Make no mistake...daytrading is where its at...

Discussion in 'Professional Trading' started by Port1385, Apr 4, 2009.

  1. Every time I have taken a position in a stock, I have to wait and wait to see where it goes. Despite all of the analysis...sometimes it all turns out to be wrong and I am saddled with losses. The conventional wisdom out there is that the majority of people who daytrade do not make money. Daytrading is sinful, for losers and anything else is better....

    However, the most money I have made in the markets is through daytrading (combined with careful use of risk management and the beloved stop/loss). After long sessions of staring at a screen, the moves in price become a no-brainer. Price seems to follow trend lines and conventional patterns until they dont. When they dont, then you just rely on the stop/loss.

    For many people, position or swing trading is where its at. I dont make any money off of that type of trading. Trading on the day where my money is in hand by day's end is how I make my profit.

    While you will read about amazing trades on ET and other blogs of great position trading, its what you dont read that you should carefully consider. Many authors of message threads and blogs will never reveal their losing trades. Sometimes you may see me make some awful calls and I look as if I am the worst trader out there. The reality is that I publish what I feel no matter the case. Other bloggers will simply only reveal winning trades.

    Daytrading is a forte for myself, however. I dont believe money can be made over the long-term through position trading or buy/hold. There may come a day some 10 years from now when it will be back, but trading on the day where cash is in your hands at the end is where its at...
  2. Buy and hold is a risk never worth taking except for maybe very depressed stocks with increasing earnings.
  3. I do think buy and hold is a very good strategy at the right time and place and with certain companies. For example, Walmart during the 70s. Microsoft during the 80s-90s...

    I do believe buy and hold will be back in about 8-10 years or so.

    Its horrible to think all of those who bought and hold Citi or AIG. Both seemed like great companies that were unsinkable. The people who were buying and holding those companies were not speculators, but retirees and other such wholesome people.

    Its a shame it had to be this way IMHO...

  4. Day trading comes from 2 simple mentalities:

    Irrational fear of overnight
    Desire for "fast money"

    Since anybody who has ever followed any market intraday knows that a particular financial instrument will have a thousand mini trends in one day. A predictive reaction would be to try to exploit them all or most of them.

    The problem with day trading is that 6 months charts still "spill over" into intra day. If a financial instrument is "doomed" a person sitting looking at a 1/3/5 min chart will not have a warning. In essence you still have to understand what is going on "up there".

    There are 2 issues with time scale in the financial markets: the longer the time frame the harder it is to predict what is going to happen and the higher chance of things changing in a major way. On the other hand, going intraday increases the risk from randomness and "spill over". So my opinion of the "golden timeframe" is >1 day to two weeks.
  5. Eight


    Mathematically speaking, daytrading is best. Develop a trading strategy that works on all timeframes even if it's only theoretical. Assume it captures one third of every bar on the chart or something. You will find that it will make more money the faster you run it right up to the point where it is going too fast for the internet latency, slippage and commish...

    Buy and hold has to be done so infrequently it's only for a retirement program for somebody that starts young. You buy only when indexes are below their 200 week sma and you buy US issues that are rock solid, paying dividends, etc... at that point you are buying issues that are depressed more than they would be on their own merits, the overall market is pushing them down. When the market rebounds they will slingshot upwards. What you are gambling on is that the American economy will eventually grow some more. That has always worked and it is the only strategy a young worker needs to retire in good shape, at least in the past. Essentially you are buying the dips and only have to be buying a few times in your life.

    In the current situation I am holding off because I'm really not sure at all the economy is going to come back in any meaningful way this time, the situation is unprecedented. We could go into decades of nothing where farming is the best industry or something like that...
  6. The problem with day trading is that 6 months charts still "spill over" into intra day. If a financial instrument is "doomed" a person sitting looking at a 1/3/5 min chart will not have a warning. In essence you still have to understand what is going on "up there".

    I get the distinct impression that you don't know how to daytrade.
  7. I get the distinct impression you are a moron. This just highlights the value of posts like the one directly above this one.
  8. I am a pure day trader myself. It started a few years back after one day I decided to short RMBS, 500 shares and the very next morning it gapped up $10 on me. Losing $5000 overnight is really painful.

    Paranoid about gaps? Think it will not happen to you? How about RIMM gapping to 60 from 45 yesterday? The same stock gapped down huge the last quarter. If you are in the right direction, that's super great. But there's always the other half. (Okay maybe a lot less shorts than longs.)

    Another reason: I make most of my winning trading the opening. Typically playing the price reversals. I need high impact. Fast. I need all my trading power. Reserving my cash gives me 4:1 margin. If I hold any position overnight, it will reduce my capability.

    But swing trading would work beautifully sometimes. Such as the recently, month-long rally from the dead. So I think we shouldn't shunt those opportunities. I might go back.

    Buy and hold is really hard with this market. The thing is: people are eager to buy when the trend is half way down. When the price finally bottoms out, they have no more money. Maybe they do, and average down. Then when the price goes back up, all they want is to break even. Unless you do the dollar cost averaging: you buy stock X every month regardless of price for a certain dollar amount and be "in for the long term". And in case you have been dollar cost averaging for C, WFC, BAC, etc... you know how that goes...

  9. I hate to bring this up but if you are afraid of gaps, they are more common intraday than outside of it...
  10. There's no ideal golden time frame for trading. Some succeed at day trading. Some succeed at swing trading. And in the past year, few have succeeded with buy and hold.

    The trick is to find what works for you.
    #10     Apr 4, 2009