Profiting from range trading stocks?

[andione1983]

Hi, there i am new to day trading, and have been thinking about it and have 5k cash that i want to play with, i have been watching LKO (Lakes Oil) for a number of years now. And especially paying attention in the last few weeks, so i will use this company as an example, I have noticed during a one week cycle that it bottoms out at .010 a couple of times a week and hits .012 a couple of times a week. Is it possible to make money out of a situation like this? if i was to put in say 5k at .010, and sell out at the end of the week at .012. i could make 1K a week? has anyone else got any advise or warning for me?
Thanks

 

[Fishbulb]

Re: Advise Please on Daytrading

Paper trading is your friend

 

[Julia]

Re: Advise Please on Daytrading

This should be in the Beginners' Lounge.

 

[kam75]

Re: Advise Please on Daytrading

Paper trading is your friend

Paper trading's a total waste of time. You'll learn nothing by doing it. You gotta get in the ring and take a few in the gut.

5K to play with. Probably go to the casino. But allright then...

First, you should be asking yourself what you want to achieve? Lets say your objective is to grow that 5k into 10k. Then you have to decide how you'll go about it. I'd look for a quality stock to buy and use extremely tight stops. Forget about the cheap penny crap and look for something at least around the 50c mark. Trade 50c to 1.00; 1.00 to 2.00 and so on.

 

[Mr J]

Paper trading's a total waste of time. You'll learn nothing by doing it

I don't agree. If nothing else, it gets us familiar with trading and getting a feel for things. For some it may also allow for other lessons, such as driving home the importance of risk management. If the downside is that it doesn't teach anything and the upside is that it does, what is the harm in trying it?

 

[sammy84]

I have to agree with Kam, even though I imagine many on here wouldn't. Paper trading is fine to do, but its when you put actual money in the ring when you start paying attention. Thats when the emotions come into play. Somethings need to be learned the hardway.

 

[skc]

Hi, there i am new to day trading, and have been thinking about it and have 5k cash that i want to play with, i have been watching LKO (Lakes Oil) for a number of years now. And especially paying attention in the last few weeks, so i will use this company as an example, I have noticed during a one week cycle that it bottoms out at .010 a couple of times a week and hits .012 a couple of times a week. Is it possible to make money out of a situation like this? if i was to put in say 5k at .010, and sell out at the end of the week at .012. i could make 1K a week? has anyone else got any advise or warning for me?
Thanks

You have identified 1 stock that trades in a tight range on paper. Great start. You now need to think about the practicalities if you do put your $5K into it. Look at questions like:

1. How deep is the market depth at 0.01? How long will you have to wait to get your order filled?

2. How deep is the market depth at 0.012? How long will you have to wait to get your order filled?

3. How long will you give the trade to develop? 1 day? 1 week? Longer? Or time doesn't matter?

4. What if the price goes up to 0.012 and starts moving back down before you got a fill? Would you sell out at 0.0115? Do you have all day to watch the screen?

5. What is your contingency plan if the price falls to $0.009? Or $0.008 and lower? When do you sell out?

6. How would you feel about losing $1K? or $2K and more?

7. What will you do after you've lost the $1K / $2K? Will you buy into LKO again? or find another stock?

8. Do you know anything else about LKO? Are they financially sound? Are they worth more than 0.012? Is there a chance they will go belly up? Could they go into a trading halt and never emerge again? What about a capital raising?

There are probably many other questions you need to come up with, and you have to write down the answer to them. Then you need to act according to your "plan" (assuming it is sound) and not let any emotion come into your head when money is on the line.

You can post them here for further scrutiny if you like...

 

[Bobby]

Look into spoof reversals of openings on the XJO , easy regular plays as the direction usually stuffs the true early trend during that time (10 minutes ruff ) till all stocks come into play .

Use the CFD Index to play , set your stop right & go long or short with a triple limit , 50/50 each time chance but your R/R will get you over the line if you keep at it

 

[brty]

SKC has it right here. A simple look at market depth shows that the original plan suggested is not possible.

109m buy at .01 and 78m sell at .012, yet only 7m traded on friday and those buy and sell numbers are an hour before opening.

Ignore that plan move on to something else.

brty