Cruiser

There is only one bottom for stocks, and I've bought a couple over the years that got there. It is when the stock hit's Zero. That is "the" bottom. Other than that it can always go lower.

I believe that supply and demand is the ultimate market determination of price. Within that context there are two major categories of drivers which I believe drive price.: 1) the Market Cycle (click here if you don't know what this is) which is driven by the ongoing business of the large institutions as they buy stock cheap and sell it high on different time frames. 2. Millions of traders trading on different time frames and giving the market reflex reactions to technical indicators and news events. But all of the above is within the overall context of supply and demand which, along with everything else, is operating on different time frames.

Sorry - I don't look at the bid/ask ratio at all. I put my attention to price action and market internals. I occasionally watch the bid ask numbers once I'm already in a trade but never have gotten a lot of info from it as price can easily move counter-intuitively in relation to the number and span of bids and offers. I trade emini index futures in the day session so the bid & offer volumes and spreads from moment to moment aren't that important to me as I'm already familiar with the characteristics of fill and slippage on orders during the time frames I usually trade. Occasionally, I'll trade stocks (mostly Nasdaq 100 stocks) based on various scans and when I do I'll end up trading stocks I'm not all that familiar with so the bid/ask levels up and down the scale are more important to get an idea of what kind fills and slippage might occur. But I'd pay even less attention to the bid/ask ratios close to current price for stocks as the market makers for the stocks might be playing all sorts of games.

The simple answer to the original question is that there are huge institutional traders who control huge volume and have lightning quick sophisticated systems. They are able to get huge orders and volume into, and out of, the order book quicker than it can be reflected in the ladder. They have the power in some cases to do this with enough volume and speed to move the price, within reason, to meet their needs. Also, as one person indicated above the ladder, or order book, reflect orders at a given price or what we'd call limit orders. They do not reflect market orders which are basically acceptance of an existing bid or offer or, if all the bids/offers are used up by a part of a market order, the next bid or offer.

Google "pattern day trader", or search for that term on this site, or on your broker's site. Basically a pattern day trader is anyone who completes 4 or more stock day trades within 5 days. It is very important that you understand your brokers minimums and other rules for pattern day traders. There are significant benefits as well, including more favorable margins and availability of funds. If you have not heard of this I'd suggest you go back to go and read a very basic intro to day trading book so that you'll understand some of the very fundamental rules and concepts.

You "know" how to do these in part by extensive sim trading and waiting until you are consistently profitable over an extended time period before transitioning to live trading. Be very careful in your selection of instruments to trade, some of the ones you've listed trade at extremely low volumes. The result is that there will often be large spreads between bid and ask and it might be difficult to exit positions without a lot of slippage. These issues might not show up in sim trading depending on your platform. I'd look at daily trading volume as a key factor in deciding what to trade.

Paper trading is different on different systems. The first question is whether the system you are using has data and actions that are as real time as their live system. Most are. The second, and bigger question, is whether the fills are realistic. Since you are not actually buying and selling this can never be 100% like live trading and most paper/sim systems show a better fill rate than live trading. What this means is that you will probably get better fills on a paper/sim system then in real life. The smaller your profit target the bigger the difference this makes. If you are swing/position trading and looking for 20 or 50 points and have stops that are 3 points or more then this will seldom make a difference. But if you are scalping and taking profits of a couple points or less then your sim/paper results will be very unrealistic. For example with many sim/paper systems you can go into a slow market where price isnt' moving much and put in a limit buy at current price, get filled, then enter a limit sell at a couple ticks profit and you'll get filled. Very small sim/paper profits but do this for an hour and you'll think you're the master of the trading universe and found 'the answer'. Do this live and you'll quickly find out that you never get filled at the price you want to buy or sell at and do nothing but lose money - unless this is part of some other successful strategy. If you are trading a very liquid contract like the ES during higher volume (day market) hours then the difference will generally be only one tick on the fills. In other words your fills will probably not occur unless price goes one tick past them and/or your profits on a round trip trade will be 1/2 point (2 ticks) lower than the sim/paper trade. On more thinly traded contracts, or even ES in some of the slower overnight hours, there could be a larger margin with several tick differences between sim/paper and live fills. The above is the biggest technical difference. Beyond that is the wide world of psychological differences. Trading the sim/paper 'game' is a whole lot more different than trading real out of pocket dollars. None the less I feel that sim/paper trading is an essential way to learning to trade with consistent profits. You should always set some sort of consistency goals with a strategy and never trade live until can do it consistently on sim/paper. If you can't make money on sim/paper you'll lose even more on live trading. Unfortunately making money on sim/paper trading does not mean you'll do well on live - but you have to do it first as a step on the way there.

I think you are confusing knowledge with experiance. The question was about experiance not knowledge. You can have the knowledge that hitting your thumb will cause pain but knowing that does not give you the experiance having it happen nor the skill of preventing it. Have you every done a job that requires a great deal of hammering? I'm neither a craftsman nor a carpenter and most of my hammering involves things like hanging a picture on a wall. But many years ago I built a large wooden shed from scratch. I had to hammer in literally hundreds and hundreds of long nails. I knew ahead of time that hitting my fingers with the hammer would hurt and never did it intentionally but did it far too often. But as the hours of hammering progressed I figured out techniques to hold the nails and hammer that resulted in fewer and fewer finger hits. As I gained some experiance at hammering I became better and better at not hitting my fingers. That period of experiance lasted only a couple days and at the end my fingers were hurting and the carpentry was less than square and true. Just imagine how better things would have been on that one particular job if I'd been building sheds and doing other carpentry for a few years beforehand. I might not have hit my finger once and my shed might have been perfectly square and even. You might not need experiance to know what the consequences or rewards of an action will be but knowing and doing are two different things. Sometimes being able to do well, and constantly, requires a level of expertise and accomplishment that can only be developed through experiance.

Frankly - I wouldn't get on the plane with either one of the two pilots since neither of them has any experiance. I know you said I "HAD" to get on the flight, but the bottom line is that if that was really true then it would only be a situation where my life over if I didn't because there would be no ****ing way I'd get on that plane otherwise. Siuya and peterjerome identified a couple of points that one would have to be to be an experienced trader. The bottom line is that until you have actually done something then you don't have experiance. Schooling and practice don't equal experiance. And there are different types of experiance as well. I think the presumption in Siuya and perterjerome's is that we're taking about a trader with years of successful trading. There are traders with experiance who are terrible and unsuccessful too. Your two pilots might both have had 20 years flying in all sorts of conditions, good and bad. Pilot X has killed 1000 passengers in over 30 crashes but somehow has survived and kept his license. Pilot Y has successfully navigated similar poor conditions and has a spotless exemplary record. Both have experiance but which would you fly with? I've been trading for 2 1/2 years. I have a lot of trading experiance. But I still have not been consistently profitable. What has my experiance gotten me? I know what needs to be done and I know what I need to find. I've only recently developed a strategy that is based on clearly identifiable criteria which can be back tested and which, at the moment, appear to be profitable. I'm in the process of live trading it, after a period of sim, and have been profitable for several weeks on limited trade size. I still need to develop the plan more to fine tune entries and exits in different market conditions and gain more experiance with it. Hopefully in a year or so I'll have this done and will have ramped up my trade size enough to support myself and stop depleting my savings. Actually finding and developing such a strategy is the nirvana that might make this all actually work for me. It has also given me the confidence to overcome many different psychological problems. I'm already content to make only one trade a day (most of the time) but still need to work out getting more comfortable with not even taking one every day and knowing what days to take a pass on it. In the past I've been more like a madman with a machine gun running out into the open and blasting away than a carefully trained sniper who knows he only really has one good shot most days. So maybe a year or two from now I'll go from being a terrible trader with a couple years of experiance to a consistently profitable trader with several years of experience.

Both of these are great. Do you follow certain stocks too? If so you might want to follow the one that more closely aligns with your stocks. Having a handle on the broad market will help your stock trading a lot. I started trading these and liked the broad market so much I switched to index futures and more or less stopped trading stocks. But the q's and the Spy are great if the futures are too much for you to start

I'd love to learn more about this; ..about brokers better for futures than TradeStation (does this make a big diff on ES and other futures too?) ...and about how it works between Ninja, Zenfire and a broker and what broker is best in this combo - I'm a little confused how this all works as opposed to a one-stop-shop like Tradestation or Think-or-swim. If anyone can shed a little light on these subjects or point me in the right direction I'd really appreciate it.

I've never drunk while I was doing my past office job and I'm not going to be drinking when I'm doing my trading job either. I think it would be a bad idea for a multitude of reasons.

I like the BMX analogy, but no analogies are necessary. It just doesn't make any sense at all to throw money away on real trades before you can be profitable on SIM. Starting out with real money, rather than SIM, knowing you'll lose money in the is a sign that you lack the psychological discipline to do the technically correct thing in trading in the first place. YES there are differences in the ease of trades in SIM including ease of fill and psychological differences, but that doesn't negate the usefulness of SIM in training for those first starting out, trying a new strategy or system, or doing any modifications or corrections to their trading rules and practices.

There are lots of differing opinions as to the best way to get started. You have to consider the cost both in terms of hard cash and in opportunity costs for time spent studying trading as opposed to studies needed for you to complete your degree. Whatever way you choose, your best bet is to find a broker that will let you use a simulated account at little or know charge. The one which comes to mind is Think or Swim, but I'm sure there are others. Although with Think or Swim the quotes on an unfunded account will be delayed. You could open a small funded account with them and just trade simulator to get real time quotes, since I don't think they have have quote fees. Practice and learn until you're consistently profitable.

I use TradeStation and Think or Swim. Tradestation only allow you to use their paper trading (simulator) once an account is opened. They have a platform fee, waived after minimum trade #'s are reached, and data feed fees (not waived) - so if you are only paper trading it can get expensive. Think or Swim offers trial accounts with no fees. Some of the data feeds are delayed if you have not funded the accounts so some of the data is a little inconsistent - but it should work for you and is very quick and easy to sign up and start using - just set up an account up to the funding stage and it will be available for paper trading immediately even if you don't enter the funding bank information. I've seen advertisements for Ninja Trader which indicate their platform is free for paper trading but you need a data feed - their ads state that they can refer you to a source for a short free trial data feed. But I haven't tried their service or platform yet.

If you are talking about stocks where there is a high correlation between positions then why are you both long and short at the same time? Unless there is very little correlation between the positions then in all likelihood they will both be moved to a great extent by the same forces that are effecting the broad market. If there isn't much correlation and one could expect different movements then you would be invested in the gross amount, or $200K in your example. If they are correlated then one would infer that your strategy of going long and short would only make sense under some sort of hedging strategy in which case your strategy would dictate the risk. Of course if you have the same luck I do (or did) there would likely be some sort of market movement that would whipsaw things quickly and stop both out in opposite directions.

This is true (and/or a CPA). The biggest thing in my post above someone should definitely do is to read the one page mentioned in the IRS Publication 550 so when they are selecting a tax advisor they can use the buzzwords there to find out if the tax advisor knows anything about trading taxation. It is not a frequent topic so to just pick anyone would be like taking your battery operated hybrid car to a local mechanic that never worked on one. Sure he is in a better position to figure it out than you are, but do you want to be the one he figures it out on? This is true. It would also be true if for some reason one had a separate office location for trading, especially if you ever had employees. Those activities could involve liability strictly related to the business, such as a slip and fall of a . I guess I was interjecting my own practices and plan here as I can't foresee myself getting into such a situation, or the risk of it being so low in my personal case that it wouldn't be worth the cost & bother. Of course I'm just starting out so the future could change.

First off - I think the best advice you can get is to talk this over with your lawyer and or accountant. I would quickly review IRS publication 550, which you can download at IRS.GOV. Read the section around page 79 called "Special Rules for Traders in Securities". This will arm you with just enough information to talk to your lawyer or accountant and see if they know anything about tax rules for Traders - if they don't (and most will not) I'd find one who does rather than you footing the bill so they can learn. With that said, I dont' see much of a benefit to forming an LLC or any other special entity unless you have an unusual tax or legal reason. As far as i can see the best possible reason to do this is that your lawyer or CPA will make several thousand dollars in fees from you for setting it up and make thousands more every year to maintain the entity and prepare extra tax returns for you. Of course this doesn't benefit you but it will help your lawyer or CPA pay their bills. In most cases I think all the tax benefits available under a special purpose entity like an LLC can be taken individually. I don't think the "less chance of an IRS Audit" is a good reason unless you have an intention of cheating on your taxes. Your odds of getting audited are very low in any event. Your best course of action is to understand the tax laws, or have your accountant/lawyer advise you on them so you can know what you are entitled to. As for liability - I don't understand what liability you'd be escaping. If you think you'd protect your trading account if you had some other liability issue then think again, your ownership interest in the entity (Corp or LLC) would be an asset someone could levy a judgement against just as easily as they could get a judgement against an account in your name (well almost as easy). Please consider that while I am an accountant I don't have more than a passing personal knowledge of these areas and these are my opinions based on very little research. You need to either research this matter to your own satisfaction or hire a knowledgeable professional to advise you.

Just to clear this up a little: For most of us the commissions are deducted from your capital gain (added to your loss). You do this by adding the buy commission to your cost and subtracting the sell commission from your proceeds of each transaction when filling out your form 1040 Schedule D. For example if you bought one share for $100 and sold it for $200 and had a $10 commission on both the purchase and sale of the shares you'd report it as follows: Sales Proceeds - $190 ($200 less $10 commission) Cost basis = $110 ($100 plus $10 commission) Net gain = $80