Do you always have a limit order going?

[Boho]

With 200 share trades at $24.60 that's less than 5k. I thought we were talking about some money. Or did he drop a zero?

I don't have a ton of money and I was just playing with the $8,000 in cash that was in my brokerage account. I was just showing the trades I make by request of a member so you'll have some more solid evidence of what actual results I get. There's plenty of back checking I could do to see if a trade like this tends to earn money but I've already read things to the effect that it does, and I'm open to making this more long term if a day trade doesn't work out, so I jumped right in. If this stock doesn't go up within a week by at least one percentage point from tomorrows low, I'll have learned a lesson. Making $50 minus fees from this is fine. I don't want to be a professional investor.

(but note that it hasn't dropped to my "buy" price yet. I renewed the order for tomorrow.)

 

[ERD50]

With 200 shares traded at $24.60 that's less than 5k. I thought we were talking about some money. Or did he drop a zero?

I take it he's starting out, so may not have a large portfolio. That's OK, we all started somewhere. It's still about percentages, and trading can be done cheap these days, so commissions/fees aren't all that big a deal.

I just hope his stash grows. I'm skeptical of that.

-ERD50

 

[Hyperborea]

I take it he's starting out, so may not have a large portfolio. That's OK, we all started somewhere. It's still about percentages, and trading can be done cheap these days, so commissions/fees aren't all that big a deal.

I just hope his stash grows. I'm skeptical of that.

-ERD50

Yeah, but the number of hours needed to find one such good deal is the same whether you are making $5,000 trades or $250,000 trades but the returns (if any) are far less with $5,000. The number of hours invested would probably be better spent improving your job skills, working overtime, or relaxing and enjoying life while the money is invested in a broad-based low cost index fund.

 

[MRG]

Yeah, but the number of hours needed to find one such good deal is the same whether you are making $5,000 trades or $250,000 trades but the returns (if any) are far less with $5,000. The number of hours invested would probably be better spent improving your job skills, working overtime, or relaxing and enjoying life while the money is invested in a broad-based low cost index fund.

+1
Post retirement those hours can be better used to enjoy life. IMHO.

 

[ERD50]

Yeah, but the number of hours needed to find one such good deal is the same whether you are making $5,000 trades or $250,000 trades but the returns (if any) are far less with $5,000. The number of hours invested would probably be better spent improving your job skills, working overtime, or relaxing and enjoying life while the money is invested in a broad-based low cost index fund.

You don't have to convince me!

-ERD50

 

[kgtest]

I don't believe the market is...what's the word...totally efficient or something. I believe there's a window of a couple of hours or more to take advantage of news affecting a stock (I saw a study on this). I do believe the price gets "more than high enough" on news like this, then it drops. BLUE already dropped from the spike. It probably has more dropping to do but I like to get in on things earlier than this.

I believe there's a long term window of opportunity too. Recent news indicates that the ultimate jump in prices due to a drug passing all trials is somewhat closer and biotech stocks will rise beyond what they are now even though people expect it.

Speculation at best. Their is no simple get rich quick scheme. Anyone in this forum will tell you we invest the way that we do because we know we are comfortable with what we are doing, we understand it and the risks associated and we want a consistent return.

Are you comfortable with your decision? Why are you buying? Is everyone else selling? I've learned the hard way it can take one tiny mistake or bit of bad news out of the companies management and boom...there goes a 10-20% loss that takes a long time to recover. I think the gambler would then double-down perhaps doubling the risk.

Imagine if boards made these from-the-hip decisions.

Trade with a mock portfolio and lose all the money you desire...but remember if it were real money, that money you lose is years added to your working life.

 

[Boho]

"Buy 200 Shares of URBN Limit at $24.60"

Based on overnight trading I changed it to $24.75.

Immediately filled after the bell and it's already down to $24.65...now $24.73 at 9:41 EST. I probably shouldn't watch it all day, but...

$24.90 at 9:53 am!

I placed my sell order: "Sell 200 Shares of URBN with a Limit Order (Day) at $25.20." It's currently $24.82

 

[Boho]

URBN was $24.72 at the close. The two other stocks I was interested in went up and I won't be considering them again for a while, so I placed a limit order for another 100 shares of URBN at $24.50.

 

[Boho]

Bought 200 shares of URBN on March 9 for $4,954.95 (commission included)
Sold 200 shares of URBN on March 10 for $5,034.94.

I made $79.90.

Short, mid, and long term sentiment was all weak. I didn't even care enough to check.

 

[ERD50]

Bought 200 shares of URBN on March 9 for $4,954.95 (commission included)
Sold 200 shares of URBN on March 10 for $5,034.94.

I made $79.90.

Short, mid, and long term sentiment was all weak. I didn't even care enough to check.

And how much did you make on the money that is sitting in cash waiting for a buy signal?

-ERD50

 

[Boho]

And how much did you make on the money that is sitting in cash waiting for a buy signal?

-ERD50

I don't even know how long it was in cash. I think it came out of an ECF that I sold about a week ago. I don't know how I'll do this on a regular basis. Maybe I'll have the recommended (by some) 6 months of cash in checking and I'll transfer some of that to the brokerage account when there's a trade opportunity. I can replace the checking account money within a few days when I sell something. Or else I'll sell right before trading. I don't know if I should keep cash in the brokerage account just for trading. I don't even know if I'll be looking for buying opportunities on a regular basis.

 

[ERD50]

I don't even know how long it was in cash. I think it came out of an ECF that I sold about a week ago. I don't know how I'll do this on a regular basis. Maybe I'll have the recommended (by some) 6 months of cash in checking and I'll transfer some of that to the brokerage account when there's a trade opportunity. I can replace the checking account money within a few days when I sell something. Or else I'll sell right before trading. I don't know if I should keep cash in the brokerage account just for trading. I don't even know if I'll be looking for buying opportunities on a regular basis.

What I'm hearing is (correct me if I'm wrong), you don't have a tracking system in place to ever know if you do better than just putting the money in an index or not? If not, how are you going to learn anything from the exercise?

I think I mentioned earlier, if nothing else, keep the portfolio isolated. Start with $X in the trading portfolio, don't add or take anything out (or do it only at the end of the year, and start fresh that next year). That's easy and clear.

-ERD50

 

[Boho]

That was close! "Urban Outfitters Inc. (URBN)...are being booted from the S&P 500 index after S&P Dow Jones raised its market cap guidelines for the index late Friday...Urban Outfitters (URBN) shares slipped 0.7% to $25."

When I was waiting to see the old financial advisor about a month ago to get the account transferred to me, I overheard him on the phone explaining to a client that a trade didn't work out because "they changed the rules" somehow. I was curious about how true that was but I suspected it was just a bad trade. Now I see how that could happen.

As far as keeping the day trading portfolio isolated and having cash sitting around waiting to be day traded, I'd rather come up with a way to quickly get cash, trade, then compare my gains/losses from that trade to the gains/losses I'd have if I didn't liquidate whatever I liquidated. That way I could day trade as infrequently as I want without worrying about having too much cash.

 

[ERD50]

That was close! "Urban Outfitters Inc. (URBN)...are being booted from the S&P 500 index after S&P Dow Jones raised its market cap guidelines for the index late Friday...Urban Outfitters (URBN) shares slipped 0.7% to $25." .... .

Yep, you might be surprised how often those little surprises hit individual stocks. But when you are diversified across 500 stocks, those are not even a blip. Sometimes they work in your favor, and build up your confidence, only to squash you like a bug later.

As far as keeping the day trading portfolio isolated and having cash sitting around waiting to be day traded, I'd rather come up with a way to quickly get cash, trade, then compare my gains/losses from that trade to the gains/losses I'd have if I didn't liquidate whatever I liquidated. That way I could day trade as infrequently as I want without worrying about having too much cash.

Where does quickly available cash magically come from, if it isn't already available as cash? Seems like it must be in something, so why not hold it in that account?

Or I guess you could use margin?

I don't know how you will ever know if your trades would be better than a buy&hold index, but maybe that's on purpose. With all the superiority you have claimed in these threads, it's hard to understand you wouldn't want to keep your money working. I know, you could be waiting for the occasional 'smart trade', but that could happen anytime, so you still need cash available (or something to quickly liquidate).

A friend of mine has a complex trading scheme. But he won't (claims he can't) compare to buy & hold the market. His rationalizations for this are... interesting. I think he doesn't want to know.

-ERD50

 

[Boho]

(or something to quickly liquidate)

Yeah, I have ETFs. Whether the time would be right for liquidating them when I need cash is another story. And I think the money would go into Cash Available to Trade and if I buy and sell stock before the ETF sale "clears" (I forgot the term), then I think that's a trading violation. Yes, I wish I had a margin account but I wasn't approved for one.

 

[easysurfer]

Yeah, I have ETFs. Whether the time would be right for liquidating them when I need cash is another story. And I think the money would go into Cash Available to Trade and if I buy and sell stock before the ETF sale "clears" (I forgot the term), then I think that's a trading violation. Yes, I wish I had a margin account but I wasn't approved for one.

I'm not being judgemental, but curious now, are you trading more for fun or for investing? If you don't have a sound comparison (such as to a SP500 Index) then there's really no way to know if your strategy is working or not.

I guess the for fun part is similar to if folks play the ponies or slots for fun but don't keep track. Which is okay, if that's what you really want. But if you want to make a living, or come out ahead than another system, seems only makes sense to have a valid comparison.

 

[samclem]

I suppose an individual can keep records of their performance and compare it to "what would have been" with another option (e.g. an asset allocation across a few low-cost index funds). But if a person believes he's got a good system, is especially talented, etc, I wonder if they'd be likely to abandon that belief based on even a decade of results. After all it's just one chunk of history out of an unlimited set of possibilities, "oh yeah, but I changed the system to constantly improve it", etc. There will be a zillion ways for a person to perpetuate the self delusion. And, at the end of the day, it really is only one data set, there's no way to build up a statistically significant history on one's own track record in a contemporaneous way. By the time you've got enough data, you are dead.
Fortunately, those who want to learn can look at the experience of others. We have decades of academic and real-world results on the performance of active traders and active trading. I'm guessing Boho doesn't care about it, though. It doesn't apply to him.
Some example of many:
Morningstar Active/Passive Barometer (2005-2015)
Dalbar: 2016: Yes, You Still Suck At Investing.
Wharton Business School: Active v Passive

On an after-tax basis, managers of stock funds for large- and mid-sized companies produced lower returns than their index-style competitors 97% of the time, while managers of small-cap stocks trailed 77% of the time.
“In case you are curious, those very few investment managers that outperformed the passive index were still likely to underperform in the future,” Smetters says. “In fact, outperformers had only a 20% chance of repeating the following year, and … just a 10% chance of outperforming three years in a row.”
Most experts and experienced investors know the reason: It’s just too hard for an asset manager to pick a portfolio that outperforms the market by enough to make up for the 1, 2 or 3% fee that must be charged to support the stock and bond picking operation. Many index-style mutual funds and exchange-traded funds charge less than 0.2%, some less than 0.1%, giving them a huge cost advantage

Lets keep in mind that every one of the managers of these active funds believed they could beat the indexes. And they all had access to much better information and analytical tools than Boho does. That doesn't matter for some reason, I'm sure.

 

[Boho]

I'm not being judgemental, but curious now, are you trading more for fun or for investing?

For investing. I compare my trades with the US indexes like the S&P. I made about 1.7% in this trade which I think is more than the S&P rose in that one day. That's all the figuring I have to do as long as I don't keep cash sitting around waiting. That cash was sitting around waiting for a little while though. Sometimes that's a good idea. As I do this more I think I'll make more accurate rough calculations about whether my trades do better than an index, and hopefully that won't be too hard because I won't keep cash sitting around for days or longer.

 

[Boho]

managers of stock funds for large- and mid-sized companies produced lower returns than their index-style competitors 97% of the time...It’s just too hard for an asset manager to pick a portfolio that outperforms the market by enough to make up for the 1, 2 or 3% fee...

The current stats are a little better than that. 91.91% of funds underperformed the S&P 500. But my portfolio is balanced and consists of five or six funds, not one fund. If you want a level playing field, how about randomly choosing one index fund and comparing it with one randomly chosen managed fund? That's never done. It's always a decently balanced index fund vs. a random fund.

I think the second sentence that I quoted above is misleading (it's hard to tell because there's no reference to a study that I can read about in more detail) in that it makes it sound like a financial advisor tried to pick a portfolio for a client that would outperform an index and failed. I think what actually happened was someone compared a random fund with an index.

 

[samclem]

If you want a level playing field, how about randomly choosing one index fund and comparing it with one randomly chosen managed fund? That's never done.

What are you talking about? What kind of "statistic" would that be?" "We chose one fund of each type at random, here's how they did." We learn very little from anecdotes in a situation like this (that's what this would be). You can get those on your own with your own personal trading experience and doing a wonderful job of it, as useless as they are in this case.

"My friend bought a lottery ticket and he won" tells me very little about my chances of winning.
"100 friends bought a lottery ticket, and 91% lost" tells me a lot more.
"The guys who won only had a 20% chance of winning the next time" gives me more information.

 

[Boho]

What are you talking about? What kind of "statistic" would that be?" "We chose one fund of each type at random, here's how they did." You don't want anecdotes (that's what this would be). You can get those on your own with your own personal trading experience and doing a wonderful job of it, as useless as they are in this case.

Correct, it wouldn't matter. And neither does comparing a random managed fund with an index. Nobody chooses one managed fund at random as their only investment. I choose managed funds after cross checking their ratings with numerous analysts who rate them. Then I have other reasons for liking the funds, and I make sure my funds work together to make a balanced portfolio. Find a guy who does that and compare his portfolio's performance with a single index fund and see who wins.

 

[MRG]

Correct, it wouldn't matter. And neither does comparing a random managed fund with an index. Nobody chooses one managed fund at random as their only investment. I choose managed funds after cross checking their ratings with numerous analysts who rate them. Then I have other reasons for liking the funds, and I make sure my funds work together to make a balanced portfolio. Find a guy who does that and compare his portfolio's performance with a single index fund and see who wins.

Much has been made of Warren Buffett’s million-dollar bet, hatched at the start of 2008, with the money management firm Protégé Partners. Buffett bet on an index fund that invests in the S&P 500; Protégé bet it could pick five “funds of funds” that would do better.
After eight years, as Buffett gloated at his company’s recent annual meeting in Omaha, the S&P 500 is killing it. The fund Buffett picked, Vanguard 500 Index Fund Admiral Shares (which invests in the S&P index) is up 65.67%; Protégé’s funds of funds—funds that own a portfolio of positions in a range of hedge funds— are up, on average, a paltry 21.87%.


http://fortune.com/2016/05/11/warren-buffett-hedge-fund-bet/

 

[Boho]

Warren Buffett’s million-dollar bet

Yes, that was about hedge funds with high costs. It's a little different. All I know is that my portfolio of mostly managed funds is better than the average managed fund that you see in these challenges. Probably much better. So my odds are probably much better than 1 in 10 of beating an index.

Here's something that I linked to a couple of weeks ago:

When we averaged all 24 combinations of time frame and peer group, the index beat about 60% of funds. That is certainly competitive. But does it make the index the undisputed king of the mountain? No way.

 

[MRG]

Yes, that was about hedge funds with high costs. It's a little different. All I know is that my portfolio of mostly managed funds is better than the average managed fund that you see in these challenges. Probably much better. So my odds are probably much better than 1 in 10 of beating an index.

Here's something that I linked to a couple of weeks ago:

Definitely the fees are responsible for a 21% vs. 65% return. That's it, fees. Bye Boho.

 

[samclem]

All I know is that my portfolio of mostly managed funds is better than the average managed fund that you see in these challenges. Probably much better.

Everybody thinks their managed funds are above average or will be. Do you think the investors choose them because they believe the funds are losers? Those investors are just like you. They look a the "star" ratings, jump in and out based on what they hear on the news or what they read in a magazine. And they in the vast majority of cases get results way worse than if they had bought a few cheap index funds and simply rebalanced. The pros seldom do any better either.