Day Trading

[TK]

I would like to hear comments and experiences
regarding the day trading of securities.

From reading previous related posts I theorize this
group would come down on the negative side of this idea.

Anyone out there have any positive experiences. :

 

[brewer12345]

Very, very hard to make money doing this, as far as I can tell. By the time you pay commissions and spreads, you have to guess right pretty frequently to come out ahead. I would imagine that trading serial correlations, doing merger arb, buying and tendering, etc. would be a lot easier to make money at.

 

[Spanky]

Day-trading takes a lots of time and efforts to be successful. You need to go through a plenthora of financial news and info before the market opens and spend time after the market closes to anlalyze what you have learned.

No. Thank you.

Spanky

 

[cute fuzzy bunny]

About the only time I'm aware of that a good percentage of people doing this consistently made money was in the late 90's. You know, when almost anything you bought went up?

 

[wildcat]

my comments =

 

[Spanky]

The best way to make money from day-trading is to spot stocks whose price pattern are of saw tooth or sinusoidal so that you can buy when they are low and sell when they are at their peaks. Since the patterns are repeatable, you can really make a killing.

 

[ESRBob]

TK,
I come down on the negative side on this one. My feeling is it takes up far too much time, stresses you out, and has little chance to beat market averages with a pretty good chance of underperforming market averages. Plus all your gains are taxable at top rates. If this is your idea of a good thing to do in ER, then I'd suggest you spend more time brainstorming other things that you could do instead that would be more wholesome, beneficial and profitable.

Daytrading sounds like a lot of work at best, and something like dabbling in hard drugs at worst.

 

[Cut-Throat]

I've got a much simpler system for you that is easier to understand.

Go to a roulette table in Las Vegas and put $100 on Red. You have roughly a 50-50 chance of doubling your money or losing it all.

If you win repeat, if you lose, double your next bet to $200 on Red. If you win this time you have recouped your original $100 plus a $100 profit.

If you keep losing, keep doubling your bet until you win, and then revert back to your $100 bet.

 

[HFWR]

To make much, you'd have to buy/sell fairly large blocks (read lots o' dough) to not dilute your "earnings" with stuff like commissions, spreads, tax...

 

[retire@40]

There are some freaks people who are professionals at this.  They read every financial magazine while watching financial channels on TV and surfing the financial websites.  I know some of these people who actually make a living doing this full time.  Most of the people I know that do millions of dollars in trades per year make or lose a few thousand, but more often lose.

It's one of the last "jobs" I would ever want.

 

[Spanky]

..It's one of the last "jobs" I would ever want.

It's not just a job, ... it's an adventure (as the Navy says). Some people really love the thrill of stock trading.

 

[Nords]

I would like to hear comments and experiences regarding the day trading of securities.

Anyone out there have any positive experiences. :

You can make up your own mind-- read "How I Trade For A Living" by Gary Smith.  (There's a financial media figure named Gary Smith, but this book's author is a different Gary Smith-- and a much nicer guy.)  Your local library might have a copy or you can read a good bit online here.

Gary is in his late 50s and has just semi-retired after day-trading for the last 30 years.  He made his living the hard way-- by earning it through trading mutual funds in his IRA.  The book is quite factual and it debunks the whole industry as well as the the thrill.  Gary's strengths are determination and an ability put his entire portfolio-- all 100%-- into a single investment if he believes it'll do well.  He made enough in junk bonds from 2000-2003 to call his own retirement.

Gary and other daytraders post over at Salil Gangal's FundVision Web site (http://www.fundvision.com/).  Try the "FVDB" to get a feel for their lifestyle.  I'll warn you that Salil does not appear to be forthcoming with his losses; all you ever hear about are his winning trades.

Another of Gary's strengths is the ability to work an indicator while watching to see if it doesn't work anymore.  He's a great teacher of how not to get emotionally involved or too dependent on your favorite tech analysis tricks.

 

[Nords]

It's not just a job, ... it's an adventure (as the Navy says).

I think it's "Accelerate your life!" now...

 

[Beachbumz]

I've got a much simpler system for you that is easier to understand.

Go to a roulette table in Las Vegas and put $100 on Red. You have roughly a 50-50 chance of doubling your money or losing it all.

If you win repeat, if you lose, double your next bet to $200 on Red. If you win this time you have recouped your original $100 plus a $100 profit.

If you keep losing, keep doubling your bet until you win, and then revert back to your $100 bet.

I've seen some pretty long streaks of one color or the other on the wheel and this is one reason they have maximum betting limits posted. But the point is valid. If you're going to gamble, why not have a little fun and get free drinks.

 

[markplus4]

I actively trade around core positions if they make extended moves...I'll trim a few hundred shares on an upward move, and buy a few hundred if they drift downward for no good reason. Only involves 5-10% of my portfolio. The rest I leave for the longer term. It's not day trading per se..as I will hold positions for several days/weeks if necessary. In fact, I could argue my tactics are really just micro level portfolio rebalancing.....

It's time consuming but I actually enjoy the mental exercise & the challenge. It's helped me outperform the market by a few points over the last 3 years. The conventional wisdom is the big guys control the market & have the small traders at their mercy. Actually, I believe the converse is true. The big institutions move stocks so significantly when they buy/sell that it can cause short term inefficiencies that can be exploited by savvy traders.

 

[TK]

Thanks for the input from all.

Special thanks to Markplus4 (Swing trade maybe?)

I continue my search for the master trading plan.....

 

[Lazarus]

In the late 90's the security guards at work were giving me stock tips. When that happens again I will know to sell. For every person that makes a fortune trading stocks there are a hundred that lost everything and aren't talking.

I don't have any secrets myself. I just buy and hold and hope for the best.

 

[riskadverse]

Hi - I daytraded mutual funds in a very big way in the late 90's and made a very nice nest egg. When the mutual funds blocked traders like me from frequent trading (and then exploited the same techniques on their own funds), I ended up going to cash. This turned out to be fortunate as I sat the bear market out. Since then I've experimented seriously with day trading stocks, but it involves incredible concentration, knowledge, and emotional control. I can't handle the emotional control part. I wouldn't recommend it . . . it will dominate your life like a drug addiction.

 

[cute fuzzy bunny]

Like I said, a monkey could have thrown darts at the stock page in the wall street journal and made big bucks in the late 90s. If you lost money trading between 96 and the end of 99 you really should stick with a day job instead of day trading.

Not denigrating your efforts riskeverse...hell I'm proud of one year that I had a 300%+ gain in without holding anything for longer than a week or two...but I dont ever mistake much of that gain for any particular prowess or any likelihood of pulling off a strong year in a normal investing period.

There are guys with WAY more access to information and company stuff and WAY more money to buy that info than any of us. If there was any science to it at all, a lot of people would be regularly stuffing their wallets.

Buffett...Lynch (for a while)...Miller (for 13 years)...monkeys at a typewriter would have better odds.

 

[TK]

from Riskaverse:

Since then I've experimented seriously with day trading stocks, but it involves incredible concentration, knowledge, and emotional control. I can't handle the emotional control part. I wouldn't recommend it . . . it will dominate your life like a drug addiction.


I could not agree more with this comment... Thanks

Of course I have seen many a retired folk with slot machine fever that would make this addiction look small.

and if you are going to do something you might as well do it with gusto no?