Stock Gurus Inside Please

[347Mike]

I tried timing this to get as low as possible to the day low (1%) and got close. Anyways, I placed a bid at $48.229 (already down .6% from market open) and got it. However, throughout the day I noticed that my losses (not much) were showing the ammount of loss from the market open? So instead of me being down .o5% I am down the full percent from market open - unless I am reading this wrong.

Like I said in the past, I am new to this but I was under the impression that where you bought in at is where your gains/loss would take affect?

Any feedback would be appreciated! thanks guys

[slow99]

Purchase price is your basis for tax purposes. Imagine the gaming that could happen if it weren't.

[347Mike]

Purchase price is your basis for tax purposes. Imagine the gaming that could happen if it weren't.

I am not following 100% so pardon my ignorance.

Since I put a limit on my first bid of $48.2, what would that mean if I bought at market and didn't chose a limit buy? Would I techically be buying at a slightly higher or lower price regardless if the market flucuates by the time my order is placed?

[Captain Crawfish]

My acct shows my purchase price and my + - gain/loss. If the prder was filled at 48.229 then whatever the stock price is relative to that is your % gain/loss.

[347Mike]

So what is the point in a limit? So what you're saying is if I wait 15 minutes before market close to buy a stock the is -%5.00 then I will assume that as a loss? That doesn't make sense.

[Captain Crawfish]

when you set a limit it is there to keep you from getting that particular stock at a higher price. The order will not execute until it reaches your limit price. If it doesnt within a predetermined amount of time the order wont be filled. Same goes when selling if the price is not at or better than your sell limit price the sell will not be executed. Defiantely do some fake trades via vse.com or something and that way you will understand how it works using virtual money.

[Broncojohnny]

Like Jodi said, share price + commission is your basis. If your interface is using some other value to calculate your gain or loss then it is wrong.

[347Mike]

I see what you're saying now and I dont think that is right, and I will explain.

Well, I sat here for 10 minutes tyring to, and I have no idea how to explain it without showing you. I am just go up to Scotttrade and have them help.

All of the calculations I come to are 30 dollars off not 7 or 14 what their commission is based off it. I would post pictures but I don't care to divulge my personal things lol

[347Mike]

I think I figured it out and what was messing me off is that my positions screen kept shows -1.11%. I dug a little deeper into the tools and what and not noticed I am only down. .54 percent.

No biggie either way. I just don't like knowing what I don't know. If that makes sense. It is all part of a learning curve I suppose.

[slow99]

I am not following 100% so pardon my ignorance.

Since I put a limit on my first bid of $48.2, what would that mean if I bought at market and didn't chose a limit buy? Would I techically be buying at a slightly higher or lower price regardless if the market flucuates by the time my order is placed?

I think your question is surrounding the limit order, but I'll use an example to show why the cost basis for figuring your gain has to be purchase price, not the opening price. Let's say (using huge figures to make it clearer), that a stock opened the day at $50. It then fell throughout the day to $30. Now, it rebounds, you see this, and buy at $35. Throughout the course of the day (after your purchase) it climbs to $40 and you sell it. If the cost basis for gains/losses was the open - $50 - you'd actually show a $10 loss and receive a tax loss or tax loss carryforward, when in fact you made $5 a share on the trade.

My benefit from tax (for doing absolutely nothing) would be $10 * .35 or $3.50. Your actual tax burden should have been $5 * .35 = $1.75... so the net benefit for tax would be $5.25 a share.

All investors have to consider taxes, and for institutional investors this consideration is huge. Taxes owed from gains might be a few thousand dollars for you or me, but they can be tens of millions of dollars for institutions. By "gaming" I mean that I, my firm, and every other institutional firm in the world would step in to stocks that had significant losses on the day, buy them, and earn tax free profits before they liquidated.

Hell, the I-banks and hedgies would leverage this position several times fold via the derivatives market, margin, and the overnight repo markets. The risk free alpha gains would be incredible if this were allowed to happen.

[347Mike]

Thank makes more sense. Thank you. I think there needs to be an investment gtg or something. I only have two sources of knowledge right now, the internet and a guy at work, but have learned a quite deal in the past 2 years.

The internet can get be a little confusing because I am an examples type person and when it is just in text I lose track of what is trying to be conveyed. I just learn differently.

The guy at work has probably been the hugest benefactory to any success I have had because he is stricly chart reading, and over the past 4 years has been very successful. He invests in companies he has never heard of and does it solely on reading the charts and that is what I am picking up.

I am usually hesitant about taking peoples advice from work as they tend to skew what their real numbers are but this guy is 1400% in 4 years and only loss $18,000 to date and that is where I want to be. I don't look at this as a get rish scheme but in hopes of someday being a day trader or just successfull at it in general.

Anyways, I think I know quite a bit for 2 years experience from learning on my own but then something small like this pops up and it feels like it puts me back at square one.

Thanks for everyones input.