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New, Basic Scenario: Need Input, Please


Hi, I am new here and I have been considering doing something for a long time. I'll describe what I want to do in detail, and I would ask you -- this community -- to please identify where my flaw is.

I will assume that I start with $100,000.00 USD. I will use this money to invest in what I consider highly reputable corporations that are low risk to go under in an exceptionally quick period of time (WalMart, AVTI, CSCO, Microsoft, etc). We'll use Activision Blizzard (ATVI) for this specific example. When ATVI is at 10.99, I invest the total of my $100,000.00 USD into it. When is it at 11.00, I sell for approximately $100 profit, maybe less. I do this multiple times (more than 4) until I reach $1,000 profit (1% of my total investment value).

That's my plan. To do that repeatedly to generate income. I'll never be a multimillionaire, but making 1K a day, I will never be poor, either.

Here are some problems that I see with my plan:

1. Stock value could decline repeatedly, money can be lost.
2. Just because the market says the value of ATVI is at 11.00, does not mean ATVI will sell for 11.00 -- potential loss.
3. Day trading rules, which I am not aware of, might prohibit this type of trading behavior.

This is just an idea, I have not committed anything to this idea except playing around with online programs which seem to prove it is feasable. I have been using one stock market trading simulator, doing this 4 days in a row, and making at least 1K a day per day with $100,000.00.

Please, please shine problem areas. There is much I don't know, and I am very willing to learn from educated investors. I realize this may not be what you guys are into, and may break some ethical law or law itself: if so, please let me know.

Thank you all for your time in advance. It means a lot to me.
Problem is it won't work. One .25 cent loss will wipe out 25 trades. Sim is not like the real world orders get taken on sim that would never get taken in the open market....I think brokers do this on purpose. I used to stock trade and do options, the best system I know of is mixing fundamentals with technicals. Pick a few children stocks that have great fundamentals like aapl, msft, goog. What ever and if the broader market is up buy pull backs to the 10sma. Hold until the broader market (dow 30 or S&P) is down below its 10sma. Continue this until the dow is 10% below its 50sma.
Can you please explain?

Do you mean that, when using an electronic system like E-trade, each share is considered a trade? And so, if you buy 1 share, it's 10.00 transaction per share?
some places charge per share others one fee really depends on who you use.
All right, under the assumption that it costs 10.00 per lump trade -- meaning 10,000 shares, 10 dollars.

But I'm not following you why it would not work. And I really want to because I think this plan is so simple that something must be wrong with it that I just don't see.

I don't know why you said .25 -- I'm focusing on the penny increments, .01 and -.01; or .02 and -.02.

So can you please elaborate for me?

Thank you for your time.
Sorry -- I just saw your elaboration.

I think I understand.

You're saying that the prices shown for stocks like ATVI on things like google finance is never what is traded on the open market, and so relying on it is a sure way to lose money?
Its just not gonna work...You should make at least what you lose and twice as much is better.
All right. Thank you for your time. :)
no problem and good luck.
For every trade you take you have a stop loss. i.e. when the trade moves against you then where do you quit and take your losses?

(Some people say that they don't have a stop loss - which isn't true - because the stop loss is when all your money is gone and nobody has infinite money.)

So how much do you risk on each trade? Say 0.25 and how much do you win? Say 0.01. Can you guarantee that you will always win more than 25 times for each loss?
Learn about market internals, NYSE tick, adv/dec,, breadth $vold there are lots of threads on this site that will help you with that. Know which sector your stock is in and is that sector up or down, for example you wouldn't go long RIG if the OIH etf was down, you need the wind at your back. Thinkorswim has a sim and market internal data, you can listen to the shadowtrader live market commentary from someone that knows how to read market internals and the market. When you're new, commentary on whats happening while it's happening helps, did for me anyway.
highly reputable corporations


In your strategy what your actually talking about is trading pure random noise, which is fine and all but the probability of the next tick being an uptick to your profit target is equivalent to the probability of the next tick being a down tick to your loss target, assuming your using a 1:1 risk:reward profile, risking 1 cent per share to make 1 cent profit. Trading random market noise and risking anything less than 1:1 will lose straight out, such as risking 25 cents per share to make 1 cent that was suggested. Thus there is no positive expectancy in your proposed strategy.

CharterJoe is correct in his suggestion of raising your risk:reward profile to 1:2 , where your risking 1 to make 2, so for example you might risk 10 cents per share to make 20 cents profit. With a purely random 50/50 outcome on 100 trades the strategy ends up with a profit after all costs are accounted for. Raising the profile further to 1:3 gives you even more breathing room on the win% and increases your potential of long term success.