I opened an account with an online broker and started trading, and I nearly immediately doubled my portfolio. It seems to good to be true. I started with 3000 dollars in May and today the value is 8000 dollars. I don't want to risk bankruptcy, and right now my position is that the oil price will not go up. I have gains that are huge for me, but the gains are not in my bank account but with the online broker. Can you advice what I should take care about, or just continue to maximize equity?
You have already indicted in another question, titled Which risk did I take winning this much?, that you did not understand (1) Why a previous trade made you as much money as it did; nor (2) How much you could have lost if things went a different way. You were, in that other question, talking about taking short position, without understanding (apparently) that a short position can create losses exceeding the value of your initial investment.
Can one make money doing day trading? Yes, an educated investor may be able to prudently invest in short term positions making knowledgeable judgments about risk, and still make money.
Can you make money doing day trading? Well, maybe. You have in the past, in what you described in a previous post as "winning". So even in your own eyes, you were effectively gambling, and got lucky.
Perhaps the more relevant questions you can ask yourself are:
Can you lose money doing day trading?
And, most importantly,
Are you more likely to lose money day trading, or consistently make money by taking on reasonable and educated risks?
The type of day trading you have described is a form of gambling. As with any type of gambling, sometimes you win. Doesn't mean you are good at it or will win next time.
As long as you clearly understand that you are doing it for fun, I think your current strategy is fine. If bankruptcy is on the table, you need to stop now.
Can you advice what I should take care about, or just continue to maximize equity?
As others have said, you definitely need to learn about risk management and position sizing, but I also think you should consider:
- Tax consequences : how much of your 5000 dollars will go to paying taxes? Note that taxes can depend on the type of investment activity you are undertaking, as well as the parameters of the positions you take.
- Transaction costs. Given your statement that 5000 dollars is huge to you, you may want to pay particular attention to transaction costs in order to minimize them. They will generally be proportionally larger for smaller sized transactions. However, don't sacrifice transactability to lower fees unnecessarily. If you switch to a broker that costs less, the executions might not be as good, or the interface may not be as intuitive, etc.
- And, is your account a margin account? If so, you should be aware that you can take positions that require additional money be added to your account to cover any loses you incur. Given your statement about not risking bankruptcy, I'd say that if you do not understand that sentence, I urge you to immediately research what you're doing until you do understand. If it's cheap to exit any positions you hold, then you might consider doing that so you can take any time necessary to understand this.