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Old 06-26-2014, 07:07 PM   #21
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I am trading a seven figure taxable account on the Interactive Brokers platform. I run it like a mini hedge fund - long, short, calls, puts, naked, covered, day trade, swing trade, margin, pair trades, et al. Working this year on improving tax strategies to minimize short term capital gains.

With improvements in mobile devices, it is possible to manage an account on virtually a 24/7 basis.

After a 45% run last year and another 32% YTD, I really should just go into cash or index funds. Frankly, having a hard time making that decision as the gains have significantly impacted net worth and opened up the possibility that with just a couple of more 'good' years - I might be truly classed as being rich (over $10MM net worth).


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Can you expound on how you're doing this? I'm fairly lame in comparison at only 15% or so this YTD. Having said that, I am sitting on mostly cash right now in preparation to travel (offline) for the summer, so that sort of explains the anemic returns. I just find it truly fascinating on how people can beat the casino like this. Just gives me hope that I can too if I understand the system - more as an intellectual challenge than anything.
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Old 06-26-2014, 08:04 PM   #22
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My little fun money trading account today hit 50% return for this year.

For the past 14 years I have averaged just over 30% compounded yearly return. I started the account with a bit less than $2,000 in a IRA and today it broke $80,000. I wish I had done it in a Roth...

One would think I have used up a few lifetimes of luck. Still, 14 years seems to be pretty good.

Part of me is leaning toward quitting while ahead. The little red guy on the other shoulder is saying why stop now.

Which one would you listen to?
Fermion,

I trade very similarly to you with a bit of fun money. It's very, very entertaining and educational. I'm inconsistent in regard to frequency, strategies and amounts. Like you, I do it within our IRA's (mainly mine but occasionally DW's) but in my case it's within Roth IRA's.

You don't need to do anything in terms of formal separation of fun money vs main portfolio money if you're only talking a few percent of your total worth. Just back off a bit on the amounts or the risk level you're trading if you feel like your "fun money" has turned into "needs money."

If you feel like you have a self-discipline problem (you can't stop yourself from being inappropriately speculative)then that's another matter.

BTW, by far my biggest loses are opportunity cost loses where I trade in and out or a stock or ETF a number of times making a bit each time. Eventually, it takes off after I sell and I never get back in meaning I didn't do as well as if I had just bought and held. This happened to me with AAPL years ago and investment club friends still give me sh*t about it.

I'm sitting now smiling from my recent good fortune with the jump up in SLV. Back to cash, I'm casually prowling for the next opportunity.

Have fun!
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Old 06-26-2014, 09:48 PM   #23
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Fermion,

I trade very similarly to you with a bit of fun money. It's very, very entertaining and educational. I'm inconsistent in regard to frequency, strategies and amounts. Like you, I do it within our IRA's (mainly mine but occasionally DW's) but in my case it's within Roth IRA's.

You don't need to do anything in terms of formal separation of fun money vs main portfolio money if you're only talking a few percent of your total worth. Just back off a bit on the amounts or the risk level you're trading if you feel like your "fun money" has turned into "needs money."

If you feel like you have a self-discipline problem (you can't stop yourself from being inappropriately speculative)then that's another matter.

BTW, by far my biggest loses are opportunity cost loses where I trade in and out or a stock or ETF a number of times making a bit each time. Eventually, it takes off after I sell and I never get back in meaning I didn't do as well as if I had just bought and held. This happened to me with AAPL years ago and investment club friends still give me sh*t about it.

I'm sitting now smiling from my recent good fortune with the jump up in SLV. Back to cash, I'm casually prowling for the next opportunity.

Have fun!
Youbet,

Yes we do sound like we have similar fun money account ideas. I envy that yours is in a Roth. It would have been so easy 14 years ago for me to convert this to a Roth (our income at that time would have allowed the conversion...of course now any income can convert but the taxes...oy!)

I have had some similar opportunity cost misses. Probably the biggest for me is Microsoft. I was playing around with it a few years ago when it was trading ridiculously low in the $24 to $28 range, writing closer dated calls against some Jan 2014 $25 LEAPS. I eventually had the 2014 $25 LEAPS paid for free and clear with the call premiums then stupidly sold them for a few dollars profit only to see MSFT climb well past $35 (now over $40). I still made like 70% overall profit on the deal but it could have been more like 300%.
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Those of you who trade, do you ever stop?
Old 06-27-2014, 01:28 AM   #24
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Those of you who trade, do you ever stop?

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Originally Posted by JacqJolie View Post
Can you expound on how you're doing this? I'm fairly lame in comparison at only 15% or so this YTD. Having said that, I am sitting on mostly cash right now in preparation to travel (offline) for the summer, so that sort of explains the anemic returns. I just find it truly fascinating on how people can beat the casino like this. Just gives me hope that I can too if I understand the system - more as an intellectual challenge than anything.

15% return in a year that the SP500 is up 5% - that is great.

I has to be understood that the last 3 or 4 years have not been normal and the market has went straight up with nary a significant correction. Volatility, the stuff that causes investors sleepless nights, has been at record lows. Any hack can generate market beating returns by using leverage (margin debt or levered ETF's) under these conditions. Buying the dip and selling the rip has worked every, every time. Will this continue - no way. At some point the party ends, and as Warren says - 'you never know who has been swimming naked until the tide goes out'.

I love to buy into dips in special situations, examples POT last year when the Russian cartel announced they would break ranks on pricing, APC after the Tronox ruling or AAPL when it broke down under 400. Someone else has mentioned GILD when the biotech scare went off three months ago - yeah I made some money off that one too.

I also buy stock and write at the money calls, aiming for 2% or 3% option premium gains per month. Or alternatively writing out of the money naked puts on stocks I would like to own at lower price points.

I am sure most of us have had the experience of being at a hot blackjack or craps table, having a significant winning streak and then giving every chip back to the casino.

So the key point is managing your money and your self. Pulling back , or altogether out, at some favorable point. When does the music end - I really have no idea. My thoughts are that so many are looking for a correction that the most likely scenario is that this bull move has yet some time left.






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Old 06-27-2014, 02:26 PM   #25
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Volatility, the stuff that causes investors sleepless nights, has been at record lows.
This investor actually loves volatility. Waiting for it to come back, patiently. Only in huge storms and waves can you find out who can sail.

Risk I don't like.

And curse the man who ever thought to equate risk with volatility. Should have given him a anti-nobel prize.
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Old 06-27-2014, 02:30 PM   #26
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This investor actually loves volatility. Waiting for it to come back, patiently. Only in huge storms and waves can you find out who can sail.
Some prefer to travel in submarines. About 200 ft or so below the surface, it's calm as can be.
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Old 06-27-2014, 03:54 PM   #27
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Old 06-28-2014, 07:39 AM   #28
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Which one would you listen to?
Both maybe? It doesn't have to be all or nothing. I'd take half off the table and keep going with the other.

I too trade or buy low when something in my "circle of competence" is on sale. I keep a core group of relatively stable blue chip equities and trade around the edges with maybe 10 - 20% of my portfolio. I only trade equities I'd be willing to hold for the long term and quite often keep my gains in them (ie. profits stay in "free shares"). I still find it enjoyable, keeps me mentally sharp, is profitable, and gives me great pleasure when I read those diehard indexers who came from the bogleheads board spouting off sarcastically about their broken crystal balls and how it can't be done successfully.

(Disclaimer: I think indexing is a fine investment strategy. i just found that I am personally able to beat average market returns quite easily by doing it my way. Your mileage may vary.)
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Old 07-07-2014, 11:05 AM   #29
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Old 07-07-2014, 05:36 PM   #30
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I have some individual stocks and make a trade about once a year, looking for value in the oil patch. When the dividends wear thin or I find I can't do better than Vanguard's VDE, their energy ETF, I will give up and put it all back into index funds.
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Old 07-10-2014, 11:37 AM   #31
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Originally Posted by wingfooted View Post
15% return in a year that the SP500 is up 5% - that is great.

I has to be understood that the last 3 or 4 years have not been normal and the market has went straight up with nary a significant correction. Volatility, the stuff that causes investors sleepless nights, has been at record lows. Any hack can generate market beating returns by using leverage (margin debt or levered ETF's) under these conditions. Buying the dip and selling the rip has worked every, every time. Will this continue - no way. At some point the party ends, and as Warren says - 'you never know who has been swimming naked until the tide goes out'.

I love to buy into dips in special situations, examples POT last year when the Russian cartel announced they would break ranks on pricing, APC after the Tronox ruling or AAPL when it broke down under 400. Someone else has mentioned GILD when the biotech scare went off three months ago - yeah I made some money off that one too.

I also buy stock and write at the money calls, aiming for 2% or 3% option premium gains per month. Or alternatively writing out of the money naked puts on stocks I would like to own at lower price points.

I am sure most of us have had the experience of being at a hot blackjack or craps table, having a significant winning streak and then giving every chip back to the casino.

So the key point is managing your money and your self. Pulling back , or altogether out, at some favorable point. When does the music end - I really have no idea. My thoughts are that so many are looking for a correction that the most likely scenario is that this bull move has yet some time left.






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Thank you very much for taking the time to respond wingfooted. I'm only about 60% invested right now with the remainder in cash/bonds so don't think I'm too aggressive (more because I'm on an RV roadtrip this summer and don't always have internet access, not really market timing). Am more concerned with learning how to best manage risk / reward and set things up properly so that it's replicable and consistent rather than making oodles in a one or two-off big win. Although that's fun too.
My weakness so far seems to be selling too soon. And trying to catch falling knives sometimes - would using a put strategy be helpful with that? Both things to work on.
Thanks again!
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Old 08-16-2014, 10:33 AM   #32
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I kept at it and now am at $85,000 and a bit over 60% return YTD. Other than a small Gilead spread I am all cash right now.

Question for those with trading accounts:

When you are unable to trade for awhile (vacation or other) and are mostly in cash, do you just leave it in cash to be ready for resumption in trading or do you park it in something?

I am going to be unable to trade for about 2 months. Part of me says just be happy with a 60% annual return but the other part doesn't want to leave $83,000 in cash just sitting there for 2 months doing nothing. I am not sure what I could earn in that short of a time period that would be worth the effort.
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Old 08-16-2014, 10:52 AM   #33
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Question for those with trading accounts:

.

If you are up 60% YTD - why ask this board ? Great results !


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Old 08-18-2014, 01:49 PM   #34
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When you are unable to trade for awhile (vacation or other) and are mostly in cash, do you just leave it in cash to be ready for resumption in trading or do you park it in something?
I continue to trade on vacation...works great when in Europe due to the time difference.

This last year has been terrific for trading. Meet some goals and will back off. Have been averaging 5 or so trades a day....mostly MU and airlines.
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Old 08-19-2014, 06:52 PM   #35
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I continue to trade on vacation...works great when in Europe due to the time difference.

This last year has been terrific for trading. Meet some goals and will back off. Have been averaging 5 or so trades a day....mostly MU and airlines.
My wife thinks vacation should mean not logging onto the internet...
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Old 01-10-2015, 10:08 AM   #36
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I trade, or more often market time focused index funds for quick 2-3% moves! one of my favorites recently IBB has been very good since even if you timed wrong hanging on a little longer made money since it's been on such a great long term rise. I do this with portion of traditional and Roth accounts, my taxable account has become illiquid because I bought a bunch of FBIOX a few years back and it grew so much I want to wait till retirement, have some $0 income years and harvest $73k capital gains for a few years unless it slows then I'll accept the 15% cap gain tax.


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Old 02-07-2015, 08:05 AM   #37
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I have a "sandbox" account at Fidelity for trading but started up buying and selling individual stocks again about 4 years ago. I seem to find it more fun in bull markets!

Yesterday I was watching a course on Financial Markets at Yale and Robert Swensen, the guy who got Yale's endowment fund form $1 billion to $16 billion in 25 years, said that he's concluded you need either 100% active investing, with all the resources that entails, or index funds with a planned allocation and periodic rebalancing. Nothing in the middle is as profitable over the long run.

Curious, I looked at all of the stocks I have now and those I sold last year. With one exception (a stock I bought on a whim and invested only $3,500) they all outperformed all indices.

I'm going to keep investing ("trading" probably implies more activity since I frequently have long-term gains). It was fund when I bought my first stock at age 20 and it's still fun at age 62! I'm now timing my trips to the fitness center so I can watch Cramer on CNBC.
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Old 02-09-2015, 12:05 PM   #38
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Thank you very much for taking the time to respond wingfooted. I'm only about 60% invested right now with the remainder in cash/bonds so don't think I'm too aggressive (more because I'm on an RV roadtrip this summer and don't always have internet access, not really market timing). Am more concerned with learning how to best manage risk / reward and set things up properly so that it's replicable and consistent rather than making oodles in a one or two-off big win. Although that's fun too.
My weakness so far seems to be selling too soon. And trying to catch falling knives sometimes - would using a put strategy be helpful with that? Both things to work on.
Thanks again!
Good discussion. I trade and have been doing well since the big crash. I learned a lot after the crash and have been getting 40% to 100% returns. I recently sold LinkedIn after it doubled. It's best not to be too greedy (lesson #1 from the crash).

What is your exit strategy? Each stock you buy, you need to know when to sell. Don't look at the market. Know your own strategy but it looks like you are doing well.

Don't worry about 2 months off. Sometimes just being away from the market is a good break. Enjoy it!
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Old 02-09-2015, 12:15 PM   #39
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I have set aside $250k to "trade" when I RE. Realistically, I am hoping to beat the market, and generate a little bit of side income. But of late, I am just getting too lazy and may just put the $250k in the rest of my main portfolio.
I started trading again in 2015 but with less "set aside" money. I call it my gambling money. So far in early Feb, I have 8% return. If I can keep that up, I am looking at 50% annualized return. That'd be enough for me to go to ER . But ... a two month positive return doesn't guarantee continuing success for the year.
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Old 02-10-2015, 12:16 AM   #40
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I read that if you trade too much the IRS could treat you as a "professional trader" and not an "investor". Since you are now a "professional" you need to pay Social Security and be treated like a business, utilize Schedule C for expense deductions.

"A taxpayer’s activities constitute a trade or business where both of the following requirements are met: (1) the taxpayer’s trading is substantial, and (2) the taxpayer seeks to catch the swings in the daily market movements and to profit from these short-term changes rather than to profit from the long-term holding of investments." -Forbes
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