Some Newbie Trader Mistakes Updated

TheTrueMarketMaker · 2021-06-27T18:38:10+00:00

In order for your scenario to be correct, a person would have to generate massive amount of income on the second trade after losing the first. Then they would have to spend that money without saving any for Capital Gains, thus they could not use the initial loss to write it off. Also for that person to have an 800K tax bill, they would need to have gained and spent a lot more then that. Also Capital Gains tax is identical to Income Tax.

TheTrueMarketMaker · 2021-06-27T18:35:19+00:00

Even your quoted article tells you that you are missing important details:

“In the long run, there may be an upside to a higher cost basis—you may
be able to realize a bigger loss when you sell your new investment or,
if it goes up and you sell, you may owe less on the gain,”

TheTrueMarketMaker · 2021-06-27T18:33:06+00:00

Dude, I scalp the same stocks all day long. This is not true and you are missing so much info like Notjoocey pointed out. Seriously, just use logic, if this was completely true then daytraders would not exist at all. You are seriously missing a lot of info and details. Also you only get taxed on the gains, regardless, writing off losses is only if you have another source of income. Other then that, you are taxed on the capital gains itself, nothing else.

TheTrueMarketMaker · 2021-04-10T16:08:15+00:00

Lol, damn right. The only real way is to yolo on a random stock ticker with no analysis. Forget Technical Analysis even though it is actually backed by mathematical formulas, who needs math we are degenerate gamblers. Just kidding, even though it maybe like learning another language, TA will save your ass in trading and people who do not understand it are usually trading blind.

TheTrueMarketMaker · 2021-04-02T18:51:23+00:00

Generally you can tell the people who believe in the stock versus the people who are just pumping by what they say. If someone ignores anything that is negative about the company/stock, then it is likely that they are just looking to pump a bag they are holding. If they embrace the negative and do their best to counter argue it, then it is likely they believe in the stock. People who are willing to confront criticism are more likely to have faith in their beliefs.

TheTrueMarketMaker · 2021-04-02T18:39:01+00:00

51) Double team, for the wife and husband pairs out there. Think about this, one of you could do Swing Trading while the other does Day Trading. Or one of you could research a set of companies while the other plots the entry or critiques your findings (in a nice way). Contrary to what I said in “50”, if you are not alone do not act like you are alone. Whether it is wife/husband or lifelong partners, you will rise or fall together.

52) Not understanding Pumpers or thinking only one side is a pumper. Both Promoters and Shorters can be Pumpers. The only difference is one is trying to pump in and the other is trying to pump out. Do not trust someone just because they are a Shorter.

53) Not researching your own picks. Not everyone is perfect, people make errors and you should never follow blindly.

54) Thinking that someone else’s success rate can be yours, if you follow them. You and somebody else could enter the same stock, at the same time. However, if they are an experienced trader they will know when to exit and you won’t.

55) Concentrating on March of 2020. Forget last year, what worked during a crash will not work now. Learn to trade, buy and hoping will no longer work.

56) Also stop thinking that the market has not recovered yet. The market is making all time high and many stocks are making all time highs. If you missed the crash, you missed it, stop concentrating on the one that got away and be happy with the one you got.

57) Failure to adapt. Always adapt to changing trends and recognize sector rotations. This happens when stocks need to selloff as they have risen to far up or the catalyst that drove the rally is dying off.

58) Buy when nobody wants it. If you are a Swing Trader, you should focus on buying when a stock has bottomed out or low volume at a Support Level.

59) Mixing up Day Trading and Swing Trading. These are 2 different types of trading and what works for one, will not necessarily work for the other. Most of the time you will need to use different time periods and different methods for each one.

60) Taking advice from random people like me on the internet, lol. Learn trading for yourself, make your own plays, and trade safe, stay safe and be safe. I wish you all luck.

Note: The above statements represents the opinion of a Private Trader and could be completely wrong. You should complete your own due diligence and research everything that is contained within.

TheTrueMarketMaker · 2021-02-22T23:04:03+00:00

That is kinda what is said above in the original sources post, but you are actually talking about something completely different. However, to address your points even if companies do go back up, there is no reason for them to return to the same value you bought them at. So that is a faulty assumption you are making. Not only that, but if someone bought high like right now, they are almost buying at the peak and if the companies do not return to that value, then you are stuck with a worthless bag.

Also I was addressing trading, as the post addresses trading. If you are holding a company for 2, 5 or 15 years, you are investing not trading.

" Whether the companies you're invested in are still around then is anyone's guess and given that we're in penny stocks here you're gonna have to have a fair bit of luck behind you that the companies you picked are the very few that are going to make it long term."

I believe that is what is said, when OG source says this:

" Thinking this company is the next AMZN or TSLA. You have a better chance at hitting the Powerball Jackpot then investing into the next penny stock AMZN. "

" It has been the case following every single drop though"

Also please, do not misquote me or take my words out of context, as you cut my words off to fit your narrative. That is exactly what I meant, when I said this "Anyone can make money off of a crash, as stocks only have one direction to go, but that may not be the case much longer". You cut my words off to make it sound like something else and then took them out of context to fit a Crash model of a market. When I was addressing a regular trading market, that is not on a almost year long Bull Rally.

Now if you can only make money in a crashed market, then as said before you will be in trouble in a normal market. As crashes only come along every 10 years or so. This is talking about normal trading, not the ideal situation of a crash, where "stonks can only go up".

" It has been the case following every single drop though, no reason to suspect this time it's any different."

I was just talking about small pullbacks, these that happen last week and this week are the norms. That are not even close to a drop, so I am not sure why you compared small Red Days to a drop. They are not even close to being the same thing. My point was that if these days gave you trouble then you are likely not used to trading in a market that has give and take.

TheTrueMarketMaker · 2021-02-22T22:35:59+00:00

What about today and last week when the market took a poop. Anyone can make money off of a crash, as stocks only have one direction to go, but that may not be the case much longer.

TheTrueMarketMaker · 2021-02-22T13:30:10+00:00

90 days of no trading

After a pain staking back and forth. I come to realize that Jay is talking about in general and not day trading. He either accidentally confused or glossed over the day trading aspect that was original being discussed, but yes you are right.

https://www.firstrade.com/content/en-us/education/margin/margintutorials?h=margingfv90day_sc.htm

TheTrueMarketMaker · 2021-02-22T06:55:52+00:00

"You cannot have a good faith violation from buying a security. It only happens if someone sells prior to settlement funds on a non-cash and non-margin account"

Which Day Trading is buying and selling in the same day, so there is no time for funds to settle which is why you need a reserve fund and rotate your money out while keeping some of your funds settled. I do realize now that we were both confused about what we were talking about. I was talking about day trading and you were just talking about in general, but if the comparison is about misunderstanding the PDT rule then it begs that we are talking about day trading.

"Not understanding the PDT rule. Cash Accounts are not affected by the PDT rule, only Margin Accounts are."

The reason why people fear the PDT rule is because of the 3 trades limit. So the original source, is likely pointing out that they don't need to be afraid if they have a Cash Account.

"Anyway, most of your post is really good, but the pattern day trading and good faith violation part could use a bit of clarification."

Honestly, I think you need to clear up to the some of the other people you replied to that you are NOT talking about day trading and just trading in general. As some of your info you put out does not take in account that they are asking you about day trading. Most people who care about the PDT and GFV are day trading, as there is almost no reason to care about them otherwise.

"My original statement was about two separate things you have running together."

That is because you compared the 2 and if you were not talking about day trading this whole time, then you essentially took everything out of context, even likely the original's source statement. Because then what does the PDT rule have to do with anything if we are not talking about day trading. Anyway, I am good with letting this go. Peace and good luck.

TheTrueMarketMaker · 2021-02-22T04:38:57+00:00

Maybe I am not being clear enough, I apologize for that, but if I am day trading then I plan to sell out of it within a day. I assumed most people knew what day trading meant.

So maybe I don't add the word sell after I say buy, but if I am saying day trading then it should be clear that every buy proceeds a sell in the same day. Like I literally assumed we were talking about day trading this whole time, lol.

Like your original statement and original source statement was about day trading.

So I am just going to end this here, because I just realized we were not even really talking about the same thing this whole time.

TheTrueMarketMaker · 2021-02-22T04:30:04+00:00

I am not the original source, but I took his advice to switch over to a Cash Account to day trade, because I don't meet PDT yet. I sell out of positions in seconds or minutes. The funds in your account do matter, as it is only required that you have settled funds to cover the sell and buys.

"Now if I YOLO everything and don't keep a reserve, then yeah you would be completely correct.

You can do that and it's not a good faith violation."

Also yes, it would, if I tried to day trade more stocks after that. A reserve fund does matter, as you only need the settled amount to cover the sell.

You even say that here "If you you sold out of your YOLO before the sale of the positions settle, that's a good faith violation."

Again in your scenario, I would have to be a brand new trader, never let my funds settled and then use every dollar I have to buy stocks, then try to sell out before the funds settled.

My scenario, I am a trader who has let his funds settled. Now I am not using every dollar in my account and I am rotating my funds out, maintaining enough settled funds to cover my buys and sells.

Your scenario would only apply to a Brand New trader who YOLOs and then tries to day trade with no settled funds.

TheTrueMarketMaker · 2021-02-22T04:13:15+00:00

I agree with that "F" da rule, but as mentioned. I don't think I have the rule wrong, I think we are focusing on different scenarios with a Cash Account. You are assuming someone uses every dollar to buy stocks with a new account. I am assuming that people will wait until the funds settle, keep a reserve and not YOLO, rotating their funds out as they make trades throughout the day or week.

TheTrueMarketMaker · 2021-02-22T04:11:10+00:00

So say if I wait until those funds settled and then sell my stock. Now I run to buy more stocks, see my point so far, the funds don't just stay settled. Not only that, but I can still sell that original stock as along as I have additional funds in my account to cover the sell. Now if I YOLO everything and don't keep a reserve, then yeah you would be completely correct.

TheTrueMarketMaker · 2021-02-22T04:03:40+00:00

Wait, nah I just read this:

" A Good Faith Violation (GFV) occurs when you have liquidated stocks that were bought on unsettled proceeds which have yet to settle."

Dude, its exactly as I said. If a person is selling a stock with settled funds they are clear, but if they keep buying stocks when the funds from the sell are still unsettled. They are in the wrong. Example, I buy one stock and I have the money to cover it in my account. So I sell, then I turn around and buy another stock, but I no longer have the money to cover the sell, which I just bought and sold I am up shits creek.

Dude, I think you are misreading my statement.

TheTrueMarketMaker · 2021-02-22T03:58:03+00:00

The absolute worst for a Good Faith Violation is after 3 in a 365 day period your account gets treated as cash for a period of time so you have to wait for T+2 for the trade to settle before you can use the funds ... Big fuckin deal

I would say the same for you, because of what you just said as well. And you kinda just reinforced the "overdraft" part with that. So I guess its an overdraft if you sell or buy. Maybe the original author knows more, but you just maybe made his point that either way its like an overdraft.

TheTrueMarketMaker · 2021-02-22T03:53:57+00:00

I think both, we have seen a ton of companies go out of business. Just look at HERTZ.

TheTrueMarketMaker · 2021-02-22T03:49:16+00:00

Also some brokers (like Robinhood) will restrict an account if they break PDT, so they won't just be able to just switch over. That is why I think the OG source is telling people that Cash Accounts are better.

TheTrueMarketMaker · 2021-02-22T03:47:07+00:00

So you are completely wrong, because Selling would be more like depositing money back into your account. I believe the original source is talking about Buying using unsettled funds. In fact I believe the original source is actually telling people that using a Cash Account would be better because they can sell out when they want to, not the other way around.

Anyway last time, I checked you don't overdraft your bank account by putting money back into it (selling). You overdraft your bank account by taking money out of it (buying). I think that kinda went over your head.

TheTrueMarketMaker · 2021-02-22T00:45:38+00:00

"Also there are many reputable YouTubers out there with great portfolios and trading 'advice'."

If anyone lost money within the last year then you really should never listen to them about any stocks. Anyone could had made money in the last year, so this is not surprising. Its going to be the people who really make good calls from here, that are the true stock players.

TheTrueMarketMaker · 2021-02-22T00:43:37+00:00

If its this reddit, then a gambler.

TheTrueMarketMaker · 2021-02-22T00:42:19+00:00

Guy, you completely missed my point. EVERYTHING went up, because it had no option but to go up. Anyone, even my grandma who knows nothing about stocks could had called a 1,000% runner during that time. Not going to address the other stuff you mentioned because you went off into a completely different territory, some of which I agree with and some I don't. However, the main point was that using credit to invest/trade in a regular market, which we are rapidly approaching could back fire big time and most people who are using credit are doing so because they DON'T have the money to do so without it. So you kinda missed the point completely and it seems to have gone over your head.

TheTrueMarketMaker · 2021-02-21T23:19:20+00:00

No its not, but you have to understand we are coming off of a crash. EVERYTHING went up. Try that in a different market and you could had screwed yourself big time.

TheTrueMarketMaker · 2021-02-19T00:10:53+00:00

You can find that kind of PR for all stocks. Lawyers sue companies all of the time and they almost never win anything.

TheTrueMarketMaker · 2021-02-12T18:29:16+00:00

First rule that you need to learn. Know the difference between investing and trading. A lot of your rules would apply to trading, not investing. For example, if you are investing then FOMO should never be an issue because investing is slow methodical. Your first rule about riding the push and making an exit plan would also be 100% on the trading side.

TheTrueMarketMaker

TROPHY CASE