you're new, I'd wait just a little longer, when this crisis seems to get under control. You'll see nothing but green numbers then! One other thing: please, dont invest in companys, unless you also like the idea behind it, the product they produce. If you are against whale hunt, dont invest in a japanese fishing company for example, may sound stupid, but the worlds gets f***ed up by people who only think about money and how to receive more at all costs. In fact thats why this system brought us in a crisis. I write this to join the discussion, I'm not here to judge (in case it would feel like that). Peace, The Dude Quote
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