Today is my first day of day trading stocks with real money.
About a year ago today, my business partner & friend told me I should look into day trading as a means of extra income. He invited me to a free introduction course that taught the attendants on how to do basic technical analysis using MACD, EMA and RSI indicators. Within minutes of understanding the basics, I fell in love with the whole idea of trading equities as a side “job”.
To further my knowledge on day trading, I took a one day course taught by a professional trader by the name of Charles Langford (who also happened to give the intro course before). He is quite possibly one of the most knowledgeable individuals when it comes to trading: Langford has written books, taught many courses and is a teacher at Université de Québec à Montréal, among other things. His course was sold out within days of being announced as seats were limited.
Before I dove into the world of trading, I practiced my technical analysis skills with a TD Active Trader account with fake money. Making plenty of mistakes, I got the hang of making a small amount of profit each trade by sticking to the rules and indicators I learned by attending the paid course.
The day came two weeks where I felt that I was ready to trade with real money. I had my line of credit increased last week so I can use it to purchase equities and leverage my trades. As a means to help me screen preferred stocks, I have subscribed to Langford’s “Langford Report” newsletter, where daily emails are sent out on various portfolios. Everyday, Langford mentions which stocks to buy, sell and stay according to his professional opinion. Looking back at his analysis records, following his portfolios would have netted you some serious cash.
The whole thing is exciting to me, yet I still feel a bit nervous. While the risks I am taking are very minimal, you can’t help but think that the chance of losing it all is still there… that is, if you invest in sketchy companies with no real products *cough* Nortel *cough*.
My rules for day trading are as follows:
- Trade Monday to Thursdays. Take Fridays off.
- Never follow the news, as it is irrelevant to trend following.
- Never get emotional with a stock.
- Don’t make your million dollar profit in one day.
- Don’t be greedy.
*gulp* here’s to the future.
I have been practicing day trading for the past six months on TD’s Active Trader demo platform and finally decided to open up a real cash account. While opening up the account was not difficult, it did require a number of steps to be performed before actually having access to the platform. You can’t sign up to the Active Trader platform directly: you must have a TD Discount Brokerage account before. There are a number of reasons TD does this, and I will detail them later on.
First thing’s first, you must create a TD Waterhouse Discount Brokerage account. This is free, but it will take up to 2 weeks for the application to go through. In my case, I found out that TD contacted my bank for authorization and validity purposes.
Once your Discount Brokerage account is created and ready to be used, you must then call the Active Trader team via telephone to register. They will ask you a few questions to make sure the platform is for you. From what I recall, they asked me questions such as my experience level, if I have tried the demo platform, how much will I be transferring to TD and if I have any proof of executing 150 trades in a quarter. The latter question is a bit important, as TD will charge you platform fees if you trade 30 times or less per month (I think a 99$ fee per month). Also, the actual trading fees will vary, from 7 to 10 dollars depending on your volume. They expect you to trade at least once a day.
In my case, whether I was getting charged 7 or 10 dollars per trade did not matter, as my current discount brokerage account at my primary bank charges me 28$ per trade! The savings here are obvious if I go with TD. Among other reasons, I chose TD because their trading platform is highly customizable (you can put in your own values for MACD, EMA, RSI and Stochastic charts).
For those who have not tried the Active Trader platform yet, I highly recommend a demo/dummy account. For about two weeks, you can play with the platform and see if it’s right for you. Compare it to the other financial institutions offerings, such as RBC, NBC and BMO. In my mind, TD’s Active Trader is the best out there, and I can’t wait to start my real trades in January!
One of my latest interests today is day trading. A couple months ago, a good friend of mine who is a professional stock broker and trader recommended I look into day trading as a part-time “job”. I’m quoting the word job because the way I see it, it’s not your usual 9 to 5 setting. Day trading is something you can do on your free time, or alongside your usual everyday job (or career). You will, of course, require access to a computer with an internet connection.
One of the things that I tout on this site is passive income, so most of you are now saying “well, this isn’t exactly passive…” This is true, as you will have to be somewhat active when you execute your trades. Unlike buying stocks and “going long”, buying & selling stocks can take anywhere from minutes to hours within the same day. This method is called intra-day trading and is what I am currently doing.
If you have some extra money lying around in the bank and you rather have complete control over it, day trading is the way to go in my opinion. Rather than dump your money in a mutual fund that may or may not grow, trading will definitely give you some nice income.
On the topic of risk: yes, there is some risk involved, but it’s actually quite minimal if you know what you are doing. Day trading isn’t rocket science, but it does require some analysis on charts. The practice to analyze chart data is called “technical analysis” and it is something that everyone can do and master with a bit of practice. To further minimize risk, you can put “stops” on your trades: when a stock falls below your minimum, your trading system can automatically sell your equities and leave you with little losses.
In the upcoming weeks, I will be detailing my techniques and methods I have learned over the past few months that are working quite well for me. I will also go further into detail on how to start and what to do when it comes to day trading, along with the questions that most people ask when they first start. When I first started, I was completely lost, but my friend helped me get started on the right foot.