Author Topic: Day trading VTI during these large swings, and switching VTSAX to VTI  (Read 2620 times)

whereareweallgoing?

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Hello all.  With the wild swings happening on an almost daily basis, I was wondering why not day trade VTI?  If the price is swinging an average of $10 every couple days, and I want to buy VTI or VTSAX anyway, why not day trade VTI?  If I don't win on the swings happening every couple days, I still own some VTI at these good prices.

Related to that, I already have VTSAX and am debating exchanging it for VTI so I can day trade it.  Pro's and con's of switching vtsax to vti?  How do I avoid losses on the bid/ask spread and its volatility? 

Thanks!!!
« Last Edit: March 17, 2020, 11:02:09 AM by whereareweallgoing? »

TheAnonOne

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Re: Day trading VTI
« Reply #1 on: March 17, 2020, 10:59:25 AM »
That's kind of the antithesis to this board.

That being said, if you do it, you could still incur large losses by missing swings, owning it at "good" prices is not that useful if you trade away 10% of your capital a few times.

rationality

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Re: Day trading VTI during these large swings, and switching VTSAX to VTI
« Reply #2 on: April 23, 2020, 12:34:22 PM »
you are going to lose some money, there is no way to avoid it. I would not recommend doing it, it's not profitable at all. It won't work, everything is not so simple as you think. Making money on trading is not easy at all, mate. I would recommend you reading some books and watching some tutorials about trading and investing. Listen to some smart people that are successful. By the way, if you want to make real money, the best place where you can do it is Fondex ETFs Trade. I am working on it for a couple of years and it brings me a lot of profit. Moreover, there are some really low commissions and full transparency
« Last Edit: April 30, 2020, 02:28:13 AM by rationality »

BicycleB

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Re: Day trading VTI during these large swings, and switching VTSAX to VTI
« Reply #3 on: April 23, 2020, 12:51:37 PM »
Not many traders here. I have no advice on this topic, besides do something else instead - something productive.

Why not day trade? Because:
1. Frequent trades cost money.
2. The other players have an edge, that makes you the sucker.
3. Your odds of coming out ahead are better from not trading.
4. If you invest in a stable long term way with few trades, you have more time for other things.
5. "Other things" could be earning money, developing valuable job skills, improving daily efficiency/thrift, building muscles/endurance, etc - stuff that is guaranteed to put you $ ahead.
« Last Edit: April 23, 2020, 02:53:58 PM by BicycleB »

magnet18

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Re: Day trading VTI during these large swings, and switching VTSAX to VTI
« Reply #4 on: April 23, 2020, 02:46:13 PM »
Sounds like a day trading strategy that a computer could automatically do for you and make easy profit.

To me that is a 100% guarantee it won't work


But we'd love to see the experiment play out, please post your trades, and let us know how long it takes for all your money to be either locked in the market, waiting for it to come up, or locked out of the market, waiting for it to come down :)

MustacheAndaHalf

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Re: Day trading VTI during these large swings, and switching VTSAX to VTI
« Reply #5 on: April 24, 2020, 03:04:55 AM »
1. Frequent trades cost money.
I agree with 4 out of 5 points, but hope you can explain this one more.

For VTI in particular, there is an illusory bid-ask spread of $0.01, but all trades happen exactly in the middle.  The bid-ask costs nothing (for VTI only - not in general), and Vanguard ETFs cost $0/trade at Vanguard, so it's my impression that frequent trades of VTI do not cost money.


whereareweallgoing - What advantage do you have over other investors?

Just because markets are volatile doesn't make it profitable to day trade.  If you time it wrong consistently, you can lose more.

johndoe

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Re: Day trading VTI during these large swings, and switching VTSAX to VTI
« Reply #6 on: April 24, 2020, 04:55:53 AM »
As a disclaimer I know nothing about day trading.

I've had similar thoughts; if a person has cash on sidelines and the fund is something in their portfolio anyway, what's the big drawback?  For instance I think SPY is going to bounce around so I buy shares and set sell limit order (to take small profit) , never selling at loss.  It's a fund I'm holding anyway.  I totally agree about computers and professionals beating me, but it allows me to watch the ebbs and flows with more interest.  Probably at the end the moral is "the gains aren't worth the time required" and maybe that makes it worthwhile.

BicycleB

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Re: Day trading VTI during these large swings, and switching VTSAX to VTI
« Reply #7 on: April 24, 2020, 06:32:11 AM »
1. Frequent trades cost money.
I agree with 4 out of 5 points, but hope you can explain this one more.

For VTI in particular, there is an illusory bid-ask spread of $0.01, but all trades happen exactly in the middle.  The bid-ask costs nothing (for VTI only - not in general), and Vanguard ETFs cost $0/trade at Vanguard, so it's my impression that frequent trades of VTI do not cost money.


I meant it as a generality. In my primitive mind, electronic front running by high frequency traders is a risk, as are "costs that are unknown now just as HFT was unknown when it was first practiced". Perhaps Vanguard's trustworthy in-house techniques or some other factor eliminate all those risks. IMHO time spent trading is also a cost, even if the financial cost is zero.

My thought process wasn't about specific transactions. The OP is new to investing, so the general risks are important in forming his habits. My view is that he is better off indexing, not searching for individual stocks, in order to use his energy productively for earning instead of wasting it in the illusion that trading is likely to help him any time soon.

You might be right that there are a few transactions where the financial costs are technically zero though!
« Last Edit: April 24, 2020, 06:33:47 AM by BicycleB »

MustacheAndaHalf

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Re: Day trading VTI during these large swings, and switching VTSAX to VTI
« Reply #8 on: April 25, 2020, 01:50:28 AM »
BicycleB - Okay, so to the general point, I agree.  Only the most liquid ETFs have 0.01 bid-ask spreads that trade in the middle.  Most ETFs have much wider bid-ask spreads, and OP would pay that price every time they do a round trip (buy - sell - buy), and those round trips are the whole point of day trading.


johndoe - Markets tend to go up.  Your example hits trouble if you show what happens in more than one trade.  If you profit +2% off a limit sale, what do you do if markets keep going up?   If markets are up +3% since you sold, you will purchase ~3% fewer shares than if you had held on to those shares.  If you refuse to accept the loss, markets could keep going up while you wait in cash...  you wind up with a smaller portfolio because you missed the chance to be invested.

johndoe

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Re: Day trading VTI during these large swings, and switching VTSAX to VTI
« Reply #9 on: April 25, 2020, 07:54:40 AM »
johndoe - Markets tend to go up.  Your example hits trouble if you show what happens in more than one trade.  If you profit +2% off a limit sale, what do you do if markets keep going up?   If markets are up +3% since you sold, you will purchase ~3% fewer shares than if you had held on to those shares.  If you refuse to accept the loss, markets could keep going up while you wait in cash...  you wind up with a smaller portfolio because you missed the chance to be invested.

If it went up another 3% I'd be happy about that portion of my portfolio :)  I'm something like 60% stocks, 20% bonds, 20% cash (which was previously stocks).  I don't know enough about economics / this virus to have valid opinions, but having 20% cash makes me feel better (in case we haven't hit bottom yet- and maybe that happens more than six months from now).  Regardless what happens I won't touch the portion currently in stocks+bonds (and that keeps getting monthly contributions) as I have ~20 years until retirement.  I have no defined plan for when to move the cash back to stocks long term.  A lot of my cash is in a Roth IRA >$25k so I can day trade without penalty.  I figured this might be an interesting time to dabble (and maybe worst case teach myself to just go back to entirely passive accounts).  I've messed with the (+/-) 3x ETFs ... probably not worth the stress haha; that's why I'm curious about short term use of things I hold long-term anyway (i.e. SPY, TLT, maybe even some GLD).

Looking at your post history you clearly know more about this than me; I'd be happy to hear your thoughts.

MustacheAndaHalf

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Re: Day trading VTI during these large swings, and switching VTSAX to VTI
« Reply #10 on: April 25, 2020, 09:51:19 PM »
johndoe - ... If markets are up +3% since you sold, you will purchase ~3% fewer shares than if you had held on to those shares.  If you refuse to accept the loss, markets could keep going up while you wait in cash...

If it went up another 3% I'd be happy about that portion of my portfolio :)  ...
I have no defined plan for when to move the cash back to stocks long term. ...
I figured this might be an interesting time to dabble (and maybe worst case teach myself to just go back to entirely passive accounts) ...
Looking at your post history you clearly know more about this than me; I'd be happy to hear your thoughts.
Yes, for your non-market timing equities, it's +3%.  But to know if the market timing worked, wouldn't you need to focus on just the money used for market timing?

My worst market timing was driven by greed without data.  On March 9-10 I sold equities when markets priced in COVID-19 as a mild problem for U.S. markets.  But I spoiled that experiment by introducing long-term bonds and gold, instead of sticking purely with cash - that would have been more focused.

I recommend measuring market timing against a benchmark, like the S&P 500 ("VOO") or total stock market ("VTI").  That way when your market timing experiment is in cash, you measure it against a market that tends to keep moving up.