The reason people daytrade is to try to reap those huge returns through huge leverage that investing into a fund would never return. It's easy once you rack up a few million daytrading to just sit back and invest for 10% returns. But starting with $25,000 as an investor earning 10% returns would take forever to rack up 7 figures.
I'm talking trading, not "investing" not "managing money" not "ROI" ....Remember, I am a floor trader at heart, and that is the reference I am making....it is not to say that many make much more with long time horizons, it's just a different term. I have always put in a caveat of term definition before saying things like this, but I figured everyone here knows what I am talking about. Cheers!! Don
I absolutely agree w/ you. Comparison is a waste of time, especially when there are so many ways other than pure dollar amounts to measure success. (My personal favorite measure of trading ability is a comparison of output to input- not just the actual risk adjusted return, but the risk adjusted return divided by the amount of stress/hassle/effort exerted to get it.) I only entered the fray because Don threw out the highly comparative term "best traders in the world" with such grossly misplaced authority. If he does not seek to compare, he should not use comparative terms.
I agree with Don's post... The market changes... I used to take 100-500 share positions in stocks that move 1-5 points throughout the day...those days are gone. Now I am trading 1000-4000 lots of stocks that move 40 cents to a buck (if I am lucky). I concentrate on liquid NYSE stocks in the S&P, BUT - I trade everything from smallcaps to Nasdaq (QLGC / NVDA). I just find the NYSE more profitable. I trade more size and go for what the market will give me, which are NOT huge moves like in 1999 and 2000. I adapted by trading more size, and the stocks I trade in must have liquidity. I also tend to leave a trade on longer these days - for example, I used to use a 3 minute chart , then went to 5, and now I use a 10 minute chart... I am less stressed and believe it or not, I trade less. What matters at the end of the day is profits...my way is not the RIGHT way and I am sure it differs from others, it is just what is working for me. We have traders learning using 100 shares, but move up in share size after they learn the software and get used to trading a bit. Otherwise, it would be difficult to make a living. Oh, how I long for the days of trading 100 shares of NTBK at $250 with a 10 point range...
Wait a minute. Are you saying that anyone who a) holds positions past the close b) manages investor funds as well as their own c) pays attention to ROI as well as dollars and cents Is not a trader? How foolish of me. I guess I'm a plumber, or maybe a milkman. I'm having an indentity crisis here... My mistake, I didn't realize that your personal definition of trading is so narrow that the words "trading" and "daytrading" are interchangeable...while you're at it, why not limit the definition further and say that the only true traders are the ones at prop firms? Then your statement about the best traders in the world would be true because your world goes no further than the carpet that runs up against your door.
Why are we being confrontational about this? I try to explain my differences in definitions, and it certainly doesn't mean that you or anyone else can't call themselves whatever they like. I am certainly not trying to limit this to prop traders or anyone else. I try to use the definition used by the regulators when they make traders get licensed. If you were an exchange member, market maker, specialist, or licensed professional trader...."....you are exempt from tax filings, etc. mixed straddle rules, etc. etc. no big deal. There are only about 6-8 thousand professional traders in the U.S. (not my number, the Feds')....many of which may hold stocks for days, or even weeks..... "Not trying to raise a fuss over nuthin" Don
I don't seek out confrontation but nor do I shy away from it. I spoke up because your statement "The "facts" are, that the best traders in the world make a few pennies per share, period!" pissed me off for its perceived combination of ignorance and arrogance. I have nothing against you or anyone else or prop firms in general or daytraders in general. I just call a spade a spade and say if ya can't take the heat get out of the kitchen, I call 'em like I see 'em and I think saying that the best traders in the world are all daytraders is ridiculous once you recognize that the term "trader" is maybe a leeetle bit broader than Uncle Sam says. No harm no foul. p.s. i went back and edited out the middle paragraph of this post in deference to my sometimes too hot temper, which i need to work on (and before someone cracks wise about the best traders having the coolest heads, it's actually more important being able to maintain control when it counts...)
Keep in mind that I traded on a trading floor for a long, long time....and there were always instances of hot tempers flying...have no fear, we all get a bit hot at times. If you knew me, you would realize that I am neither ignorant nor arrogant (I can say that with all humility) ...(small smile). It's often difficult to express ourselves correctly via posting on a board, and I would love to have a discussion with you about this or any trading topic at any time. Good Luck in your trading!! Don
And I'm not calling you either one. I believe in making a clear distinction between the message and the messenger. Since I come off like a jackass myself from time to time, it would be hypocritical not to do so. Game on, back to subject at hand. I am making 'real $$$' in this market if my vote counts for anything. Now that I think about it, about a third of my plays end up being daytrades after all, so perhaps I partially qualify.
There are plenty of people who trade mutual funds using timing techniques and sector plays who are certainly not day traders and I can assure you are making a lot more than 10% returns. Take a look at HOLDR's and ETF's, and you'll find plenty of sectors moving 10% in one month. Gary Smith turned a small $5,000 account into more than a million doing mostly mutual funds in "ONLY" 15 years.