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Friday, May 13, 2011

The ABC of Day trading with TD Waterhouse

Despite being stuck with some stocks that were supposed to be hold for one day for dy trading purposes, I did it again. This time, the profit is extremely tinny because as you can imagine, I sell in a rush. I made 7.02$ (!!) from day trading Horizons BetaPro COMEX Silver Bull Plus ETF (HZU). Despite what I wrote yesterday, I trade again today. Day trading can quickly become addictive and no matter how little the profit is made, it’s a profit made out of nothing. I may not totally closed the door behind day trading, but at this time, I am stuck with 3 trades that were supposed to be sell on the same day for a little profit: Horizons BetaPro NYMEX Crude Oil Bear Plus ETF (HOD) (buy at 6.65$), Horizons BetaPro COMEX Silver Bear Plus ETF (HZD) (buy at 7.79$) and First Majestic Silver Corp (FR) (buy at 19.34$).

Tips and tricks for day trading using TD Waterhouse platform

My experience with day trading had been a constructive one. If you are tempt by day trading, what will follow describe the way I did the day trading in the past couple of days.

Where to start in you TD Waterhouse broker account

15 minutes following the opening of the stock market, at 9:30am, I usually begin my day by looking over the section “Markets & Research”. At the right column, take a look at “TSX Comp” under “Company movers”. You’ll see right there all the top performers for the day. You’ll only day trade stocks that appear on that section. Why? It’s because the ultimate goal is to make easy profit on a quick buy-and-sell scheme. It does not always happen on the same day. For that reason, you’ll trade only quality title and avoid penny stocks.

My best advice: for day trading purposes avoid penny stocks

On the section “Company movers”, many penny stocks will appear. Don’t trade anything located below 5$. Why? From what I experience so far, I found penny stocks even more volatile that all of the rest of the stock market. The stock market being already volatile enough, you don’t want to create a more volatile trading environment for yourself by picking penny stocks. Because as a day trader, you want to put all the chances of the world in your trade. That’s why you’ll avoid penny stock.

Avoid the one time hit wonder stock

Ok, you saw what the possibilities are for your day trading. You avoid the penny stocks. One stock (I will give an example) Horizons BetaPro COMEX Silver Bull Plus ETF (HZU) is up of 5%. Good. But before day trading HZU title, you’ll verify the trading volume to make sure you’ll not get stuck in a one hit wonder.

To place that verification, I use Enter the ticket HZU in their search engine. Verify the column “#Tr”. It’s currently say 1 400. You are good. The fact that the title being highly trade will make it easier for you to make a profit out of a quick buy-and-sell trade.

A one hit wonder stock is a title that has a low trading volume. Suddenly, the title gain in value. Sometime for no reason. Many of them appear as Company movers of the TSX.

Example: a couple of days ago, Mercer International Inc. (MRI.U) appears in the Company movers column. Mercer International Inc. (MRI.U) was making interesting gain on that day. I verify MRI.U trade volume, and it was low. It may have been of what it is now, something like only 1, I don’t exactly remember. However, a low trading volume is not good for titles your willing to trade for day trading only because less a title is being trade, less are your chances to be able to generate a quick profit out of a buy-and-sell.

Another example I can come with when it comes to low trading situation is Corby Distilleries Ltd (CDL.A). When I first start investing in CDL.A, I had purchased stocks at something like 15.35$. For a long time, CDL.A value remain the same, at 15.35$ or around. That was partly due to the fact that Corby Distilleries Ltd (CDL.A) is barely trade.

So far, those 2 main guidelines: no penny stock and a quick verification of the trading volume have helped me to generate a small income from day trading. Day trading yes, but under condition. Another tip would be not to invest too much in the same trade. The more you invest, the more your chances of making a huge profit increase, but that come with a higher risk. Focusing on small profit instead of larger one may help to keep your day trading real.

Happy day trading!


Anonymous said...

Sunny, do you even know what you're buying. PHS.U , PSLV, HZU will go up when silver is up and HZD will go up when silver is down, but you'll never be right on all of them at the same time. So what ever you win on one of these stocks, you're guaranteed to lose on the other one. So tell me when you wake up in the morning, do you cheer for silver to go up or down.

Arunan said...

History: Investors make million and become rich. Traders never stay in this business for more than 5 years. Traders enjoy their profit everyday, and one bad day with wrong pick wipe out all their profit along with capital.

Anonymous said...

she cheers that she still has enough brain cells to tie her shoes. The other ones were all killed by the crack that she smokes.

pattirose said...

Thank you Sunny, interesting post.

I am wondering though how you decide which one to pick, aside from volume?

I've only day traded a couple penny stocks on the Venture and so far I've been lucky.

Sunny said...

I think this post was honest on the way I proceed. It's ok to want more than just dividend.

Thanks Arunan. I am mostly dividend oriented for that reason.

Hi Pattirose, I may elaborate this post a bit more to answer you. But basically high gainer of the day and quality title. But sometime it's difficult to get both. Horizons ETF are perfect for that reason.

Thanks for reading :0)

Anonymous said...

You haven't mentioned anything about stop losses, which is BY FAR the most important aspect of trading. If you haven't decided on a stop before you buy the stock, you have made an enormous mistake that is guaranteed to lead to ruin eventually. You will end up holding losing positions into a second day, and a third, and so on, and end up risking thousands of dollars when your goal was to make less than $100. On top of this, leveraged ETF's like Horizons suffer from time decay which means they gradually lose value over time even when the commodity they are tracking is perfectly stable.

Anonymous said...

Funny thing is that you bet on silver going up with PHS.U, PSLV and FR, and you bet on silver going down with HZD. And your managed to lose money on all four of them. Just goes to show that when you're trying to day trade timing and luck is everything. If it would be intelligence there's alot of smart people out there that wouldn't be working and would just play the market. Like a previous poster said, you can make 10$, 30$, 60$, 100$, but just one bad trade that doesn't go your way and you lose all that money and all you did was waste time in front of the computer. Actually, so far you've lost more than you made with your day trading.

Having a dividend portfolio, is a smart way to play the market. Problem is when your watching it everyday and you see it going up , than down, then up again (basically nowhere), you want to try to day trade to make extra money, but that rarely works as you're witnessing.

If you're gona day trade, at least buy a company you don't mind holding if the trade don't go your way. The problem with HZD (which will only go up if silver goes down) is twiced leverage and is not a long term hold. You really need to read on those leveraged ETF.

High on Dividends said...

Interesting post! Keep them coming. Very enjoyable reading for everyone, even if some do not agree with you.

Looks to me like your strategy over the last few months has turned from investor to day trader (speculator).

Do whatever makes you happy and some $$.

Sunny said...

I try day trading just for the fun of it and yeah, it was fun.

As said however, I am stuck with some investment like FR, HOD, and HZD that I wasn't able to sell at profit yet. So I learn my way.

I won't be trading that much more during daytime with the beautiful summer weather coming in. I plan to focus mostly on dividend like before. This was a "day trading" try out. I don't think I will be day trading on a regular basis.

Anonymous said...

roulette is fun
slots are fun

only if you're winnin'

these posts are quite

good luck with the silvers

DVDguy said...

Hey Sunny,

Just a quick thank you first... found your blog recently while searching for some good dividened paying Stocks! Good work, love your writing style.

Some quick details at this end. Investor. 10% is GIC... 75% in the highest yield stocks I can find. And 15% in cash for playing around with day trading.

When I first started my TFSA I just put in ING the first year and part of the second. I put the max in... but after looking a year later... had made less than $90 in interest. That Sux. So I decided to open a TFSA trading account in the hopes of making more money than I would have sitting in the bank. So far.. so good.

After playing around and losing some $$ this is what I do.

I use this chart to see what is moving on the day:

Like the venture but it updates a variety of stocks.

NEVER EVER would I day trade a stock over $5... don't even really want to touch a stock over a $1. This is what I do. I find a very active stock, and price I like. Last week I was looking at three stocks... SCG, FSW and INT. Three tech companies from Canada that have been very active. SCG traded 6.7 million shares on Friday... perfect for day trading.

I buy 13000 shares of a stock. (For example on Thursday I bought 13000 shares of Selectcore Ltd at .57 ($7410) and then quickly put a sell order in for .58 ($7540). Sold for a profit of $100 (-30 for the buy/sell commission). Works for me... only need the stock to move a penny and I make my $100. Could never do that on $5+ stock. The percentage change needs to be too high to make the same amount. I'll do that several times a week.. (Made $800 on SCG last week... and all profits go directly into my collection Dividend paying stocks). INT is getting too expensive for me to do that. So a cheap active stock... and it only needs to go up a penny for me to make my $100).

Keep writing and good luck! DVDguy

Sunny said...

Thanks Anonymous...

Hello DVDguy,

Thanks for sharing your experience with day trading.

I guess the real day traders trade mostly penny stocks. Seem to be quite simple for a stock to gain only one cent but it's not always as easy. Personally, I am not into penny stocks. But if this way had been working fine for you, that's good.

The reason why I prefer stock over 5$ is that I try to target stocks that are more than just penny stocks. In case a sell cannot be made on the same day to make a profit, a quality holding will make it easier to sell at another date. Is the stock well rank by analysts? Is it rank as a buy? Is it been largely trade? If a top day gainer fit in, I will buy and try to sell on the same day, if not, no stress, I can hold the investment because it will "probably" go up again...

It's tricky of course, but by trading stocks answering to specific criteria, it make the day trader safer and easier. Of course, this being my opinion. There's actually no easy way, but this is what I had come with in other to better control the volatility of day trading.

And of course, my profit are smaller than yours. I am not making 100$ a shot by day trading my way. But I focus on small profit to keep the thing safe and easy.

DVDguy said...


Thanks for the feedback. Guess there is no wrong way to day trade. Just found that this method works for me. $10 in profits really doesn't cut it! lol

The only way to really lose with my method is to buy a stock at the 52week high... and never have it go a penny higher again. Could that happen .. sure. But knock on wood not yet.

I never buy at the days high... these penny guys can move around a lot in a day.. say it opens at .40... goes to...50 pulls back to .44... I try and buy around then. hard to be perfect naturally... but all I need is that penny above my buying price!

Good luck... will continue to read your blog looking for good tips and stocks.


Arunan said...

Hello DVDguy, think about other way too. If a stock goes down by one cent, you will lose $100. You cannot expect a stock that always goes up. Sunny, please be a investor not a trader. Invest your money into some quality companies and in some bonds with high yields. Again and again diversification is very import to reduce the risk in the market.

Sunny said...

Hi DVDguy,

Your way to do the day trading seem quite interesting.

Thanks Arunan for adding your comment.

I am not looking to go deeper in the day trade. I had experience it, it was fun, but see, there's still 3 stocks I was not able to sell at profit. My X and DGI.UN are experiencing some magical gains. So between day trading and investing, I feel better at investing, more secure.

If it happen I loose too much on the market, I may not be able to recover.

DVDguy said...

Arunan ... you NEVER lose money on a stock until you sell it. So if I watch a stock and decide to get in .50... and it goes to .45. Haven't lost a thing, because I've haven't sold it yet. My sell order stands at .51 and will stay there until it moves (That can take a day or two but who cares). The key is to pick a very active stock,and don't buy at the high natuarally. These little guys can move alot durning a day. Most of my money is in safe and dependable stocks... I just like to play around a bit. Oh yeah. made $200 today on SCG!

Bumbayababa said...

How much do you pay per transaction?

I'm very doubtful of your strategy in the long run.

Peter Lynch would call it : diworsification

Good luck anyhow.

Sunny said...

DVDguy: 200$ in one day of trading? That's very good! Congrad!

I like the part where you say that no money is lost until you sell... I had invest 4 000$ in Timminco (TIM) way back. I still hold in date of today. But the investment worth less than 100$ now. Is that money lost or not? lol....

I hold because one day, I will be a old nanny and only at that time, I will recover from my lost in Timminco. So you are right, there's no money lost until a sell is made yeah. :0)

Hi Bumbayababa,

My day trading was a try out. It was fun for the time it last.

DVDguy said...

Bumbayababa said... "How much do you pay per transaction?"

I pay $14.95 per trade, so $30 for in and out. That is why I buy 13000 shares ($130 profit before the commis). You don't need that many. You could go for 6500 shares and make $50 a time. I just like the $100 number. "I'm very doubtful of your strategy in the long run." Not in this for the long run... meant for day to day when I find interesting stocks. Been in and out of SCG again.. so it is $300 for the day. That's enough. Girl: Just looked at that TIM chart... scary!

Sunny said...

I forgot to answer. I pay 9.99$ per transaction with TD Waterhouse.

Bumbayababa said...

I wasn't talking to you DVDguy! Is this your blog? ;-)

9,99$ per transaction eats up a lot your profit.

You have shares from too many companies. Hence the word diworsification.

My advice : diversify to a certain degree. But your portfolio would certainly benefit from concentrating your shares into no more than 10 compagnies strong operating in 3-4 different sectors (energy, finances, telecomm...)


Sunny said...

DVDguy wanted to add his contribution, that's ok.

Thanks for sharing your view Bumbayababa.

High on dividends said...

Bumpy-blahblah has no idea of the concept of dew RSI ovation. Why? because you can not be properly diversified with only 10 stocks. that is very poor advice, so everyone please ignore this. Stats show you need a min of35-40 stoke to properly diversify. if one tanks, you only lose 2.5 of your portfolio. the othr way you would lose 10 percent. Yikes! bad advice.....

Rob The Trader said...

I Expermenting with a slighly different take on day trading. I stick to trading only quality dividend stocks. BNS and my strategy is very simple. I buy on dips and sell when it rises 1-3 dollars. For example I bought BNS a little while ago at 54, sold it at 64, just shy of the high of 66. It dropped to 60 where I bought it again and aim to sell it for a 2-3 dollar gain. of course the main negative is you need a minimum of a 1000 shares to make it worth while, but I sleep at night, if I get it wrong and the price drops, well I still get the dividend!

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