Day Trading

[riverbabe]

For those of us who indulge to some extent, and for those of us who do not, this was a fascinating (to me) article in yesterday's paper. I thought it was right on the money.

http://www.nytimes.com/2010/03/28/business/28trader.html?adxnnl=1&dbk=&adxnnlx=1269875316-aPqLhSmtH0TqlM7zhqgnVQ

[billyjoe]

River,
Great article "80% of active traders lose money" and "only 1% of them are predictably profitable"

---------------billy

[riverbabe]

River,
Great article "80% of active traders lose money" and "only 1% of them are predictably profitable"

---------------billy

billy, pretty scary huh? But, I have found that it's mostly the commissions that kill you. I have consistently broken even or been ahead, but not enough to eke out a living. That's not good enough. Have to have enough money and margin to be able to buy 20,000 shares at a time like Lyehopper does to clear the big bucks. Takes steady nerves, guts, concentration, a positive outlook, and serenity when taking a loss. Notice that the one guy was sometimes clearing like $75 for a whole day's risk.

[skiracer]

billy, pretty scary huh? But, I have found that it's mostly the commissions that kill you. I have consistently broken even or been ahead, but not enough to eke out a living. That's not good enough. Have to have enough money and margin to be able to buy 20,000 shares at a time like Lyehopper does to clear the big bucks. Takes steady nerves, guts, concentration, a positive outlook, and serenity when taking a loss. Notice that the one guy was sometimes clearing like $75 for a whole day's risk.

i dont think that lye was disciplined enough. he spoke and wrote of his rules but he violated them on numerous occassions. i dont think it takes as much money as what lye was using coupled with his margin if you pick stocks within a specfic range say of $2 to $30. and im talking about trades of 3 to 10 days in duration. not exactly day trading. the day trading takes a commitment of being able to sit in front of your screens all day to be able to control the trade. when you do that you limit what other things you can accompolish or do during the day so then you have to make a reasonable amount per hr/per day to make that living. it becomes more like work under those circumstances. whereas the swing trades dont require the commitment of watching the trade all day long or even watching at all. you can still trade for a living or a supplemental living under much easier circumstances.

[billyjoe]

River,
I never traded more than a couple hundred shares of anything until meeting Ski and Lye. Now I'm doing 1000+ regularly and it's working. But, actually for longer time periods of a month to a year. Get a good core and solid businesses and most of the gamble is eliminated. Also a bit of luck helps.

-----------billy

[riverbabe]

i dont think that lye was disciplined enough. he spoke and wrote of his rules but he violated them on numerous occassions. i dont think it takes as much money as what lye was using coupled with his margin if you pick stocks within a specfic range say of $2 to $30. and im talking about trades of 3 to 10 days in duration. not exactly day trading. the day trading takes a commitment of being able to sit in front of your screens all day to be able to control the trade. when you do that you limit what other things you can accompolish or do during the day so then you have to make a reasonable amount per hr/per day to make that living. it becomes more like work under those circumstances. whereas the swing trades dont require the commitment of watching the trade all day long or even watching at all. you can still trade for a living or a supplemental living under much easier circumstances.

I also am much more comfortable with very short term and swing trading. With daytrading, you can't really make more than 3 round trips and keep the concentration. Theoretically, you should be able to make enough in the first hour and have the rest of the day free. I've found that doing more than that invites losing trades. One of the instructors for AAII seminars only day trades the first and last hours of the day. Makes sense, because that's when you get the most volatility.

I decided trading ES minis was not for me, mostly because in the course we were supposed to be taking the same trades as the live instructor, but there was a few second time lag in transmission. I finally got out before I lost too much because I saw the writing on the wall.

[Invested Central]

Point to keep in mind: the article did a poor job of explaining that day-traders of the past have now evolved. The term is anachronistic if not entirely irrelevant. We'll stick to swing- and short-term trading and keep those commissions in check while also taking some of Wall Street's robo-advantage out of the equation.

[riverbabe]

Hello

Point to keep in mind: the article did a poor job of explaining that day-traders of the past have now evolved. The term is anachronistic if not entirely irrelevant. We'll stick to swing- and short-term trading and keep those commissions in check while also taking some of Wall Street's robo-advantage out of the equation.

Hello Invested Central, thank you for your comments. Have seen the robos in action. Thank you for your free (if belated) charts.

FYI, I am short THOR and watching and waiting confidently...(with all fingers crossed)...my virgin IC trade. Riverbabe1

[IIC]

I hardly think one has to trade 20,000 shares a pop to do well...Doug

[riverbabe]

I hardly think one has to trade 20,000 shares a pop to do well...Doug

Lye was making upwards of $2000 per day and juggling millions every day. Now that I aspire to, altho a little nervous. He hasn't been around lately. Don't know what he is doing except maybe building his business back.

[IIC]

I'd recommend setting your intial goal at less than that...say $500 day.

I don't set a dollar amount goal though...Much of what I do is based on what the market and/or groups are doing...Some days are good for my style and some days are not good. Worst thing to do is make up a trade in one's own mind just for the sake of trading.

Also, primarily what I do is scalping...Not the same thing as daytrading.

I've taken it a little slow the past 2 weeks...only made 3 trades today...But normally I make about 8 trades a day...sometimes more sometimes less...But over 12 in a day is a little much for me.

Now, lets take a hypothetical scenario...

8 trades at 2,000 shs each w/ an average of 8 cents a sh gain on each trade.

That's +1,280.00 minus r/t commish of 80.00 = $1,200.00. Then you gotta deduct a couple bucks a trade for fees.

One also needs to love to sit there and stare at charts and action..Could sit there for a couple hours and never find a trade...I take a lot of breaks tho...and invariably that's when most moves happen...lol.

I classify my trades into 3 categories:

1) No Brainers
2) Technically Correct
3) Anticipation

imo...one should avoid "Anticpation" trades...But I'm guilty sometimes I'll admit...But they rarely work.

No Brainers which I've explained before are great...problem is they don't happen that often and many times when they happen I'm not prepared.

So most of my trades are from #2...Biggest problem there is admitting to yourself when it isn't gonna work and just get the heck out asap.

Best, Doug

[IIC]

Belaruski...Day trading is work...But I'd also say unlike many jobs, one must love the work to do well...Doug

[riverbabe]

That is an enlightening analysis Doug. You obviously have thought this through and are very comfortable with what you are doing. And you are successful at it. I have admired your trading for a long time.

It is hard work keeping mentally alert, sitting in front of those screens. Not panicking when the trade goes against you in a hurry. It takes a certain kind of confidence to do it full time, I think.

I know you trade the Q's, but you also scalp stocks. Other than your chat room, what do you use as news sources while trading? I guess a better question might be, do you know what you will be watching for scalp trades on a given day ahead of the bell? Do you watch the AH and PM for specific stocks? I guess I'm just curious about how you find your trade possibilities.

[IIC]

That is an enlightening analysis Doug. You obviously have thought this through and are very comfortable with what you are doing. And you are successful at it. I have admired your trading for a long time.

It is hard work keeping mentally alert, sitting in front of those screens. Not panicking when the trade goes against you in a hurry. It takes a certain kind of confidence to do it full time, I think.

I know you trade the Q's, but you also scalp stocks. Other than your chat room, what do you use as news sources while trading? I guess a better question might be, do you know what you will be watching for scalp trades on a given day ahead of the bell? Do you watch the AH and PM for specific stocks? I guess I'm just curious about how you find your trade possibilities.

I don't read news as much as I used to. I have Yahoo, DJN and newsflasher on but just in case I wanna look something up or I'm bored...I also have some Twitter newsfeeds.

Today I didn't see the OSTK report when it came out but I got a tip at the chat and was able to pick off +.97. Making that much on one trade is very rare for me tho.

Sometimes I watch A/H but I do not make watchlists the night before...I watch pre-m movers and breeze thru news but mostly I run scans about 20 to 30 mins after the mkt opens...I rarely trade the first 1/2 hour.

During the day I also run some scans.

Scans may include Hi Volume Movers vs ADV, SP 500 Vol. Movers...A lengthy technical scan I wrote and some days I run RealTime MoMo scans which have the same criteria as my Today's MoMo list. I do not use the eod Today's MoMo for ideas unless I see something that just jumps outta my monitor at me...I have other technical scans that I run sometimes.

But on flat or up days I find a lot of ideas from the Realtime Group action...I watch the T&S of maybe 15 of top group's movers and I choose several to concentrate on with charts(Invariably I never choose the best ones...lol)...Then I watch the group(s) 1 min chart...I have a number of favorite group components already in streamer folders e.g. Coal, Steel, Apparel, SOX and others.

Besides my chat I also administor another chat where I get some ideas...However, it is not in English and not public.

So basically...I'm a scavenger...And if all else fails...I watch the Q's.

That's it in a nutshell altho I'm sure I'll think of something I forgot after I post...Best, Doug

[riverbabe]

Thank you Doug!!!

Folks, there you have it from an expert. His philosophy and how he does it. Read and learn and digest!!

He is some trader! Doug, maybe you should write a best seller.

Again, thank you for sharing with us all. And have a Happy Easter.

The weather here on the north coast is superb right now. Makes me think of (and remember) the cool ocean breezes in LA. River