It will be interesting to see whether it recovers the lost ground or if $7,800 turns out to be the pinnacle. You seem to know your stuff, I have only recently discovered trading but absolutely love it and am fascinated by it. Do you day trade or hold your positions long term or a mixture? I am slowly discovering the rules of different types of trades and finding out the costs of leaving trades open over night and over the weekend, that kind of thing. Can you give me some advice on it please? What is the ideal rule of thumb for leaving a trade overnight?
Trading can be fun and lucrative. Money management skills are crucial. I've made money and I've lost money. Fortunately, I made more than I lost.
There are all kinds of trading system and styles out there and I've used practically all of them. I prefer to be out by 4pm, so I mostly favored day trading and scalping. I hardly ever leave a trade on overnight, and never over the weekend. Too many things can go wrong. You can put stops in, but the market can gap down overnight and blow through your stop (i.e. the stop never gets triggered). You can also buy put options against your long positions, but this can be complicated if you are a beginner. Also, do not use margin or over-leverage yourself. If the trade goes underwater, you can wipe out your entire account. I know a guy that did this, he lost 200K in one day during the dot.com bubble. He had a hard time explaining that to his wife. I only day trade with money I could afford to lose. I have core portfolios that I still maintain today... mostly blue chip and utility stocks that all pay dividends.
Besides day trading, I'm a big believer in
contrary investing. I accumulate and take long positions in the most hated asset classes, then I just wait. Patience is the key. This is how Warren Buffett (before he became a inside trading political hack) and Jim Rogers made most of their billions.
Over the past couple years I've been accumulating a position in precious metals. They've been heavily manipulated (held down) over the last 6-7 years. Silver is currently one of the most undervalued assets on the planet right now. These markets are so manipulated now and algos are running the whole show. It could take years for a stock market crash to materialize. Then again, it could happen tomorrow. Extreme patience is required. Sometime after the crash I'll start buying stocks again. There are cycles to every asset class. Following the herd will work for a while, but when things go south the majority usually get caught flat-footed. It's all a matter of timing.
