Apologies if you get this reply twice. For some reason my initial replies did not go through. Why not outsource the leverage to a 3X ETF instead? The *median* value of daily (high-low)/open of the TNA ETF for the last two years is 6%. Median! Can you perhaps explain why this is not a valid way to use leverage?
Your figures did not make sense. Not everybody lives in Beverly Hills. 8-10K monthly expenses? That translates to $96,000 to $120,000 expenses a year. That is based on after tax dollars. Here is some stats about houshold income: http://en.wikipedia.org/wiki/Household_income_in_the_United_States If you have household income more than $100,000 a year, you are in the upper 85% of the US population. And this is pretax income. [Granted the census was in 2005, but the figures will not be too far off adjusted for 2010.] You are saying $8-$10K a month expenses is a norm?
No, I meant gross expenses where tax is counted as an expense. $8-10K go out of pocket where average 2-3K goes to feed the government beast. This includes corporate income taxes, which are around $2k/month. So our expenses monthly are anywhere from $5-6K, which, for a family of 4 and a mini-zoo of animals is not bad. Of course I realize I am in the top whatever. But I don't need to feel guilty about that.
Even trying to generate 60k on a 100k might seem impossible when you look at it- but as a day trader you get 4 times leverage so how about 60k on 400k buying power (15% annual return)-now is that reasonable?? IF it were an "easy" way out I am sure a lot of people have/had at least 100k or more in their home equity/networth accounts and would be very happy to take 60k each year and not reply on a regular job. LVS dropped almost 6% from yesterday to todays bottom or look at SPG -thats the skill you are looking for-watching the right stocks at right time.
Possible? Yes. Probable? No. A good day trader can easily pull down 500 bucks a day, especially if volume and volatility are high...just catch half a point on 1000 shares. Every day 100s of stocks move a point or more, just gotta find one. That'd work out to 10k a month. Few stocks require more than 100k in buying power to get 1000 shares. Of course, if you're wrong a few times it adds up fast. Lose 500 one day and the next day you need to make 1500 just to keep pace. Plus you need to factor in exchange fees, commissions, etc. 10k gross can turn into 0 net if you're banging in and out of tons of positions every day for a month. The guys who make real money typically use much more buying power. When you can help move prices you have a lot more opportunities in thinner stocks. You also don't have to catch huge moves to make decent money. Staying real small you just get pushed around a lot of the time.
Exactly. In the last two years, the TNA ETF (a 3X bull) has had a median of 6% difference between high and lows throughout the day. I believe you can surely find a few 3X ETFs that you can trade throughout the day for well more than half a point on 1000 shares. Am I insane? Anyway, I'll be paper trading for a month or so before I put real money on the line.
There are people with weird thinking processes everywhere... I knew one guy that liked Fords, Fords were the only car that deserved any reality in his thinking, the worst Ford was better than the best of anything else... one day I loaned him wifey's TBird and I led the way in my (muchly suspension-modified) Camaro. I took a turn that I knew the TBird could not do and he spun out... there was no other way to tell him anything... There is no sense telling them anything and if you did, they would say it was a fluke or whatever...
You're insane to think you're going to be right all the time. Even the best traders have what...60-70% win rate? Hold one bad position for too long and you can wipe out days worth of profits. It looks real easy...pull up almost any chart and it'll seem like you could have made a few thousand dollars trading it. Actually doing it is significantly more difficult.
The reality is that even if you could achieve the kind of returns you propose, that outlier event (as cliched as it sounds in this day at age to talk about)...whether it be an FOMC Announcement, some piece of new market legislation (outlawing shorts in financials), a "flash crash", quite literally anything and they occur at least once a year could literally knock you out. That's becoming more and more of an issue and I don't see that getting any better. Personally, I think these sort of discussions are about a decade late. The trading landscape (aside from the guys on the frontlines of HFT or really successful algorithmic traders) is completely barren. The volume speaks to it as does the overall malaise and apathy that I've seen on forums in recent years.