OT....Stock daytrading
edmundfitzgerald
Posts: 4,306 ✭✭
About five years ago I made about 50k in the market on short term trades. Trades that usually lasted anywhere from 1-6 months.
During and after the crash I decided to day trade because the market was too crazy to stay in it at all. I lost about 30k in three years
daytrading. It seemed that whenever I bought a stock it always went down (then again the market was always going down about two
years ago). But even last year when the market was rebounding my short term trades were more often then not losers.
So has anyone here every honestly had a good run of daytrading ? You can't convince me to ever do it again. That's not what I'm looking
for. I've just heard stories about how "the house" always wins and just wondering if anyone has ever bucked the house.
During and after the crash I decided to day trade because the market was too crazy to stay in it at all. I lost about 30k in three years
daytrading. It seemed that whenever I bought a stock it always went down (then again the market was always going down about two
years ago). But even last year when the market was rebounding my short term trades were more often then not losers.
So has anyone here every honestly had a good run of daytrading ? You can't convince me to ever do it again. That's not what I'm looking
for. I've just heard stories about how "the house" always wins and just wondering if anyone has ever bucked the house.
0
Comments
My system is simple- I'm wired in a way that I can recognize when value is being excessively discounted (examples: WFC at $12/sh, BP at less than $30/sh, XOM at abt. $64/sh) and have the risk tolerance to stomach speculating on the future "revaluation" of such discounts. I've gotten nailed bigtime at least once (WCOM) so I'm not perfect in my guesses. I'm no good at momentum, charting, any of that. The only cup-and-handles I can use are my coffee mugs.
When I was starting out I lost a ton %age-wise between 2000-2003, and recovered a bit from there, just like the market. I think a similar phenomenon explains my performance from 2008-2010. Any short or medium-term strategy I suspect is going to be a slave to market direction.
You know that anecdote from "Reminiscences of a Stock Operator"- Jesse Livermore's trading mentor, when presented with the observation that all these traders around him were doing so well, said, "you know, it's a bull market". Rising tides lifting boats and all that.
Sure, you'll find stories of success, but with those you will find the losses are usually greater
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
On the Internet, a person might think trading is an easy game because it is mostly the winners that report their big profits. Some of these "winners" aren't even trading real money. There was that ex-professional baseball player that launched an investment advisory service and advertised something like 95% winners. Turns out that he wasn't trading real money, they were mostly just hypotheticals, a few were blatant post-dated hindsight trades.
These days, the big firms do high frequency trading with automated computer programs. Individuals still trying to day trade by the seat-of-the-pants, are seriously outgunned. The pickings are ever slimmer. The talent required to succeed ever greater. The computers hold for an average of 20 seconds or so, and can execute their trades in milliseconds at no commission just exchange fees, hoping to make maybe half a cent per share. There is no commission because the computers are run by NYSE seat holders or Nasdaq market makers. The computers analyze every tick, and optimize their algorithms every day, every hour. It is about like Jeopardy, with the computer behemoth Watson against Ken Jennings, or more like Watson against the average Jeopardy contestant. The average guy doesn't stand much of a chance against that kind of competitive advantage.
The one and only time I did stocks was a couple years ago....day trading.....started with 8k.....ended 3 months later with 0000000000000 never again!
Many years ago a gentlemen who I had a great amount of respect for and always will told me that even when something looks easy to you and folks are either making money at it or they are being paid to do it,........
don't kid yourself........it ain't easy!
A partner of mine left our firm in the late '90s to try his hand at day trading. He figured that $50K of 100% pure risk capital would would do for a start.
He actually did better than average, considering. IIRC, he was ahead for some time, but then gave it all back - plus his nut. All told, he lasted about 9 months before coming back and asking for his old position.
I am curious to see how I'd do, but don't think I'd have the stones to do it full time.
For the time being, I'll stick to part-time, long-term trading my own accounts, and play things safely.
RR
<< <i>I couldn't ever do a single day in/out on a stock. I think it's much more reasonable with a medium-term time frame though - 1-6 months for example. >>
That's refered to as swing trading.
I would say I am a month or year trader. I do all trades in IRA to eliminate the paper work headache
100% Positive BST transactions
BTW, what you have described is swing trading. Day traders typically hold their trades for less than a day.
the few who do it well, work hard at it, know when to take profits and cut losses, and make net wins exceed net losses over time
the vast majority of participants in both activities lose big in the long run (card-room poker is another example)
Liberty: Parent of Science & Industry
<< <i>Most successful daytraders have gone broke a few times. I don't think it's possible to be a successful daytrader without losing a few accounts. You can't learn how to daytrade from reading books and studying, although you should do that too. You can't acquire the proper mentality until you've run up an account a few times and then lost it all back. There is no substitute for experience, and that's what you need to daytrade.
BTW, what you have described is swing trading. Day traders typically hold their trades for less than a day. >>
I've never known any professional day traders to go flat bust. Yes I've known many that had to call it quits or had to re load once they got below a certain stick. Let's say below 300K in an account they wouldn't be albe to trade effectively. I don't know anyone that could DT with less then amount as you have to put lot's o capital behind each trade since you are looking for pennies, nickels or dimes. That also means you can't afford to lose much more then nickels or dimes on a trade X 1,000 shares or so. Day trading is very emotionless, cold and lonely. IMHO, if you are DTing with less then 250K in an account and are trying to make more then a $1000 a day with less then that amount of capital you are the sucker at the table.
I've day traded in groups before and it was somewhat effective.
Yes, some of the greatest traders and spectulators have gone bust at one time or another. Look no further then Jesse Livermore as he was the greatest spectulator that ever lived. However, that is a different ballgame then DTing. I also don't know any professional DT's that EVER leave a trade open overnite (unless highly hedged which almost defeats the purpose of not closing a trade) . Everything is taken to flat after each trading day. Anything else is swing trading, speculating, novice day trading or greed. DTers believe it or not are not greedy by nature. MJ
edited to add my pennies, nickels and dimes statement was only an analogy or an euphemism if you will. Stocks over $150 are a different animal. Mini's or indexing are yet another beast............MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
With 300K to play with, + $6000 days should not be out of the question. That's only 2%. In an up market (line the last two years) this should not be too hard even for " a random walk through Wall Street".
BTW, Buffet says, cut him back to a 1,000,000 and he could get 50% per year E.Z.
<< <i>As MJ says, successful day traders are few and far between. I knew a few people who enjoyed some success in a rising market but were clobbered when the market reversed. If you want to gamble, go to a casino. >>
Interestingly the best DTers I know all have a bias on shorting markets. Myself included..............I'm generally more comfortable at resistance then at support. However, it really shouldn't matter. The biggest scores for me have been on the short side though. MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Interestingly the best DTers I know all have a bias on shorting markets. Myself included
Amen Brother MJ.
If people havent gathered from my posts I am very often playing the short side. And I am NEVER 100% invested. Usually hold at least 50% cash.
Knowledge is the enemy of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
There are 10 types of people in the world, those who understand binary and those who do not.
It's been my experience watching these guys that the majority really have no clue what they're doing, and the few that do only had limited to decent success over the longer term (2 or more yrs.)
During the raging Nasdaq bull market in the mid to late 90's my bosses gave me a large chunk of company funds to trade for them (using options only) and I made them a small fortune, but that was during a time when it was fairly easy to make a lot of money in certain sectors and a lot different then today. IMO there are very few people with the discipline and talent to make a good living at daytrading, even during volatile markets. The one mistake I saw many people make was the inability to let go of losing positions quick enough or not using proper hedge positions or a host of other things.
In short, I very rarely daytrade my own account, and I don't recommend it for most retail customers unless they have extensive market experience and saavy, and even then the majority do no better than the average investor or the S&P500 over time........and the key phrase here is "over time".
<< <i>
<< <i>As MJ says, successful day traders are few and far between. I knew a few people who enjoyed some success in a rising market but were clobbered when the market reversed. If you want to gamble, go to a casino. >>
Interestingly the best DTers I know all have a bias on shorting markets. Myself included..............I'm generally more comfortable at resistance then at support. However, it really shouldn't matter. The biggest scores for me have been on the short side though. MJ >>
I don't mean to say that no one makes any money day trading. We have some sharp people here and I've no doubt some of them have done well. As for me? I'll leave it to the cognoscenti