Today we are discussing short-term stock market trading, I'm going to give you guys my four best tips on how to be successful as a short-term stock market trader. I cannot wait to share this with you guys today.
This is the financial education Website and today we're talking about short-term stock market trading, and I'm sharing my four best tips on how you can make money and be successful as a short-term trader in the stock market now for full disclosure.
I am a long-term investor in companies, mainly. That is the way I have found over time. I can make the most amount of money throughout my investing career.
So that's the way. I primarily stick to what I dabble in a short-term trading here and there I've made tens of thousands of dollars doing it. I'Ve lost tens of thousands of dollars doing it.
So today, I'm going to be here to share with you guys the things I've done. Well, in those tips that are really good and the things I've done bad and that you should not do.
#1. STICK WITH A SPECIFIC PLAN
I'm going to share all this with you guys and let's go ahead and get right into this so number one most important thing is sticking with your Plan, so when your short-term trading in the stock market, you need to have a plan, it needs to be a very exact plan.
It needs to be very precise, so, for instance, maybe you're planning on playing company ABCs earnings the following day. So you go ahead and buy that stock and your plan is I'm going to sell the very day after earnings and I'm going to get out of stock completely right in the morning.
It needs to be a very exact plan, whatever happens with that stock, whether it goes up or down or whatever happens, you need to stick with that plan and get out of that stock and 9:00 a.m. like you said you were done.
It cannot be something where somehow a short-term trade turns into a long-term thing into the company, because that's not why you are looking into it.
If you want it to be a long-term investor in that company, you could have bought shares whenever or at that time and said this is a long-term investment.
But just the fact that say you bought and then it went down that doesn't know to mean that now you Should hold it for the long term because it's a short-term trade I've seen so much money lost that way.
Because, then not only does the stock go down that next day, then it goes down the next day and the next day and then you're stuck in a position where you're down 20%-30% in a position and you're like what the hell am. I do with this stock, it just keeps going down.
It was just supposed to be a one day, trade, I'm still holding it, and then people end up selling out at that point and losing a lot of money.
So you need to have an exact plan when your short-term trading, it needs to be exact, and you need to stick with it.
A hundred percent there could be no flip-flopping, you know be going in and out needs to be an exact plan.
#2. HEDGE YOUR POSITION A BIT!
So, stick with it number two that I would also to suggest is head your positions all the time now, hedging your position means you are basically placing a bet that the opposite of whatever you believe is going to happen now, of course, with the opposite that you, You are putting a lot smaller amount into that stock.
So say you believe. Stock ABC is going to go up huge on this earning, so you buy in that stock the day before earnings.
You also might want to buy a small put position, a small put position that way if that stock drops use that day, you'll at least save some face and you'll make some good money on those puts because those puts will become much more valuable.
I did that's called what are options you. I were discussing options if you guys are not familiar with that. Yet so you want to head your position same thing.
If you short a stock, let's say you short a stock ABC you think that stocks going down for whatever reason next week or whatever.
Well, then, you can go ahead and buy some call options. Just a few to go ahead and save some face if that stock, for some reason shoots higher.
So then your put your calls excuse me will be worth much more money at that point, then you can sell those off and then go ahead and solve your position.
You'll lose money, but you'll love lost way less money. Then, if you were to win all in on one way or another, so short-term trading, you absolutely have to hedge your positions a bit, just so you can save some face if some reason what you think does not go correctly because a lot of times it does A lot of times it's a one in two chance of going right or going oh, so that is very, very important to understand.
#3. PLAY DEVIL ADVOCATE!
Number three most important thing is you need to play devil's advocate. You need to be able to play devil's advocate and look at.
Why ever you're doing whatever you're doing whether you're trying to place a short-term trade on a stock or long to earn well long-term trade? You need to do this, but whatever you're doing in the short term, you need to try to play devil's advocate, and why will that not work? Why will that trading strategy not work for the short term?.
What are the chances that that company reports great earnings and you were expecting them to be batarangs or vice-versa?
And then also how much do they need to beat the endless numbers you've got to play devil's advocate and play all the way through and try to put Your shoe on the other foot and say: okay! Well, if I'm looking at from this way, one of the chances of stocks after you go up versus going down and all those kinds of things.
You got to play devil's advocate it's so important to because you're doing a short-term trade. It's not like when I do a long-term trade. I do have to play devil's advocate and say what, if this goes around, what if that goes wrong, but I have time on my side, if I'm doing a long-term trade, I can hold that stock for years. If I want to months years, however, long decades, if I really want to whereas a short-term trade you're sticking a plan, it's a one-day thing or one-week thing or at the most a one-month thing. So you need to be exactly right. So it's very important to play Devil's advocate.
#4. DONT SHORT TERM TRADE HEAVY ON MARGIN!
Number four last one is: do not short-term trade on margin. This hurt me substantially, because I would basically you zoom and kind of run numbers and that a company would beat their earnings right and so beat analysts, estimates and all those kinds of things.
So then, I will load up on that stock on margin and a lot of times. I was right about what the company did. They were blow out numbers or whatever, but sometimes I stock went down for whatever reason, because the margins weren't what they were supposed to be or because guidance was a little weak.
The next quarter, for whatever reason that stock would go down and then I would get burnt because then I would have margin calls coming after me and all those kinds of things. So that's why I highly suggest you do not short-term trade on margin if possible.
You have to have a margin account pretty much too short-term trade, because if your short-term trading.
You're in and out of stocks every day every week or whatever - and it takes three business days for a stock position to close out so - which means you pretty much have To make a margin account.
But the trick is you: don't really want to go on margin and if you do go in March and don't go heavy like I used to, because that is when really bad things should happen, because then you're forced to sell a position Before you may want to.
Because the margin calls and those kinds of things or deposit more money plus if you lose money, you're paying interest on that margin, usually, I used to pay like six and a half percent so say I had a 100k on margin. Six and a half percent over the course of a year.
That's six thousand five hundred dollars, not fun if you're losing money and you're paying margin.
So when short-term trading tries to stay away from the margin, in my opinion, even if you think you're so right, because I felt I was so where I don't so many and sometimes it just didn't, go the way I expect it.
You know this made. My numbers were all right: they blew them out, but the stock would go down or vice versa.
So these four tips, hopefully, guys, should help you immensely as a short-term trader and as a beginner to understand these tips are critical. In my opinion, they're critical because you're going to need them every step of the way.
I thank you so much for watching this today, guys if you have not subscribed yet, you may want to.
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