118 votes
Accepted

Is trying to learn day trading a complete waste of time?

The vast majority of people that day trade lose money. Of those that make money, most aren't going to beat an index fund. Of those that actually beat an index fund, very few do so without investing ...
user avatar
  • 20.4k
83 votes
Accepted

Why is day trading considered riskier than long-term trading?

Over a period of time greater than 10 years (keep in mind, 2000-2009 ten year period fails, so I am talking longer) the market, as measured by the S&P 500, was positive. Long term, averaging more ...
user avatar
43 votes

Why don't traders place limit orders at all prices to be first in line when the price moves?

A limit order is an order to buy or sell a product at a specific price or better. For a buy order, you might buy for lower than the limit. For a sell order, you might sell for more than the limit. If ...
user avatar
  • 779
40 votes

Maker taker fees - can somebody explain in plain english?

Not sure why @Brick's answer was voted down; let me try to state it more precisely. maker Type 1 (seller): You tell the exchange that you want to sell at price P, but P is higher than the highest ...
user avatar
  • 6,007
34 votes
Accepted

How is it possible that these deep ITM stock options on DISH went from 52,000 volume, 550 open bids, 550 open asks to being completely dead overnight?

If you look at DISH's dividend history, you can see that on 20111101 DISH declared a special $2/share dividend payable on 20111201. The ex-date for that 8% dividend was... 20111115. The $2/share drop ...
user avatar
  • 950
30 votes

Is it unreasonable to double your investment year over year?

Yes, it is unreasonable and unsustainable. We all want returns in excess of 15% but even the best and richest investors do not sustain those kinds of returns. You should not invest more than a ...
user avatar
30 votes
Accepted

What's the point of the wash rule?

The point of the wash rule is to defer (not eliminate) the tax benefit of a sale until you close out the position that you opened after realizing the loss. In your example, you closed your re-opened ...
user avatar
  • 115k
28 votes

Why is day trading considered riskier than long-term trading?

Day trading is probably the most often tried and failed activity in the financial world. People think they can parlay $1,000 investment into $1,000,000 in a week with little or no knowledge on how to ...
user avatar
28 votes

What is the point of using a limit order?

I think you might be misunderstanding what a market and limit order are. To clarify. A market order will be executed at whatever the current price is when the trade happens. So you can't be sure what ...
user avatar
  • 51.6k
25 votes

Is it unreasonable to double your investment year over year?

Yes, because you cannot have an exponential growth rate that is faster than the rate at which the economy grows on the long term. 100% growth is much more than the few percent at which the economy ...
user avatar
22 votes

Wash Sales and Day Trading

You are correct. She cannot claim the initial loss of $1,000 on her taxes, she can only report the $500 profit. However, the IRS does allow her to add the $1,000 loss to the basis cost of her ...
user avatar
  • 4,073
21 votes

Why don't traders place limit orders at all prices to be first in line when the price moves?

In a reply to one of the comments, you state: "Isn't [getting the transactions filled] a good thing? Isn't that the whole point of placing an order and being the first in line? What's the point ...
user avatar
19 votes

Why is day trading considered riskier than long-term trading?

Often times the commission fees add up a lot. Many times the mundane fluctuations in the stock market on a day to day basis are just white noise, whereas long term investing generally lets you ...
user avatar
  • 20.1k
18 votes

What's the point of the wash rule?

The point of the wash trading rule [and similar variations in different jurisdictions] is to prevent someone from deferring gains and accelerating recognition of losses, for tax purposes. Without a ...
user avatar
17 votes

Why is day trading considered riskier than long-term trading?

Day trading is an attempt to profit on high frequency signal changes. Long term investing profits on low frequency changes. What is the difference? High Frequency Signal = the news of the day. This ...
user avatar
  • 1,116
17 votes

What is the point of using a limit order?

Suppose we are trading a very illiquid stock of a small company. Some people are trading around a small number of shares for 10€. There are standing sell orders of a volume of maybe 2k oder 3k shares ...
user avatar
  • 1,615
15 votes
Accepted

Which risk did I take winning this much?

If you didn't have a stop loss set (or trailing stop loss) then an equally random spike in the other direction could have obliterated your account and put you in debt to the broker, depending on the ...
user avatar
  • 20.1k
15 votes
Accepted

Create a limited company to speculate with leverage

Generally I think you will find that financial institutions and other businesses are well aware that people sometimes set up limited companies with the intention, if things go bad, of walking away and ...
user avatar
14 votes

Is trying to learn day trading a complete waste of time?

"High-frequency trading" has made day trading basically obsolete. Computer systems can take an order feed, process it through a set of algorithms, and issue an order in under a microsecond. The ...
user avatar
  • 1,669
13 votes

Maker taker fees - can somebody explain in plain english?

As you are asking specifically for Kraken, here is what I found: What is ​Maker vs Taker? A trade gets the ​taker​ fee if the trade order is matched immediately against an order already on ...
user avatar
13 votes
Accepted

What is the point of using a limit order?

A market order basically determines when the order is executed: as fast as possible but the price is unknown. A limit order determines at what price the order is executed: at maximum your limit but ...
user avatar
  • 6,708
12 votes
Accepted

Can I make money daytrading?

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 ...
user avatar
12 votes

Is the "3 bar play" trading pattern good advice?

As pointed out by Daniel Kahneman in his book, frequent stock trading is anything but Illusion of validity. Comparing the results of 25 wealth advisers over an eight-year period, Kahneman found ...
user avatar
  • 4,195
10 votes

Is it unreasonable to double your investment year over year?

One thing I like to do every once in a while is look at the day's market movers. It's a list of symbols that had huge movement. There tend to be a couple of 50+% movers every time I look. In fact ...
user avatar
10 votes

Is it unreasonable to double your investment year over year?

"Wealth gained hastily will dwindle but whoever gathers little by little will increase it." Proverbs 13:11 (ESV) Put another way... "Easy come, easy go" You cannot sustain 100% annual ROI. Sooner ...
user avatar
9 votes

Why don't traders place limit orders at all prices to be first in line when the price moves?

It would make sense for an investor or trader to place a limit order in advance to close an existing position at a better price. For new positions, traders might be less inclined to have limit orders ...
user avatar
  • 73.9k
8 votes

Why is day trading considered riskier than long-term trading?

Largely, because stock markets are efficient markets, at least mostly if not entirely; while the efficient market hypothesis is not necessarily 100% correct, for the majority of traders it's unlikely ...
user avatar
  • 35k
8 votes
Accepted

Wash Sales and Day Trading

Great question! It can be a confusing for sure -- but here's a great example I've adapted to your scenario: As a Day Trader, you buy 100 shares of LMNO at $100, then after a large drop the same day, ...
user avatar

Only top scored, non community-wiki answers of a minimum length are eligible