How I Day Trade Stocks for Profit | Day Trading for Beginners | How I Swing Trade Stocks
Running Time: 8 minutes
They say that stocks take the stairs going up, but the elevator going down. If you’re willing to try and catch a falling knife, you can make some serious money.
In this video, I am going to be going over how I personally buy and sell stocks every day. I will go over how I find stocks to buy, when I sell them, and how much profit I expect to make. I will be talking about how I try to keep my money safe, and how it’s always a balancing act between what’s a good buy and what’s garbage.
Everybody has their own unique way of investing. This is mine, and certainly not how I am suggesting that YOU invest. I have between $5,000 and $10,000 in the market at any given time. I like to own my stocks with cash. If I am dead, my wife owns the stocks. If I was doing Option Trading, then my wife would be down tens of thousands of dollars before she even realized what happened. And I guarantee, many new Quarantine investors would have never even thought out that.
Welcome to Day Trading
Buying and selling stocks for long term investment is one way we normally think of stocks. This could be done through a 401k’s brokerage, or through a self-directed IRA. For someone like me, investing in a company like Tesla who is gearing up for the next 25 years this is a no-brainer. But to invest like this, you need to have access to money that you don’t actually need for the next few decades.
Another way of buying and selling stocks is called gambling. This is where you are betting on stocks going up in value (or sometimes down) within a relatively short time frame. You could either buy and sell the stocks themselves (which is what I do), or you could purchase Options, which is kind of like flipping a coin. More on that later.
Being a Day Trader is quite similar to being a burglar. You look around for an opportunity, and as soon as you see it, you take what you can and resell it for a quick profit. Their loss, your gain. It’s the American way!
Everyone has their own thoughts on what is worth the effort. But for me, if I can buy and sell several different stocks within 24-48 hours, and make the same amount as a day job, then it’s totally worth the effort for me. If I can make 5% profit all week long, then I think that’s awesome. Other people can’t be bothered unless they are making 20% or more. But remember, big wins also mean big losses. I have a wife and a child, so I have bigger concerns than riding on that YOLO train.
I don’t want to say that I hold any asset. That would give the impression that that I plan on holding anything for a longer period of time. Rather, I am just trading. Day in and day out, I am buying and selling stocks. There is nothing new here. I am not personally invested in any of these companies, so I only want to buy low what I am sure will go back up, and sell when I feel the profit is good enough. This doesn’t have to be your way, but it’s my way.
Why I Don’t Deal with Stock Options
I’ll start by saying that I have no desire to buy Stock Options. I have another video that explains Options in detail, link in the description below. Purchasing Options requires 100 shares of something. This means many deals are worth tens of thousands if you were to lose. While there are safer and riskier ways of approaching Stock Options, I simply do not have the funds, financial backing, or personal ability to put that kind of money on the line. You can find an abundance of other traders on YouTube talking about this, but you won’t find any of that here.
Many Stock Option deals are done through what’s called Margin, which is basically a loan from the bank. This is ridiculously easy to do, and these banks are more than happy to over fund a line of credit to people that have no business risking this type of money in the first place. It reminds me of the housing bubble of 2008, where anybody with a pulse could get some half-assed loan, and foreclose within 2 years.
So, for me, Options are off the table. I can’t lose that much, so I am smart enough not to risk it. However, buying stocks in the morning, and selling them later in the day, well, that I can do. Let’s dig deeper into that.
How I Pick My Stocks
On the surface, it appears that I am simply guessing that each of my chosen stocks will ultimately go up in value, however the truth is much more complex. In reality I use historical data to show me what the current value really is, how much more it can lose, and in the best case, how much more it can gain. By mostly focusing on the same stock’s day in and day out, I know what they can do, and how long it will take them to recover, simply by looking at recent trends.
So, yes, I am guessing. This is because any stock can sit dormant for weeks on end without any movement, but down. They always say to “Buy the Dip”, but sometimes the dips just keep happening, until you run out of money. Then all you can do is wait. But in general, I like stocks that move up and down every day, and every week. For these, I only need to know that if I buy low, I can eventually sell high. For me, that’s around a 5% profit. Sometimes I get lucky with an 8-10% profit. But just as often it will spend a few days and weeks never going above 1-3%. In those cases, I just dump it and move on. Profit is profit, and there is always more to be had.
How to Buy Stocks, and Not Get Burned
You need to make a plan, and execute that plan. Do NOT let your emotions get in the way. For example, let’s say you make a plan to buy at $40/ea, and setup an automatic selloff at $44/ea. That’s a 10% profit. That’s good, really good. Personally, I target 5%. It’s easy to reach, and frees up the money quickly for the next deal.
Do NOT sell early, unless you REALLY need to. It matters. Time and again, I got hung up on stocks that sit there for days on end, doing nothing for what seems an eternity. Even worse, they go further down in value, forcing me to do things I don’t like to do. In these cases, fall-back plans are needed to limit loses. However, the initial plan is always 5% profit, unless I have to settle for 1-3% profit, just to get out of it.
Prices will fluctuate all day every day. But the beauty of actually buying and owning the stock, even for a short period of time, is that there is no time limit on when I actually need to sell anything. So, if my stock is down $2/ea share, I simply ignore it until it starts getting closer into profit. Remember, you don’t lose any money, until you actually sell. Options have time limits, so you could lose hundreds and thousands if you are not careful. That’s why this style of trading isn’t right for me. Buying in multiple companies is a much safer way to go. If you don’t have the cash to put in, then I don’t feel you should be doing this.
But in general, you need to trust in the plan that prompted you to buy in the first place. This is also why you should not spend everything you have in one place. Spread it out. Give it time, and let it make you money. If you sell at a loss, then it’s a loss. If you sell at a small profit, then it’s a small profit, and likely not worth tying up your funds. But if you are willing to hold during the down times, then no loss is ever official, and you can hold onto it for as long as you need.
For me, I look for stocks that are down around 5% on that day for no particular reason. I will then buy 5 of them. I prefer stocks priced between $20 and $70 because they are affordable, and only need to grow between $1 and $3.50. I can get in without spending too much money. I set it to automatically sell at 5% profit, which is often back where it was at the start of the day. Usually, I make my 5% profit within 24 hours. Sometimes I need to wait two or three days. Sometimes I’m actually sitting on it for a month. At that point, I dump it for whatever profit I can get.
While yes, there are plenty of people that bet big on Options for $10,000 or more, but I am not comfortable with that, not even close. I want to make a 5% monthly average per transaction, and I’m happy. So, if I can ride a stock down, then profit when it comes back up, then that’s all-easy money to me.
10 shares at $20 is only $200. So, even if it takes 4 weeks to rebound 10%, then what do I care? It’s only $200. But if I have a $400 stock, then $4000 is tied up for weeks. Think small, think smart, and make money.