All the benefits of using a limit order are also detriments. While I do like getting the price that I want, I also would rather be in a trade when I decide I want in.
Today was a prime example of why limit orders are killing me. I won't note the trades on the chart as it is not terribly clear but here is the intraday for HGU:
So, $12.50 limit order ($12.48 PP) at shortly after 1000h...filled then the price dropped to $12.28...I got out around $12.38, it was moving. That was the only order that filled.
I placed another minutes later to catch the bounce off of the 200sma (green) but missed it by a penny or two. 20 cent trade missed.
1035h...$12.50 again, missed, 1058...$12.50...missed. 15 cents and 15 cents again missed.
I made out well enough when I was placing market orders to get in before so I will go back to that method again.
48 cents per share had I been using market orders, and perhaps some trades on HGD too...perhaps not. At 300 shares that is a $144 gain or $104 net profit.
I decided to concentrate on HGU only and leave HGD alone for a bit...although I did place one order over there too, same result.
The end result is a loss for the day, not really much but had I gotten in on every other order...or even one or two I would have broke even or ahead at least a bit. The one trade was filled only due to the price dropping through my order. This ETF is traded enough that the spread is only usually 1 or 2 cents so using a limit is really not a great advantage.
Trying the limit orders has given me a lesson in patience though, letting the price go if the order is not filled has it's own lesson built in. It helped to train my emotions to watch a price climb...and occasionally drop, without worrying that I missed the trade as there is always another being setup later.
I know I am a month in and really nothing to show for it but I did only plan on 40 weeks. So I still have 48 weeks to go...8 week buffer should be loads I expect.
Jeff.
Hi!
ReplyDeleteI am about to start the same thing you are doing. I have money in a TFSA, and also in a non-registered account.
I would like to start day trading on the TFSA only. Do you know if that will turn me into a day trader for the non-registered account? I am trying to avoid paying too many taxes.
Hope everything goes well! I read your blog every day!
Glad to see someone is actually reading this stuff.
ReplyDeleteThe TFSA has zero tax implications and does not affect any other tax rates should you withdraw money from it. This makes it an ideal source of income. I started an entry based on the CRA rules as they pertain to day trading vs investing but got sidetracked. I will try to post it tomorrow as there is more than I can put into a comment.
Keep in mind that you cannot short sell in a TFSA...which leads to an interesting strategy of money management which I will touch on this week as well. So much stuff to consider when making plans with money.
Jeff.
Hi again!
ReplyDeleteOh, I am definitely reading your blog everyday. I am new to this. My goal is to have 50000$ in a TFSA at the end of the year. I will do a lot of day trading.
But I also have a non-registered account on which I am not planning any day trading. I am hoping for a 10 bagger on this non registered account, so I want it to be considered a capital gain.
If day trading on my TFSA compromises my gains on my non-registered account, it would really hurt me.
Also, are you ABSOLUTELY sure that day trading in a TFSA is really tax free? I mean, is it considered capital gain, or income?
Hopefully we can figure this out and make loads of money this year.