"Bulls May Hear The Call" AKA "The Losses Will Be Washed"
Q: If you are really daytrading, using some strategy like this, the typical pattern is to "get lucky" for a while, think that you've got the game "beat", then "all of sudden", hit an "unexpected" series of big losers that wipe you out. For real-life examples, read this group, particularly around early 2000, back when there were still a few deluded but HONEST posters.
A:
You had mentioned the feasibility of daytrading. Until a couple of years
ago, daytrading stocks for retail customers did not work. Period. I think
we can all agree on that, but over the course of the last 125 years, it has
worked for some people. These were men who paid hundreds of thousands of
dollars for a daytrader's seat on the Big
doing it because the prices for such seats have only gone up. Obviously,
these guys have had many advantages that retail customers did not. My
guess is they also had access to the specialists' books in exchange for a
"shmear."
That has all changed. We have Level II quotes, we have the specialists'
books online, we have competitive market places and we have half penny per
share commission rates. Make no mistake, daytrading is not for most people
and is particularly not for people who work for others. It's work. It is not
very hard work, but it is time consuming and tension packed. You also need a
great deal of money backing you up, as in any other business. I think a
minimum of $50K in disposable capital (emphasis on "disposable") should be
considered.
I've been doing it on and off for over twenty-five years, and I have been
trading securities since the late 1960s. First I daytraded commodities
starting in the early 1980s because the ratio of expected gain vs. trading
costs was much higher than for stocks. When commodities began trading 24x5,
it became a situation of data overload and I couldn't handle it, so I
returned to my day job of software consulting. Last year I discovered
Interactive Brokers and I had an opportunity of deploying my commodity
methods on stocks. All I wish to tell you is that it works. I make as much
money daytrading as I did as a software consultant. With so much of my work
getting outsourced to India and Russia nowadays, I now make more daytrading
than I can as a software consultant, given today's labor rates for software.
There is a great deal of skepticism and overall bad-mouthing of daytrading.
That's the way of Wall Street. The Street is filled with promoters and
naysayer. The same people who warned the public against daytrading warned
the public that GOOG was priced too high in its initial Dutch auction. They
are also the same people that wanted us to buy CIEN and SCMR in 1999. I
will only add that yes, daytrading works, but you need the temperament and
the confidence that your methods work. In short, when you place your first
orders for the day at 9:30, you should repeat to yourself the Tug McGraw
maxim, "You gotta believe." And make sure you have money to pay the
mortgage.
Nah, more like $100K+, we're now into the crux of the matter here...all
of the failed day-traders here were trading something like $20,000 trying
to make $200 a day trading a single stock they "specialized in" or something
like that, and eventually wound up losing so much of their "capital" they
had to get a job doing God knows what (most began day-trading when
they got canned from a so-called "good" job).
Yeah, and as another reference to "New Market Wizards", note how
many of the "traders" in the book were not only commodity traders, but
they actively HATED the stock market, which they considered to be
PURE INSANITY...and I know exactly where they're coming from,
even though I started off trading stocks. Stock trading IS nutz...