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?

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    This would sound much less like spam if you removed the references to your online broker.
    – NWR
    Jun 16 '16 at 19:55
  • Learn about risk management, money management and position sizing. If you are planning to day trade into the future make sure you place trades based on a trading system (a set of rules that determine what, when and how much you go long and short and when to exit - that is: your entry and exit rules), and not based on your emotions or a gut feel or a hot tip. You have been lucky so far but your luck will soon run out. Also, keep your losses small and let your winners run.
    – Victor
    Jun 16 '16 at 21:53
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    I don't mean to be picky when I say this is akin to asking "Can I win the lottery since my neighbor won recently." Can you make money day trading? Yes. Are you likely to given certain parameters such as the expected duration of your day trading operation, equity capital and leverage used, commissions rates, and prior financial and markets experiences? Under most circumstances, the probabilities over the long run are stacked against day traders who usually cancel each other out minus their capital and operating costs. Without more info though, there is no firm answer to the question as posed.
    – Catalyx
    Jun 16 '16 at 22:02
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    If 8K will bankrupt you, then perhaps you should concentrate on other areas first. For example build an emergency fund.
    – Pete B.
    Jun 17 '16 at 15:21
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    If you don't understand trading to the extent that your post seems to indicate then I would strongly advise you to quit while you're ahead, take your profits, and have a professional handle them for you. It almost sounds like you're confusing luck with skill and trying to figure out how to monetize the former. I'm not trying to sound cruel here, but if you're this new to trading, then day trading is definitely not something you should be doing. Jun 18 '16 at 1:47

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?

  • It is possible that they were shorting oil via an ETF, which can only lose 100% of its value. But yes, I agree with your answer. Jun 16 '16 at 20:52
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    @Comptonburger For reference, the previous post I'm referring to, here: money.stackexchange.com/q/66176/44232 states that the OP took a short position in a currency transaction. Jun 16 '16 at 20:54
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    By the way, a great answer, I edited the question you referenced into the text of your answer, Jun 17 '16 at 9:11

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.

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