Seems liks day trading is all but finished!

acrary · Mar 3, 2003

Quote from IndexTrader:

Is this type of approach profitable in choppy conditions or can it still be profitable in the occasional 2-3 day trends that rarely show up?
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No, it's a daytrading edge only. I don't have anything that does swing trading.

Prosperous · Mar 3, 2003

Quote from daniel_m:

daytrading has never been, except for a couple, few glorious years, able to offer very much more than the equivalent of a well paying job. if that's all one wants out of trading then that's fine. there's no doubt, however, that the big money -- and a few hundred K, make no mistake, is NOT 'big money' -- is made in the long terms.
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I've been daytrading for several years (S&P) and my personal experience tells me that very few "salaried" people net what I do yearly. I know doing in the high 6 figures daytrading is realistic on a consistent basis.

I believe it requires 2 things:
1- the right system
2-the discipline to follow it without exception

Just like "Life" trading is a very individual experience!

Trend Fader · Mar 3, 2003

Prosperous..

Please tell us a little about your system....

BCE · Mar 3, 2003

Quote from Hamlet:
Looks like Alan took the postings here on this thread and turned it into an article.

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Thanks Hamlet Certainly does sound like he read this thread and maybe he did. BTW the link only works if you're a subscriber.

slapshot · Mar 3, 2003

Quote from Hamlet:

Looks like Alan took the postings here on this thread and turned it into an article.

By Alan Farley
Special to RealMoney.com
03/03/2003 11:56 AM EST
Click here for more stories by Alan Farley

It's Friday night, and we're headed over to the Trader's Bar. After a tough week, two veterans are pounding back some brews. Let's listen in on their conversation.

--------------------------------------------------------------------------------

Gunslinger: This is a great market. Trading has always been tough, or everyone would be doing it. Listen, you can complain all you want, but I've never had another career where I could make money sitting in my pajamas, looking at a bunch of numbers. I trade when I want, the markets I want, and the hours I want. Can't beat that.

Market Mensch: The only way I can make money in this lousy market is to hold on for dear life and hope I get my move. Most of the time, I give back every penny I make, because it's so unpredictable. The charts are worthless, and the [expletive] market makers got us down to a science. They know exactly where we'll go short or go long. They tease us with a little profit, and then rip us to shreds.

Gunslinger: Everyone complains this market is the hardest one ever, and they all wish things would go back to the good old days. But they said the same thing when the market was really hot. Guess what? It's always hard. Get used to it.

Market Mensch: Hey, if you're getting better while the market is getting worse, more power to you. But don't say this market is getting better and that anyone who's struggling just can't cut it. Traders as a group are doing worse now than they did in the past. Just look at the lousy volume. It tells us the troubled times we're living in, brother. So please, be realistic!

Gunslinger: Trading is getting better and better for me, so it must be your perception that things are getting worse. How well you do depends on your skills and how you look at your trades. If you keep a clear head these days, you can still make a fortune. I'm so sick of traders complaining about the war, the hedgies and the specialists. Look in the mirror if you want to find the real culprit.

Market Mensch: Hey, who's whining now? I'm just asking you to be realistic. It's a fact of life the majority of traders are losing money in this market. So it's stupid for you to say it's just my perception that things are getting worse.

Gunslinger: Somebody's making money in this market. Listen, we all know it was a gravy train in the late '90s. Traders got used to the easy money, and now they're all looking for a plan that works. Excuse me if I don't shed a tear. You have to adapt to changing markets to make a living over the long haul. I tweak my system at least two or three times a year to stay ahead of things. It's the only way I know to survive.

Market Mensch: An old pro told me about traders who would break down and cry at their desks during the 1974 bear market. And this bear market is a lot tougher than that one. We just went through the biggest crash since 1929, and it'll be years before the money comes back. I suppose the good thing is someday it will come back, but I'm not sure I can last that long.

Gunslinger: Good traders will change their styles and methods to accommodate the market and adjust to it. Fools who play the blame game will wash out and go away. This market isn't too tough to trade -- it's just different. Admit it. You need to change in order to survive. Find out what works and stop blaming the market.

Market Mensch: Even my best trades turn my stomach these days. My timing is always off, and I sit through a thousand paper cuts before I make a penny. I feel like a masochist if I widen my stops, because I know they're going to get hit. It seems like getting stopped out has become more painful than it ever was. Hey, I know I'm supposed to step aside when things get rough and wait for the markets to come to me. But waiting for better days and skipping the bad ones means never trading at all.

Gunslinger: Most traders are too stubborn or too unwilling to adapt to market conditions as they really are. But they'll fail over time anyway, so who cares about them? I'm sure about one thing. If you say the market is too hard to trade, it will be, because it becomes a self-fulfilling prophecy. Your mind-set will ultimately dictate your reality and trading results. So clear your head and get on with it.

Market Mensch: I trade over a dozen systems, and they're all losing money this year. The problem is no one is in a big rush to buy or sell anymore. That screws up all my breakout and trending strategies. They're totally useless, and even dangerous, in this lousy market. You can keep up the sales pitch all you want, but finding something that works right now is a major challenge.

Gunslinger: Can't you see it's the same cycle over again and again? Traders who make the big money start to lose their shirts. They step aside, and the newbies come pouring in. They win for a while and think they're hot stuff. Then they get crushed and are forced to quit. An efficient market forces the majority to lose over time. Real winners know why they win, while fake winners don't realize the market casino is setting them up for the big fall. That's the way it is, and the way it's always been. Deal with it.

Market Mensch: You made some good points, but I'm still skeptical. I guess it's back to the drawing board for me. One thing we both share is our love of the game. The market keeps drawing us back even when we get pounded. I'll bet you can't survive if you don't love it. You're right about one thing: I've heard about markets like this one many times in the past. They usually change just when the losers say it'll never change. I'm going to hang in there and stop complaining, at least for now.

Want another beer, dude?

http://www.thestreet.com/p/rmoney/theswingshift/10071655.html
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This is absolutely hysterical

Thanks!!!!!!

Paul

hardrightedge · Mar 3, 2003

I thought the interchange summed up the great debate among traders these days. The column memorialized the debate. I found it fascinating. It is a fictionalized piece though, for the most part.

onelot · Mar 3, 2003

Quote from acrary:

From a numbers standpoint, the daytrading range (high - low) for the SP market is averaging 16.6 pts. this year. This is the lowest range since 1997 (13.8) and is 17% lower than last year (20.0).

The two day range (in at todays high or low and out at tomorrow's low or high), has declined by 20.5% from last year (23.8 vs 29.9). Again, it's the lowest since 1997 (21.0).

The followthough ratio (2 day range versus today's range), is at it's lowest level since 1985. (23.8/16.6 = 1.43 vs 2.7/1.9 = 1.42).
Last year it was 1.495 (29.9/20 = 1.495).

The number of trend days (open near high or low and close near low or high), has declined from 10 during the first two months of last year to 6 for this year.

The decline in opportunity seems to be just a statement of observation. Not a statement of perception.

My own plan for March has changed to increase size and shorten my timeframe to 1-2 hours instead of all day (until the followthrough improves).
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i'm wondering if it's meaningul to take a look at the daily range with respect to price levels. for instance, can a 20 point range at current price levels be directly compared to a 20 point range at price levels in 2000. or, would it be more meaningful to look at the range as a percentage move in relation to price, and then draw conclusions from there.

if the ranges, in percentage terms were similar. then one might just increase size like you mentioned earlier. it seems as if the same conclusion are drawn, anyway though. Just a thought.

onelot

rtharp · Mar 3, 2003

Quote from WinSum:

Jeff,

What is the web page to subscribe to the NYSE Open Book service?

Also, I thought only the Specialist can see their Order Book and they do not show it to anyone. It is one of their special privileges for making the market. Is that no longer true ?

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Open book is available through many different vendors

http://nysedata.com/OpenBook/

see above link for more info

The data has been available for over a year now. Neither market orders stops, nor is what the crowd near the specialist post is doing are available. Open Book is 10 seconds delayed

It is possible though that the $2 brokers can walk up to a specialist and do a "look" They can report back to traders what the floor brokers are doing, where the stops are and what type of action is happening.

rtharp · Mar 3, 2003

Quote from onelot:

i'm wondering if it's meaningul to take a look at the daily range with respect to price levels. for instance, can a 20 point range at current price levels be directly compared to a 20 point range at price levels in 2000. or, would it be more meaningful to look at the range as a percentage move in relation to price, and then draw conclusions from there.

if the ranges, in percentage terms were similar. then one might just increase size like you mentioned earlier. it seems as if the same conclusion are drawn, anyway though. Just a thought.

onelot
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Problem is it's usually easy to get in and out of 500 shares.

The liquidity to get out of 5000 shares isn't always available in a lot of stocks at certain levels.

GreenDog · Mar 3, 2003

Quote from acrary:

My own plan for March has changed to increase size and shorten my timeframe to 1-2 hours instead of all day (until the followthrough improves).
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acrary:

I have done the same. Early in the year I had actually reduced my position size due to the "chop." This seemed the logical thing to do in order to protect a nice equity curve. I'm now back to my original position sizes (5-15K shares on the QQQ) and have drastically reduced my timeframe. The results have been very pleasing.

dog