OK, I know that it is generally not advised to try to time the market, but…
The past 3-4 months (no hard data here), I have noticed that every time the market goes up, the next day it seems to go back down. We have a large run up like yesterday, and I bet that today we will see a dip. This has seemingly happened time and time again lately.
Some of you are pros at this stuff. Any way to use this pattern to try to make some money? Even if it is risky and may not hold 100% true?
The DIA and SPY are two ETFs which track the Dow Jones Industrial Average and the S&P500, respectively. You can buy and sell those. You can also buy and sell options. This is much cheaper than buying and selling the DIA and SPY, but also much more risky. I currently have some DIA puts and was up 17% on Monday and then down 13% yesterday. My total options investment is only around $4,000 though.
Whatever you do, I recommend starting very small until you get used to how things trade. For example, the spreads on option contracts are typically big and they can go several days without trading. If the strike prices on the options you buy are closer to the current trading price of the underlying security, the market will generally be fairly liquid (although not always!).
I think there are also some sites out there that allow you to do paper trading. These weren’t around when I first got started, so I haven’t used them, but I would think that would be a good way for a newbie to get started. You can try out your strategies without risking any real money.
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