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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Dragonstrike on September 23, 2016, 11:33:30 AM

Title: Is Day Trading Worth It?
Post by: Dragonstrike on September 23, 2016, 11:33:30 AM
Hey everyone.  I'm curious if anyone here has had any experience day trading?  And if so, what qualifications or requirements do you need to start?  ( i.e., schooling, trading platforms and software, starting funds, certifications, etc?)

I'm actively interested in running a compounding interest experiment, though it may seem volatile to others, but I figured what the hell, I might as well try.  We've all seen that article that asks "What to do with $1000 on hand?", and granted there is a lot you can do with that.  I've also heard the compounding interest story since I was a little kid: "Choose one option: $1000 a day for 31 days, or you get a penny which doubles in amount every day after that until the 31st day.  Which would you choose?  Well the penny, because it would be $10 million on a 100% return."

Doing the math on something more feasible, if you started with the 13th day, which would be about $1500 (a reasonable investment amount), and were able to get a 25-50% return (yes, pretty high and possibly unachievable) just 13-18 times, you could have a portfolio worth close to a million dollars. 

Is this feasible?  Yes, but not unless I do a lot of research and understand the risks, true costs per trades, etc.

I figured I'd rather try then not, so to everyone here, what's your advice (positive advice) and knowledge? I'm happy to hear everyone's thoughts on the challenge.
Title: Re: Is Day Trading Worth It?
Post by: pbkmaine on September 23, 2016, 11:51:40 AM
Well, I know a lot of poor people who used to be day traders, and a lot of rich people who invest in index funds.
Title: Re: Is Day Trading Worth It?
Post by: tyort1 on September 23, 2016, 12:00:42 PM
Well, I know a lot of poor people who used to be day traders, and a lot of rich people who invest in index funds.

Day trading is gambling.  And for a lot of people it's addictive.  My advice is don't even start down that path. 
Title: Re: Is Day Trading Worth It?
Post by: dandarc on September 23, 2016, 12:08:32 PM
My favorite compounding interest experiment is a game I play on my phone called Tap Tycoon.  Try it, its fun and its free.
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on September 23, 2016, 12:30:42 PM
I did it starting with $1700 in a rollover 401K from a short time at a previous employer (really was don't care money).  I have grown that to ~$124,000 but it has taken 15 years, not 13 days or whatever.
Title: Re: Is Day Trading Worth It?
Post by: BigHaus89 on September 23, 2016, 01:07:13 PM
You need at least $25,000 and spend a LOT of time learning how to do it before even executing your first trade. And then you will likely lose quite a bit of money for a while before you even have a chance of coming out ahead.

TL/DR It is not worth it.
Title: Re: Is Day Trading Worth It?
Post by: Dragonstrike on September 23, 2016, 01:15:56 PM
I don't understand what you're proposing - and it's likely others don't as well.

What securities do you plan to day-trade?

How is the 100% return story relevant?

Do you expect to earn a 25-50% return in a day? 

Are you proposing doing some trial without using real money - like a simulation?

Like I said before, I'm mainly just getting people's knowledge about how to do it and best way to be educated on it.  Even if I do it on a virtual platform that is just a simulation it would be interesting to see if I can achieve it.  Not really educated yet on securities.

100% return story is the objective I want to try to achieve: not 100% per se, but just seeing if I can take a small investment and trade it to the point where I make the small returns, even over years time, to achieve the "1 penny to 1 million dollars" approach.  Again, sorry if I seem confusing.

I'm not expecting a return over a day.  This is the way I see it right now:  you have a stock pick that, when it's bought in volume say $1000 dollars worth, goes up marginally 5-15-25% whichever, and then sell it when it makes it that high.  That counts as a "day" to me, where I got the return back.  So on a good day or several days or weeks till it gets that return, $1000 becomes $1250, then compounds every time you get that set goal of return.  You theoretically have to do it "18 times" at that return rate, but of course there will be multiple trades made. 

I already have made several hundred dollars by switching my Vanguard Roth Fund to my settlement fund and back simply on the "sell high, buy low" approach.  I'm not expecting this to rake in a large amount of money in a short time, this is a long term approach that I will have trial and error in and may or may not have success at.  But like I said, it's worth a try.

Title: Re: Is Day Trading Worth It?
Post by: Dragonstrike on September 23, 2016, 01:17:22 PM
Isn't day trading how the brokerages make tons of money in fees?

Seems to me, the best way to make money off of day trading is to be the brokerage.

Case in point as to wanting to be educated about this:  can I day trade on my own time without certification and when I have a platform like TD Ameritrade or Optionshouse?  Or do you need at least a certain amount of funds to be able to trade?
Title: Re: Is Day Trading Worth It?
Post by: AdrianC on September 23, 2016, 01:42:02 PM
Try it in one of those trial fake accounts. Here's one:

http://www.optionsxpress.com/tools_research/virtual_trade.aspx

Hopefully you will lose the $25K fake money they give you and get it out of your system that way.
Title: Re: Is Day Trading Worth It?
Post by: trailcamaddict on September 23, 2016, 01:49:06 PM
I have traded options (spread trades) in the past.  Typically these were one to three month plays.  So not quite day trading but certainly not long term.  My experience was good financially, but stressful emotionally.  I started with approx. $3000 in actually trades (more in the account) and through the course of 12 trades (2 years) was looking at a profit of over $15,000.  I soon found that although I was coming out ahead I was getting more nervous at the prospect of losing a large amount of money with each subsequent trade.  To make a lot you typically need to risk a lot!  It was not worth the emotional stress for me. 

If you decide to go for it, I would suggest paper trading (fake trading) for many months before throwing real money out there.
Title: Re: Is Day Trading Worth It?
Post by: Dragonstrike on September 23, 2016, 02:02:16 PM
I will try the simulators you guys suggested as a start.  Again, not looking to go headfirst into this as a real thing until I have enough education to risk the first $1500 out of pocket.  Stock market game is fun of course.

And I completely agree with "safe and long term" versus "short and sweet".  I currently have VTSAX at $14,100, and will trade again back into the settlement fund when I feel it peaks at a high price again.  I only make like 2% from the trade alone, but it's more buying power that can add up over a year.  Goal is a safe 20% per year return from simple fund switching.

Besides that, I have $12k in my TSP which I move between G and S funds (DWCPF identifier on google finance).  Same strategy there. 

And I'm not looking for high volume trades.  I don't really ever want to risk things like Options or securities.  I just want to buy a set amount of stock, sell high and buy low with it: whether it's over the course of a day or week or month depending on the return. I was under the assumption that things like "scottstrade" or "Optionshouse" allowed for investors to do that, but if I'm wrong don't feel bad correcting me on that.

Otherwise, I'm pretty good right now where I am on investments, but I'm always trying to do more.  My wife and I just purchased our first 1 bed/1bath condo on Oahu, HI, for 312k, and with BAH from both of us being/going to be military we are hoping to pay that down considerably over 4 years before we move off island.  After that it's finding reliable tenants to pick up the costs of rent and us finding our next place to purchase. 
Title: Re: Is Day Trading Worth It?
Post by: sisto on September 23, 2016, 02:49:33 PM
Isn't day trading how the brokerages make tons of money in fees?

Seems to me, the best way to make money off of day trading is to be the brokerage.

^^^^This^^^^
Title: Re: Is Day Trading Worth It?
Post by: BigHaus89 on September 23, 2016, 02:50:24 PM
I will try the simulators you guys suggested as a start.  Again, not looking to go headfirst into this as a real thing until I have enough education to risk the first $1500 out of pocket.  Stock market game is fun of course.

And I completely agree with "safe and long term" versus "short and sweet".  I currently have VTSAX at $14,100, and will trade again back into the settlement fund when I feel it peaks at a high price again.  I only make like 2% from the trade alone, but it's more buying power that can add up over a year.  Goal is a safe 20% per year return from simple fund switching.

Besides that, I have $12k in my TSP which I move between G and S funds (DWCPF identifier on google finance).  Same strategy there. 

And I'm not looking for high volume trades.  I don't really ever want to risk things like Options or securities.  I just want to buy a set amount of stock, sell high and buy low with it: whether it's over the course of a day or week or month depending on the return. I was under the assumption that things like "scottstrade" or "Optionshouse" allowed for investors to do that, but if I'm wrong don't feel bad correcting me on that.

Otherwise, I'm pretty good right now where I am on investments, but I'm always trying to do more.  My wife and I just purchased our first 1 bed/1bath condo on Oahu, HI, for 312k, and with BAH from both of us being/going to be military we are hoping to pay that down considerably over 4 years before we move off island.  After that it's finding reliable tenants to pick up the costs of rent and us finding our next place to purchase.

Investopedia has a stock simulator that you can use. Day trading rules per the SEC is that you need $25,000 to open and close positions more than 3 times in one week. If you're wanting to play with trading, I recommend trying swing trading if you are intent on doing this.
Title: Re: Is Day Trading Worth It?
Post by: talltexan on September 23, 2016, 03:09:35 PM
Dragonstrike, you're describing activity that sounds like maintaining some balance in a set of individual stocks with a lot of attempts at buying low. A responsible way of doing this is probably something similar to dividend growth investing, wherein you commit a monthly/quarterly purchase to whichever out of your stocks is lowest in total position (as a way of artificially rebalancing). If you restrict your attention to dividend-payers, such as dogs-of-the-dow, you won't equal the return of the SP500, but you'll make some money over time while scratching the itch you describe.

Ford is a really good value today if you have $2,400-ish to get started. (disclosure: I am long in them, and expect I will be for some time)
Title: Re: Is Day Trading Worth It?
Post by: AlanStache on September 23, 2016, 03:11:21 PM
Also even if you do make money you need to figure out what you are making per hour, is your method worth the effort (time & stress) or would you do better getting a job at starbucks?  Yes I get how compounding interest works but even then you need a good bit of capital and good returns. 
Title: Re: Is Day Trading Worth It?
Post by: steveo on September 23, 2016, 04:26:05 PM
Well, I know a lot of poor people who used to be day traders, and a lot of rich people who invest in index funds.

This. To answer the question day trading isn't worth it.
Title: Re: Is Day Trading Worth It?
Post by: thunderball on September 23, 2016, 05:57:13 PM
OP, as someone who has been down that road, I can tell you it takes a very specific personality to be successful.  While you do need $25K+ once pegged as a Pattern Day Trader, you can trade leveraged instruments, such as futures and foreign currencies as much as you'd like.  The problem is if you don't know what you're doing you'll get your face ripped off, quickly. 

If you really want to get started, you MUST only risk a small amount of your capital, say 5%, and be prepared to have wild swings or possibly lose it all.  If you truly want an education, you might visit www.tastytrade.com, or Don Kaufman at TheoTrade.  These are all options guys that started with Thinkorswim, which is an amazing platform that is also free.

But daytrading overall?  Put it this way:  I've chased that dragon for 10+ years and ended up here (only recently).  Had I discovered the "simple math behind early retirement" back then....  My advice to my 37 year-old self would be to buy REITs, dividend-paying stocks, etc. and don't try to time the market.  My 2 pips, as we say in the forex community.



Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on September 23, 2016, 06:01:34 PM
You made me go look at the performance YTD of my trading account.

It is up about 101% this year and about 33% per year compounded over the past 15 years.

Debatable if it was worth it.   Had I started with more than $1700, then maybe.

It is starting to be worth it, if I make $30,000 a year trading on average.

Title: Re: Is Day Trading Worth It?
Post by: FB2020 on September 23, 2016, 06:42:09 PM
OP, as someone who has been down that road, I can tell you it takes a very specific personality to be successful.  While you do need $25K+ once pegged as a Pattern Day Trader, you can trade leveraged instruments, such as futures and foreign currencies as much as you'd like.  The problem is if you don't know what you're doing you'll get your face ripped off, quickly. 

If you really want to get started, you MUST only risk a small amount of your capital, say 5%, and be prepared to have wild swings or possibly lose it all.  If you truly want an education, you might visit www.tastytrade.com, or Don Kaufman at TheoTrade.  These are all options guys that started with Thinkorswim, which is an amazing platform that is also free.

But daytrading overall?  Put it this way:  I've chased that dragon for 10+ years and ended up here (only recently).  Had I discovered the "simple math behind early retirement" back then....  My advice to my 37 year-old self would be to buy REITs, dividend-paying stocks, etc. and don't try to time the market.  My 2 pips, as we say in the forex community.


Agree.. Consider learning about options and how to effectively sell them. I know people who make a living doing these, but you got to learn properly and do strong risk/money management.

These sites are a great starting point, google it and there are others. Ensure to paper trade initially until you're comfortable
Title: Re: Is Day Trading Worth It?
Post by: TomTX on September 24, 2016, 08:35:08 AM
Hey everyone.  I'm curious if anyone here has had any experience day trading?  And if so, what qualifications or requirements do you need to start?  ( i.e., schooling, trading platforms and software, starting funds, certifications, etc?)

I'm actively interested in running a compounding interest experiment, though it may seem volatile to others, but I figured what the hell, I might as well try.  We've all seen that article that asks "What to do with $1000 on hand?", and granted there is a lot you can do with that.  I've also heard the compounding interest story since I was a little kid: "Choose one option: $1000 a day for 31 days, or you get a penny which doubles in amount every day after that until the 31st day.  Which would you choose?  Well the penny, because it would be $10 million on a 100% return."

Doing the math on something more feasible, if you started with the 13th day, which would be about $1500 (a reasonable investment amount), and were able to get a 25-50% return (yes, pretty high and possibly unachievable) just 13-18 times, you could have a portfolio worth close to a million dollars. 

Is this feasible?  Yes, but not unless I do a lot of research and understand the risks, true costs per trades, etc.

I figured I'd rather try then not, so to everyone here, what's your advice (positive advice) and knowledge? I'm happy to hear everyone's thoughts on the challenge.

Day trading is dumb gambling in disguise.
Title: Re: Is Day Trading Worth It?
Post by: financialfreedomsloth on September 26, 2016, 01:17:12 AM
OP, as someone who has been down that road, I can tell you it takes a very specific personality to be successful.  While you do need $25K+ once pegged as a Pattern Day Trader, you can trade leveraged instruments, such as futures and foreign currencies as much as you'd like.  The problem is if you don't know what you're doing you'll get your face ripped off, quickly. 

If you really want to get started, you MUST only risk a small amount of your capital, say 5%, and be prepared to have wild swings or possibly lose it all.  If you truly want an education, you might visit www.tastytrade.com, or Don Kaufman at TheoTrade.  These are all options guys that started with Thinkorswim, which is an amazing platform that is also free.

But daytrading overall?  Put it this way:  I've chased that dragon for 10+ years and ended up here (only recently).  Had I discovered the "simple math behind early retirement" back then....  My advice to my 37 year-old self would be to buy REITs, dividend-paying stocks, etc. and don't try to time the market.  My 2 pips, as we say in the forex community.
This!

I dabbled a bit with it when I was home for a few months. Knew my limitations and yes did make a bit of money over three months. But daytrading is not a fun activity. Trust me in that. You have to be glued to your monitor for hours and when you are in the market, psychologically/emotionally it can be though. It requires a lot of discipline. When not to trade, but also when to trade and when to exit a position. Making money is a rush (which has his own dangers …) but being in a losing trade can be very unsettling.

I am pretty confident that with my current stash I could have made 2.000 euro a month consistently, but the thing is, I would have been working again. Not for a company but as a day trader for myself. And there was always the risk that the markets move against you for several months, perhaps even years.
So with FIRE in mind it was just a too high risk path and quite frankly, not a whole lot of fun. After a few months, when that rush of realizing that you actually can do it, and are actually pulling in money with trading it becomes a grind. A very boring grind sometimes or a very nerve wrecking grind at other times.

With my approach I went in and out a position about 4 or 5 times a day (which is very low for your typical daytrading guy) but even then: can you imagine sitting behind your monitor for hours on end, every day to do those trades? Some days I did 0 trades because I didn’t like how the market moved, but even then you have to pay attention to it …

And then there is the fact that you always, always have the feeling you leave money on the table: entered a trade to early (or to late), exit it too early (or too late), not entering a trade and then seeing it move up, and up. All those things have you thinking: could have made 20 usd more, or 50, or fuck: that is 500 usd I just missed. You have to A) learn from those to do better but B)also remember that nobody gets a bottom or high timed perfectly and trying to chase that last little bit just has you take on more and more risk which might cost you money also (should have exited earlier ..).

With a small amount it will not bring in that much (except if you leverage up in a big time, but expect to be wiped out sooner or later then) and with a bigger stash you can do other stuff that doesn’t require you to sit behind your computer for hours on end and also gets you a decent return. I went back to work and now do a few trades a year (like I did before). Less stress, the stash will continue to grow and I will end up with a much stable base to FIRE and freedom away from the desktop.

in short: the MMM approach is superior.
Title: Re: Is Day Trading Worth It?
Post by: Scandium on September 28, 2016, 08:26:49 AM
I currently have VTSAX at $14,100, and will trade again back into the settlement fund when I feel it peaks at a high price again.  I only make like 2% from the trade alone, but it's more buying power that can add up over a year.  Goal is a safe 20% per year return from simple fund switching.

Besides that, I have $12k in my TSP which I move between G and S funds (DWCPF identifier on google finance).  Same strategy there. 

This sounds like a terrible idea. How do you know when the peak is? After all the market reaches a peak all the time, that's the nature of something that goes up more than down.. What if VTSAX goes up more? How much do you loose then? And do you buy in again then or keep waiting? What if VTSAX never comes back down?
Title: Re: Is Day Trading Worth It?
Post by: Dragonstrike on September 28, 2016, 11:25:28 AM
I currently have VTSAX at $14,100, and will trade again back into the settlement fund when I feel it peaks at a high price again.  I only make like 2% from the trade alone, but it's more buying power that can add up over a year.  Goal is a safe 20% per year return from simple fund switching.

Besides that, I have $12k in my TSP which I move between G and S funds (DWCPF identifier on google finance).  Same strategy there. 

This sounds like a terrible idea. How do you know when the peak is? After all the market reaches a peak all the time, that's the nature of something that goes up more than down.. What if VTSAX goes up more? How much do you loose then? And do you buy in again then or keep waiting? What if VTSAX never comes back down?

Let's look at VTSAX and especially the S fund for TSP over the last several years.  Can you not argue that at certain points of the year for those years that there was a considerable dip?  All the strategy says is to sell the fund when it peaks before that dip, say before the last week of December, and ride out the dip when it hits bottom of its assumed rock bottom.  Then you buy back in and ride it to the peak and then even its gains until the next theoretical dip.  The gains are considerable, and for the truly financially savvy you could get good returns. 

Sure, you can miss out on a huge gain: I did for the s fund with that nice 9% gain since Brexit.  But also, that 9% doesn't mean anything when it drops back down.  If I didn't pull out from the S fund, yeah I'd have about another thousand in the fund, but it's still ok because I'm still making money in the fund.  And when it drops, it's just another field day for me to buy more of it when it does. 

                                         
Title: Re: Is Day Trading Worth It?
Post by: waltworks on September 28, 2016, 01:02:46 PM
Hello, fellow human! I see that your brain, like mine, likes to find patterns in random data. Holy smokes, that cloud looks like Marlon Brando! My tortilla has the virgin Mary on it! Or maybe Moe the bartender.

Anyway, like you, my primitive brain is sort of a dumbass when it comes to these things, so I educated myself on how the stock market works by reading some books. And yup, it's pretty much random on any short term basis. So if you start day trading, your odds of losing all your money start out high and only go higher. Probably not worth even considering.

What's that? Someone online says they made a ton of money? Well, millions of people day trade, and even over a long period of time, some of them will come out ahead - so that person might not even be lying! 99% will lose - but guess which ones will come brag about it on anonymous message boards?

-W
Title: Re: Is Day Trading Worth It?
Post by: jjcamembert on September 28, 2016, 03:01:00 PM

Let's look at VTSAX and especially the S fund for TSP over the last several years.  Can you not argue that at certain points of the year for those years that there was a considerable dip?  All the strategy says is to sell the fund when it peaks before that dip, say before the last week of December, and ride out the dip when it hits bottom of its assumed rock bottom.  Then you buy back in and ride it to the peak and then even its gains until the next theoretical dip.  The gains are considerable, and for the truly financially savvy you could get good returns. 

Sure, you can miss out on a huge gain: I did for the s fund with that nice 9% gain since Brexit.  But also, that 9% doesn't mean anything when it drops back down.  If I didn't pull out from the S fund, yeah I'd have about another thousand in the fund, but it's still ok because I'm still making money in the fund.  And when it drops, it's just another field day for me to buy more of it when it does.                                         

Yes, of course you can see peaks and valleys when looking at a chart of the past. But given that there are no charts of the future, everyone can only guess if they're currently seeing a peak or valley. When the market drops significantly, how do you know you're near the bottom? A popular trading adage is, "Don't catch a falling knife." http://www.investopedia.com/terms/f/fallingknife.asp (http://www.investopedia.com/terms/f/fallingknife.asp)

The people who have made money in the market aside from buy & hold investors do so from the enormous amounts of research and training they perform, along with luck. You can commit yourself to working for that extra (uncertain) money if you want, but simply thinking that you can beat the market by looking at price alone is highly unlikely. Remember that for every strategy you come up with: if it was that simple, everyone would be doing it.
Title: Re: Is Day Trading Worth It?
Post by: lordmetroid on September 28, 2016, 03:55:24 PM
I day-traded for a couple of weeks. You are never going to experience how it is to trade with real money using a simulation. With every bet you may lose big chunks of your capital. Adrenaline was absolutely rushing through my veins, I experienced deep despair and exctacy. It is a psychological rollercoaster ride.
Title: Re: Is Day Trading Worth It?
Post by: Financial.Velociraptor on September 28, 2016, 08:31:40 PM
Before I was FIRE, I committed 50k to day trading.  I did a lot of research and settled on "fading the gaps" as my strategy.  I spent a lot of time trading in and out of Chinese solar manufacturers who had never shown a profit and similar.  I had a of stress.  Over about 4 months, I made a grand total of 300 bucks.  I think its not "worth it".   I haven't considered trying it again since.

If you do, do this....respect your trailing stops.  Defense matters when you put a huge chunk of your networth on the line for a 'hunch'.
Title: Re: Is Day Trading Worth It?
Post by: hodedofome on September 29, 2016, 10:34:33 AM
The problem is that most people start out with day trading (I know I did) when it should be the last thing they try. Day trading is the most difficult thing to do out there, because it's so competitive and your are up against very powerful, very smart, and very fast computers. What you should do instead is start with buy and hold investing, and then work your way down the timeframe as you gain experience, knowledge and wealth. If you take a slice of your wealth and do well with it on a shorter timeframe, then continue to compound that money, but leave the bulk of your wealth in longer term investments. Only after you've done maybe 8,000-10,000 hours of deliberate practice as a trader would I ever risk the bulk of my wealth on trading strategies.

Starting with day trading is like starting out playing football in the NFL. Start with pee-wee league, then move up from there.
Title: Re: Is Day Trading Worth It?
Post by: FIPurpose on September 29, 2016, 10:43:23 AM
Or write a day trading algorithm:

https://www.quantopian.com/

See if there's any merit to your strategy. Automate it. Make money. Takes emotion and anxiety out of it.
Title: Re: Is Day Trading Worth It?
Post by: AdrianC on September 29, 2016, 11:32:06 AM
What is your edge?
What is it that you have that your competitors do not?

At one time I thought I had an edge - time arbitrage. I didn't need to sell if something went down. I could just wait until it went back up. I waited a very long time, too long in one instance and suffered a total loss on that one. A good lesson.
Title: Re: Is Day Trading Worth It?
Post by: Rubic on September 29, 2016, 11:37:46 AM
Notes from 2005 Wesco Financial Annual Meeting:

"I think the people who say “I need more” and therefore try to get more than they need,
are likely to get into terrible trouble. I know a man who owned his house free and
clear, had $5 million of securities and lived on the income from those securities. But
this left him a little short of what he wanted, so he said to himself, “I’ll go do a little
work to get my return up,” and he sold puts, backed by his entire account. At the time,
the highest price was on naked puts on Internet stocks and in due course he lost all of
his money and now works in a restaurant."
  -Charlie Munger

I've heard about people who have made money in day trading, but everyone I've
known personally has been made poorer by the experience (though not reduced
to working in a restaurant).
Title: Re: Is Day Trading Worth It?
Post by: DrF on September 29, 2016, 01:19:30 PM
Only after you've done maybe 8,000-10,000 hours of deliberate practice as a trader

10,000 hour rule! May be only true for professions/tasks which are complex but ultimately repetitive (golf, chess, piano, etc).
http://www.salon.com/2016/04/10/malcolm_gladwell_got_us_wrong_our_research_was_key_to_the_10000_hour_rule_but_heres_what_got_oversimplified/

As a day trader you are competing with alogrithms written by MIT/Harvard/"Impressive Chinese School" graduates, some with PhD's in mathematics, economics, finance.

Instead, why not try this approach? -> buy and hold with leverage
https://www.amazon.com/Lifecycle-Investing-Audacious-Performance-Retirement-ebook/dp/0465018297/ref=la_B001H6O2XC_1_7?s=books&ie=UTF8&qid=1475176370&sr=1-7
http://content.time.com/time/business/article/0,8599,1982327,00.html
Title: Re: Is Day Trading Worth It?
Post by: steveo on September 29, 2016, 03:42:04 PM
Only after you've done maybe 8,000-10,000 hours of deliberate practice as a trader

10,000 hour rule! May be only true for professions/tasks which are complex but ultimately repetitive (golf, chess, piano, etc).
http://www.salon.com/2016/04/10/malcolm_gladwell_got_us_wrong_our_research_was_key_to_the_10000_hour_rule_but_heres_what_got_oversimplified/

As a day trader you are competing with alogrithms written by MIT/Harvard/"Impressive Chinese School" graduates, some with PhD's in mathematics, economics, finance.

Instead, why not try this approach? -> buy and hold with leverage
https://www.amazon.com/Lifecycle-Investing-Audacious-Performance-Retirement-ebook/dp/0465018297/ref=la_B001H6O2XC_1_7?s=books&ie=UTF8&qid=1475176370&sr=1-7
http://content.time.com/time/business/article/0,8599,1982327,00.html

It's not just competing against people that are supposedly really smart and better than you. It's about trying to predict the future consistently with no edge.

Long Term Capital Management was a firm with a bunch of brilliant guys. They went bust.

Charlie Mungers quote above is gold.
Title: Re: Is Day Trading Worth It?
Post by: FIREby2021 on September 29, 2016, 05:11:04 PM
Ah day-trading ...

1) Is not (should not) be fun - there are much cheaper hobbies if that's what you're after
2) Requires extreme self-discipline, adherence to process, hundreds - to - thousands (?) of hours of screen time and study
3) Requires knowing your market intimately, your edge thoroughly, and fitting said edge to your personality
4) Prioritizes money management (understand expectancy, seek a high Risk:Reward ratio, optimize position sizing to reduce risk of ruin, etc.)
5) Eyes wide open - it can be profitable, but very few % of traders are ever consistently profitable

Probably most of this has already been said, but that's what initially comes to my mind.
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on September 29, 2016, 06:43:45 PM
Are we all talking about the same thing here?

To me day trading is entering and exiting positions in minutes or hours during the course of one day.   Quite a bit different from buying a stock one week and then selling it on some news a couple weeks later, only to re buy it lower a few weeks after that when the euphoria from the news wears off.  Or properly catching a falling knife, which is one way I have managed 30% a year gains for the past 15 years.   On a very rare occasion the computers or funds or Jesus or whatever will over sell a stock on bad news past the point of reason.   It is at this time that the knife can be caught carefully.   I have done this recently with Endocyte, a biotech which has $150m in cash on hand, no debt, and was sold off on negative news down to a $110m market cap.  $40m below cash on hand.
Title: Re: Is Day Trading Worth It?
Post by: Dragonstrike on September 29, 2016, 08:53:53 PM
Are we all talking about the same thing here?

To me day trading is entering and exiting positions in minutes or hours during the course of one day.   Quite a bit different from buying a stock one week and then selling it on some news a couple weeks later, only to re buy it lower a few weeks after that when the euphoria from the news wears off.  Or properly catching a falling knife, which is one way I have managed 30% a year gains for the past 15 years.   On a very rare occasion the computers or funds or Jesus or whatever will over sell a stock on bad news past the point of reason.   It is at this time that the knife can be caught carefully.   I have done this recently with Endocyte, a biotech which has $150m in cash on hand, no debt, and was sold off on negative news down to a $110m market cap.  $40m below cash on hand.

Not really knowledgeable in that yet. I'm thinking more passive, as in your example of selling when the time is right for short gains.  Options, contracts, etc. I'm not looking for an extreme risk.
Title: Re: Is Day Trading Worth It?
Post by: AdrianC on September 30, 2016, 06:15:31 AM
Or properly catching a falling knife, which is one way I have managed 30% a year gains for the past 15 years.   

That's better than any professional money manager out there.
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on September 30, 2016, 06:50:40 AM
That's better than any professional money manager out there.

Much easier for an individual to do with a small amount of money than a money manager so really meaningless.

I think Buffett said something like he could make much better returns on a million than a billion.
Title: Re: Is Day Trading Worth It?
Post by: steveo on September 30, 2016, 07:19:34 AM
That's better than any professional money manager out there.

Much easier for an individual to do with a small amount of money than a money manager so really meaningless.

I think Buffett said something like he could make much better returns on a million than a billion.

I'm skeptical about the results and I'm skeptical that you will make money doing this over the long term.
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on September 30, 2016, 07:40:51 AM
Sure, but what is long term to you?  15 years is fairly long but certainly not a lifetime.   Maybe I will get back to you in 10 more years and we can agree 25 years is long term.
Title: Re: Is Day Trading Worth It?
Post by: AlanStache on September 30, 2016, 08:32:36 AM
Sure, but what is long term to you?  15 years is fairly long but certainly not a lifetime.   Maybe I will get back to you in 10 more years and we can agree 25 years is long term.

This is the point where statistics, reality and available data start getting really hard to reconcile.  We can take Roland at his word but need to balance that with the 1000's of people who stopped day trading after loosing money, but it would be nearly impossible to gather the required data to do a proper analysis. 

What a superficial level of stats fails to account for is the question of if the the current situation is representative of the over all population.  What are your odds of winning an Olympic gold metal?  Basically zero, unless you are Michel Phelps.  Edison tried 10,000 times to make one light bulb that worked, what are the odds his next bulb worked?  If he copied the one that worked fairly good, but if you take a simple frequentest approach you would conclude 1/10,000 and this would be wrong.

If Roland is the Phelps of day trading, well great for him, but that does not change the fact that most everyone else will fail at day trading. 
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on September 30, 2016, 08:59:14 AM
Day trading is such a broad term.   I have only actually been flagged a pattern day trader a few times.

"Pattern day trader is a term defined by FINRA to describe a stock market trader who executes 4 (or more) day trades in 5 business days in a margin account, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period."

Once you are flagged, you are required to keep $25,000 in the account until you have a 90 day period of no day trades.   Not really a problem since I have over $100k in that account but could be for some.  Note this is only for margin accounts...and margin does not always mean that you are taking money on loan, but also means you can somewhat avoid waiting for funds to settle.  I don't go on margin but I do take advantage of the free ride of a margin account.

I would classify my trading as more of opportunistic trading.   I may hold something for years or weeks or just a few days. 
Title: Re: Is Day Trading Worth It?
Post by: jjcamembert on September 30, 2016, 11:19:10 AM
Notes from 2005 Wesco Financial Annual Meeting:

"I think the people who say “I need more” and therefore try to get more than they need,
are likely to get into terrible trouble. I know a man who owned his house free and
clear, had $5 million of securities and lived on the income from those securities. But
this left him a little short of what he wanted, so he said to himself, “I’ll go do a little
work to get my return up,” and he sold puts, backed by his entire account. At the time,
the highest price was on naked puts on Internet stocks and in due course he lost all of
his money and now works in a restaurant."
  -Charlie Munger

I've heard about people who have made money in day trading, but everyone I've
known personally has been made poorer by the experience (though not reduced
to working in a restaurant).

This anecdote doesn't necessarily mean, "trading is bad", or "options are bad", but rather that this particular strategy (selling puts on a single asset class backed by your entire net worth) went bad for one individual. I think that's a terrible idea anyway! Sure it's a binary decision (trade or buy and hold), but within "trading" or "day trading" there are limitless variations on strategies; some which take more risk in search of more reward, others with less. And then you can execute those strategies with a diversified portfolio to further reduce risk. The other key is consistency. If we have a market crash, guess what, everyone invested in the market is going to lose money. Your strategy may even lose more money than if you'd just bought an index fund. But if you bail out when the going gets tough, you're not going to realize those potential gains that your strategy could bring you. For investing in general, it's the long-term that counts. Munger is trying to point out that you shouldn't get greedy and take significant risks with your capital. And, like others have pointed out, you want to be able to sleep at night on your investments.
Title: Re: Is Day Trading Worth It?
Post by: MoonLiteNite on October 01, 2016, 04:41:35 AM
2015 I ended up double up on a biotech, 2k to 4k in just a few months. That was pure luck, but here is my chart for 2016... YTD.

I say most is just finding good uptrending stocks that are under valued. And another good chunk of it was good swing trades for biotechs, and oil type companies.

Most trades this were with SUNE, CHK, AVXL, AMAT, and FOLD


(https://i.gyazo.com/9ab5ca8fcdfc46fbede9edbc58799039.png)


My personal view on day trading.
STRESSFULL AS HELL!
My first few days last year made me have a few strokes i swear....
My 2nd trade ever ended up turning red within 2secs of buying. Then it dropped to -100 on the day. The next day was down over 1000. About a 50% loss...
Price ended up recovering and i made a bit, but looking back i should have actually sold.

If you are actually "day trading" and never holding over night you must be VERY VERY strict on your stop losses, and take a % loss and just walk away. Have a good risk/reward plan and stick to it. If you think "oh it will go back up" you end up holding the shares for weeks on and end and you are losing lost opportunity with other trades.

And remember, day trading is a skill, something you learn.
It isn't like what is talked about on this site.  You do not just go out and BUY a stock then sell it once it turns green.
Trading with TA or the books are two big ways to trade. And both take a long time to learn. If you don't, you truely just are gambling....
If you do want to try it. Try it with paper money, and BE HONEST. Like be super honest with yourself when you do your trades. And do it for MONTHS and MONTHS, until you can ALWAYS end your months in the green.
Title: Re: Is Day Trading Worth It?
Post by: MoonLiteNite on October 01, 2016, 04:48:49 AM
I day-traded for a couple of weeks. You are never going to experience how it is to trade with real money using a simulation. With every bet you may lose big chunks of your capital. Adrenaline was absolutely rushing through my veins, I experienced deep despair and exctacy. It is a psychological rollercoaster ride.

i 2nd that....
And still a year later. Once you hit buy, and that limit order reaches. A few moments later you see that candle stick turn red/green and you feel a punch in in your gut or have a big grin.
Title: Re: Is Day Trading Worth It?
Post by: swamimeister on October 01, 2016, 08:30:37 AM
I taught myself to trade and I use Stockcharts. There's a lot of educational info on their site. It's good to learn from other traders but before you play with a substantial amount of money, you have to become confident with your trading abilities and trade on what you feel, not what someone else feels. The more experience you have, the less risky it is. I have also heard that most traders fail. I don't know where the stats come from. Maybe it's true. It isn't easy but if you work at it, you can become successful. A lot of the advice that people give against trading is bullshit. If you are smart and tend to think out of the box, you can do it.
Title: Re: Is Day Trading Worth It?
Post by: Rubic on October 01, 2016, 10:27:30 AM
If you can get rich by merely avoiding dumb mistakes, why take unnecessary risks?
Title: Re: Is Day Trading Worth It?
Post by: frugalkristen on October 01, 2016, 04:56:47 PM
My thoughts?  My dad starting day trading with his retirement account when he decided to retire early (not because he planned and saved but because he wanted to.  He also took a big cut in his pension by doing so.).  This was 20+ years ago.  He lost everything.  His broker got in trouble for day-trading with a retirement account (I don't know all the details of that.).  He also got my brother into it.  That was also a bust.  My brother ended up years later with a good job (although he still spends more than he earns) and my dad ended up finding odd jobs to support himself after going broke (he was a retired commercial pilot).  I highly suggest avoiding that path!
Title: Re: Is Day Trading Worth It?
Post by: whodidntante on October 02, 2016, 12:09:22 AM
I don't know of any resource that can teach you to beat the market.  If such a resource exists, the provider will be able to charge whatever they want for it, so you likely can't afford it anyway. 
Title: Re: Is Day Trading Worth It?
Post by: whodidntante on October 02, 2016, 12:11:10 AM
My thoughts?  My dad starting day trading with his retirement account when he decided to retire early (not because he planned and saved but because he wanted to.  He also took a big cut in his pension by doing so.).  This was 20+ years ago.  He lost everything.  His broker got in trouble for day-trading with a retirement account (I don't know all the details of that.).  He also got my brother into it.  That was also a bust.  My brother ended up years later with a good job (although he still spends more than he earns) and my dad ended up finding odd jobs to support himself after going broke (he was a retired commercial pilot).  I highly suggest avoiding that path!

Wow!  Thanks for sharing that. 
Title: Re: Is Day Trading Worth It?
Post by: MustacheAndaHalf on October 03, 2016, 02:24:47 AM
Dragonstrike - Your thoughts are all over the map.  You agree with people about long and safe investing, you mention options, you think 25-30% gains are possible.  None of this adds up.

Gilead claims to be an elite investor nobody's ever heard of, with a record that rivals Warren Buffet (Berkshire Hathaway stock), George Soros (Quantum Fund) and other names with past records - but public records, not self-proclaimed ones.  It's also possible we have another Beardstown Ladies, where they posted amazing returns until close examination revealed they treated new money they contributed as profits.  Their actual record was not good when audited.  Just claiming something isn't very interesting to me - there's no tracking, no audit, and nobody but an anonymous forum poster to validate it.

Now if you really have exceeding skill at profiting, you could post your trades in a new thread you create.  Each time you make a move, you post it and everyone waits to see what happens.  Publishing allows others to see the record of past purchases, and see how purchases turn out.  But claiming great success with no track record doesn't seem like something others should value.
Title: Re: Is Day Trading Worth It?
Post by: AdrianC on October 03, 2016, 06:20:40 AM
Sure, but what is long term to you?  15 years is fairly long but certainly not a lifetime.   Maybe I will get back to you in 10 more years and we can agree 25 years is long term.

In ten more years if your luck/skill holds you'll have turned your $1700 into $1.7M. That would be a fantastic record.

Has anyone had documented returns of 30% over 25 years? I can't think of anyone.
Title: Re: Is Day Trading Worth It?
Post by: arebelspy on October 03, 2016, 06:43:26 AM
My question would be, if this is repeatable/reliable, Roland, why have you not added more to the account along the way?  Why such a paltry amount in it after 15 years of 30% returns?

In other words, how come you never put your money where your mouth is? (Aside from an initial 1700 capital.)
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 03, 2016, 07:02:39 AM
My question would be, if this is repeatable/reliable, Roland, why have you not added more to the account along the way?  Why such a paltry amount in it after 15 years of 30% returns?

In other words, how come you never put your money where your mouth is? (Aside from an initial 1700 capital.)

Because I am not crazy and realize it is very likely just incredible luck.    I do sometimes think about what if scenario, like what if the $1700 had started as $17,000 instead.  I likely would not have been so ambivalent with my initial trading risks (I had to use options to leverage the $1700 up to some amount worthwhile for trading).

The vast majority of our investments are in Vanguard index funds.   We have over $700K in a 401K that I have not even changed the fund in over 6 years.

Even now I doubt myself with this now sizeable trading account.   What if I blow it all up next year?   Unlikely I know, as part of it is in SPY, but...
Title: Re: Is Day Trading Worth It?
Post by: arebelspy on October 03, 2016, 07:17:00 AM
My question would be, if this is repeatable/reliable, Roland, why have you not added more to the account along the way?  Why such a paltry amount in it after 15 years of 30% returns?

In other words, how come you never put your money where your mouth is? (Aside from an initial 1700 capital.)

Because I am not crazy and realize it is very likely just incredible luck.    I do sometimes think about what if scenario, like what if the $1700 had started as $17,000 instead.  I likely would not have been so ambivalent with my initial trading risks (I had to use options to leverage the $1700 up to some amount worthwhile for trading).

The vast majority of our investments are in Vanguard index funds.   We have over $700K in a 401K that I have not even changed the fund in over 6 years.

Even now I doubt myself with this now sizeable trading account.   What if I blow it all up next year?   Unlikely I know, as part of it is in SPY, but...

Okay.  Probably worth adding that caveat when you post about your day trading successes in a day trading thread.  It comes off as you thinking this is a valid, reliable thing.  :)

Thanks for the clarification!
Title: Re: Is Day Trading Worth It?
Post by: waltworks on October 03, 2016, 09:21:28 AM
I'd go a step further and go back and add that caveat to all your previous posts.

-W
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 03, 2016, 09:44:56 AM
What caveat?  That it probably is just luck?

I would contend that Warren, Bill Gates, all of them, really relied on some luck along with their investing ability. 

Did Warren predict that Wells Fargo, which he is heavily invested in, would commit massive fraud?   Guess he didn't see that one.

What are some of those other big guys playing around with Herbalife and Valiant?

Risk pays.   Even selecting individual stocks over an index pays because it has more risk.   They say diversity is the only free lunch, but you do not make as high a gain (OR LOSS!) with a diversified portfolio.   You can see this in the options market.   Options on index like SPY sometimes trade for half or lower of the adjusted price of similar options in individual stocks.  If you sell a cash secured put at the money on SPY, you might make $5,000 on $100,000 at risk, where if you sell it on Tesla, you might make $10,000 on $100,000 at risk.
Title: Re: Is Day Trading Worth It?
Post by: arebelspy on October 03, 2016, 09:48:10 AM
What caveat?  That it probably is just luck?

Yes, I think that's what he meant.

Or, more specifically, that it is "very likely just incredible luck."

And that most of your investments are in index funds.  And maybe the even now you doubt yourself and could blow it all up next year line.
Title: Re: Is Day Trading Worth It?
Post by: waltworks on October 03, 2016, 10:23:35 AM
Exactly. Whether you intended it or not, you've come off as advocating day trading here. If that's your goal, great. If you're going to be honest with people, though, you should make it clear you consider it mostly luck and don't invest most of your money this way.

-W
Title: Re: Is Day Trading Worth It?
Post by: zephyr911 on October 03, 2016, 10:36:00 AM
I'd rather suck off a shotgun than day trade, but that's more about my personality than the relative merits of the approach.

Most people here will tell you it's a bad idea for mathematical reasons as well.
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 03, 2016, 10:44:11 AM


Yes, I think that's what he meant.

Or, more specifically, that it is "very likely just incredible luck."

And that most of your investments are in index funds.  And maybe the even now you doubt yourself and could blow it all up next year line.

Ok.   It is a little funny that I am getting lectured by someone heavy into individual real estate (risk) and also skates the edges of credit card fraud.  :-)

I took it as a given that nobody was so stupid as to put all of their assets at risk doing something as risky as day trading (I don't even consider myself a day trader as that term is defined).
Title: Re: Is Day Trading Worth It?
Post by: arebelspy on October 03, 2016, 06:32:19 PM
Ok.   It is a little funny that I am getting lectured

Are you?

Quote
I took it as a given that nobody was so stupid as to put all of their assets at risk doing something as risky as day trading (I don't even consider myself a day trader as that term is defined).

You'd apparently be shocked at how stupid people can be then.  Many otherwise reasonable people think they can "beat" the market via various strategies (day trading among them).  It's not even an unreasonable idea to hold at first glance, without having done any research.

(https://imgs.xkcd.com/comics/engineer_syllogism.png)
Title: Re: Is Day Trading Worth It?
Post by: Dexterous on October 03, 2016, 09:18:02 PM
I did it, and now index.  'nough said :)
Title: Re: Is Day Trading Worth It?
Post by: Shor on October 03, 2016, 10:15:13 PM
I did it, and now index.  'nough said :)
Yes, that is going to be future me's position...... as soon as I can exit out of this losing position I find myself in.. XD
Title: Re: Is Day Trading Worth It?
Post by: Mighty-Dollar on October 04, 2016, 02:09:35 AM
Day trading not worth it. https://youtu.be/0d8M9oth330
Title: Re: Is Day Trading Worth It?
Post by: MoonLiteNite on October 04, 2016, 04:26:13 AM
My question would be, if this is repeatable/reliable, Roland, why have you not added more to the account along the way?  Why such a paltry amount in it after 15 years of 30% returns?

In other words, how come you never put your money where your mouth is? (Aside from an initial 1700 capital.)

index fund = retirement
day trading = living money to help pay the current bills.


So that is where my mouth is... and that is exactly where my money is.
And for others, i am fairly certain that none of the people who posted here are 100% in stocks and day trading and planning on retiring in 5 years...

Title: Re: Is Day Trading Worth It?
Post by: steveo on October 04, 2016, 05:09:09 AM
This is interesting:- http://www.travismorien.com/FAQ/trading/futradersuccess.htm. The data seems to state that you will lose money.

My FIL was a trader for a big bank and managed a billionaire's private hedge fund. I doubt I will ever meet someone that successful when it comes to trading. It was his job and it paid him very well. He is extremely wealthy and retired at 40 with a lot of money (he would have I guess now a net worth of like 20-30 million). For the record the billionaire's hedge fund was also traded by the billionaire and combined they lost a lot of money (I think the billionaire was more accountable for losing money than my FIL but everyone loses money at some point trading) and the fund had to be shut down.

I don't see him as one of the very few successful traders making money consistently over the long term. He also didn't day trade with his own money. He takes big positions and holds on for weeks to months. This via the facts tends to be more profitable than day trading. You can try day trading but I think it's more than likely you will lose everything and I think it's pretty close to guaranteed that you will lose everything unless you get out of the game prior to losing everything.
Title: Re: Is Day Trading Worth It?
Post by: Enigma on October 04, 2016, 06:12:01 AM
Probably one of the most Stressful things I had ever done.  I would wake up hours before the market opened, checked out the foreign markets, reviewed the early morning reports and pre-market, and make dozens of trade throughout the day. Some days were positive gains and some days were negative gains.

I began to dream about the market, started buying and selling in my sleep, and the market ended up affecting my mood.  If it was a bad day for the market and for myself I was upset...  Yet if it was a good day I was happy.  Others could easily see it around me.
Title: Re: Is Day Trading Worth It?
Post by: lordmetroid on October 04, 2016, 08:41:06 AM
I did it, and now index.  'nough said :)
Me too, I lost several percent of my stash to trading. Now I am just indexing with a 1,5x leverage.
Title: Re: Is Day Trading Worth It?
Post by: swamimeister on October 04, 2016, 11:16:07 AM
My question would be, if this is repeatable/reliable, Roland, why have you not added more to the account along the way?  Why such a paltry amount in it after 15 years of 30% returns?

In other words, how come you never put your money where your mouth is? (Aside from an initial 1700 capital.)

Because I am not crazy and realize it is very likely just incredible luck.    I do sometimes think about what if scenario, like what if the $1700 had started as $17,000 instead.  I likely would not have been so ambivalent with my initial trading risks (I had to use options to leverage the $1700 up to some amount worthwhile for trading).

The vast majority of our investments are in Vanguard index funds.   We have over $700K in a 401K that I have not even changed the fund in over 6 years.

Even now I doubt myself with this now sizeable trading account.   What if I blow it all up next year?   Unlikely I know, as part of it is in SPY, but...

Okay.  Probably worth adding that caveat when you post about your day trading successes in a day trading thread.  It comes off as you thinking this is a valid, reliable thing.  :)

Thanks for the clarification!

I have enjoyed reading a lot of the post on MMM but so many posts are so conservative and attacking like this. So what if Gilead feels lucky. I don't day trade but did learn how to trade on my own. I did loose money at first but now I kill it because I knew that I would if I stuck with it. It takes time. While some of you are thrilled with a ten or twenty percent yearly return, I would be surprised if I didn't make that in a month. Up almost thirty percent today and will probably close out by end of the day. So rather than taking the time to criticize Gilead, why not put that time into learning to do what he's done. 
Title: Re: Is Day Trading Worth It?
Post by: Dan32 on October 04, 2016, 11:24:03 AM
1.  I believe that Roland could have (and does have) the results posted.  But he is the exception, not the norm.  The OP (and 99+%) of the people who try this will be the norm.
2.  I find it "unusual" that this post would appear on this board, which touts success by patience and very conservative means.
3.  I would advise the OP against the use of a margin account, options trading, and leveraged funds until he gains a lot more experience.  In fact I would recommend against him ever using leveraged funds, due to the daily rebalancing that is used.
4.  Simulations are useful, but the psychology behind real trading cannot be overestimated.  Selling losing positions (even when you have a model that you believe in tells you to do so) is very difficult to do so. 

Good luck to the OP, in whatever he decides to do.  Hopefully, he will post his trades and results as a learning guide to others (Real or simulated)
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 04, 2016, 11:43:22 AM
There are going to be people who make money trading, just like there are going to be online bloggers who end up making millions (*cough* MMM, *cough*).   Does it mean you will likely make significant money blogging?  Statistics say no way.  Still, it does happen.

But if 99.9% of people who try trading lose, then it is probably not a good idea.
Title: Re: Is Day Trading Worth It?
Post by: GuitarStv on October 04, 2016, 11:45:16 AM
My question would be, if this is repeatable/reliable, Roland, why have you not added more to the account along the way?  Why such a paltry amount in it after 15 years of 30% returns?

In other words, how come you never put your money where your mouth is? (Aside from an initial 1700 capital.)

Because I am not crazy and realize it is very likely just incredible luck.    I do sometimes think about what if scenario, like what if the $1700 had started as $17,000 instead.  I likely would not have been so ambivalent with my initial trading risks (I had to use options to leverage the $1700 up to some amount worthwhile for trading).

The vast majority of our investments are in Vanguard index funds.   We have over $700K in a 401K that I have not even changed the fund in over 6 years.

Even now I doubt myself with this now sizeable trading account.   What if I blow it all up next year?   Unlikely I know, as part of it is in SPY, but...

Okay.  Probably worth adding that caveat when you post about your day trading successes in a day trading thread.  It comes off as you thinking this is a valid, reliable thing.  :)

Thanks for the clarification!

I have enjoyed reading a lot of the post on MMM but so many posts are so conservative and attacking like this. So what if Gilead feels lucky. I don't day trade but did learn how to trade on my own. I did loose money at first but now I kill it because I knew that I would if I stuck with it. It takes time. While some of you are thrilled with a ten or twenty percent yearly return, I would be surprised if I didn't make that in a month. Up almost thirty percent today and will probably close out by end of the day. So rather than taking the time to criticize Gilead, why not put that time into learning to do what he's done.

You are absolutely crushing the investment returns of nearly the entire rest of the world.  Kudos.

Based on your claims, let's run some 240% yearly returns (yes, this is lower than you claim to get at 20% a month).

If you start out with 5000 dollars, and get 240% returns compounded monthly you can comfortably retire with just under 1.2 million in two and a half years.

When did you FIRE?
Title: Re: Is Day Trading Worth It?
Post by: waltworks on October 04, 2016, 11:54:49 AM
I have enjoyed reading a lot of the post on MMM but so many posts are so conservative and attacking like this. So what if Gilead feels lucky. I don't day trade but did learn how to trade on my own. I did loose money at first but now I kill it because I knew that I would if I stuck with it. It takes time. While some of you are thrilled with a ten or twenty percent yearly return, I would be surprised if I didn't make that in a month. Up almost thirty percent today and will probably close out by end of the day. So rather than taking the time to criticize Gilead, why not put that time into learning to do what he's done.

We're not worthy! The best trader in history is so good he can't even _spell_ "lose", because he's a winner, baby!

Look at these hands. There's no problem here.

Seriously, thanks for the laugh. At least Roland's results are vaguely believable.

-W
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 04, 2016, 12:03:54 PM
I do a lot of tiny trades now.   For example, last week I bought 3000 shares of Endocyte (a small biotech with more cash on hand than the current market cap, but no drug near end game).  I bought it for $3.09.   $9,270 plus 9.99 commission (stupid E-trade, don't get me started).  Today I sold the shares for $3.30.  $9900 minus 9.99 commission.

So I netted $610 after commissions on about $9280 at risk.   I held the stock for 5 days.   I will have to wait 3 more days for the funds to settle although I can buy something else right now (just not sell it for 3 days).  The downside to being in a IRA cash account.

$610 is a drop in the bucket when your account is over $125,000 but it does add up.   I got lucky Endocyte spiked so fast but there is some news coming out this fall/winter which makes it volatile.  I like that it has some form of a bottom in price since it is trading below cash on hand and has no debt.
Title: Re: Is Day Trading Worth It?
Post by: swamimeister on October 04, 2016, 12:12:26 PM
When did you FIRE?

About ten years ago. I still work part time though just because I enjoy it.
And to the dick who criticized my spelling - I don't like poor spelling any more than you do. I was actually aware of my misspelled word but forgot to correct it. If you would abstain from learning something that could make you a lot of money, simply because someone misspelled a word then shame on you:) 
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 04, 2016, 12:14:59 PM
A good portion of my $125,000+ account is tied up in a Gilead covered call which is about to expire.

I did a buy-write for 500 shares of Gilead when it was $79, selling Oct $80 calls at the same time for $76 per share total (5 contracts sold).   My max profit was thus $4 if the shares are called away but I did the trade across a ex-div period so I also received a couple of days ago $0.47 per share dividend.  So really my max profit is $4.47 per share, or $2235 (minus some $20 to $30 commissions depending how the trade ends).  I have $37,825 at risk and entered this trade back in August.  Today Gilead is flirting about 77.50 and the October calls I am short are only worth $0.60 (when I started they were worth over $4).  I expect to make near the $2000 mark, which would be a profit of 5.3% over not quite a three month period, or an annualized gain of 23%.  Not quite the 30+% returns I have been having in the past, so I may need to step up my game a bit :-)
Title: Re: Is Day Trading Worth It?
Post by: GuitarStv on October 04, 2016, 12:26:15 PM
When did you FIRE?

About ten years ago. I still work part time though just because I enjoy it.

Cool.

So assuming that you've been getting these 20% monthly returns for the last ten years, and that you retired with a single dollar invested . . . your net worth is about 3.175 billion dollars now?
Title: Re: Is Day Trading Worth It?
Post by: waltworks on October 04, 2016, 12:39:53 PM
When did you FIRE?

About ten years ago. I still work part time though just because I enjoy it.

Cool.

So assuming that you've been getting these 20% monthly returns for the last ten years, and that you retired with a single dollar invested . . . your net worth is about 3.175 billion dollars now?

In another 10 years, he'll have turned that $1 into ownership of the entire world (and then some!) with a net worth of $8,400,632,947,000,000,000. The first ever (octuple!) billion-billionaire!

I'm struggling to think of ways to spend that money, though. Heat your home with Elon Musk's farts? Make world leaders dance as you fire bullets at their feet made from the Hope diamond? Have workers lay monogrammed gold brick walkways beneath your feet as you walk to the toilet, then removing the bricks soiled by your footsteps and firing them individually into the sun via custom-built space shuttles?

-W
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 04, 2016, 12:53:57 PM
Heat your home with Elon Musk's farts?

Damn you!  Now I have to go set up a "go fund me" page.
Title: Re: Is Day Trading Worth It?
Post by: GreenEggs on October 04, 2016, 12:56:20 PM
A time machine would be handy for day trading. 

My day trading mom would have been rich if she'd held onto all the Priceline she had @ $2 a share.....

Btw, she's broke now.  :(
Title: Re: Is Day Trading Worth It?
Post by: zephyr911 on October 04, 2016, 12:57:17 PM
I'm struggling to think of ways to spend that money, though. Heat your home with Elon Musk's farts? Make world leaders dance as you fire bullets at their feet made from the Hope diamond? Have workers lay monogrammed gold brick walkways beneath your feet as you walk to the toilet, then removing the bricks soiled by your footsteps and firing them individually into the sun via custom-built space shuttles?

-W
I'm disturbing my office workers with my laughter. Please try to be less hilarious! >.<
Title: Re: Is Day Trading Worth It?
Post by: Financial.Velociraptor on October 04, 2016, 04:01:45 PM
... plus 9.99 commission (stupid E-trade, don't get me started).  Today I sold the shares for $3.30.  $9900 minus 9.99 commission.

... I will have to wait 3 more days for the funds to settle although I can buy something else right now (just not sell it for 3 days).  The downside to being in a IRA cash account...

Interactive Brokers has much lower fees and will not require you to wait for cash clearing to trade in a tax advantaged account. They also have the very best options rates.
Title: Re: Is Day Trading Worth It?
Post by: AdrianC on October 04, 2016, 06:39:18 PM
I have enjoyed reading a lot of the post on MMM but so many posts are so conservative and attacking like this. So what if Gilead feels lucky. I don't day trade but did learn how to trade on my own. I did loose money at first but now I kill it because I knew that I would if I stuck with it. It takes time. While some of you are thrilled with a ten or twenty percent yearly return, I would be surprised if I didn't make that in a month. Up almost thirty percent today and will probably close out by end of the day. So rather than taking the time to criticize Gilead, why not put that time into learning to do what he's done.

When you say "Up almost thirty percent today" you mean on that particular trade, right?
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 04, 2016, 06:48:40 PM
Interactive Brokers has much lower fees and will not require you to wait for cash clearing to trade in a tax advantaged account. They also have the very best options rates.

I looked at some of their fees.  In their fixed pricing structure, the fee to trade 3000 shares of Endocyte would be 0.005 USD per share, or $15.   At E-trade I pay $10.  At Optionshouse, where I have our taxable account, I pay $3, but Etrade is buying Optionshouse :-(
Title: Re: Is Day Trading Worth It?
Post by: swamimeister on October 04, 2016, 08:39:12 PM
I have enjoyed reading a lot of the post on MMM but so many posts are so conservative and attacking like this. So what if Gilead feels lucky. I don't day trade but did learn how to trade on my own. I did loose money at first but now I kill it because I knew that I would if I stuck with it. It takes time. While some of you are thrilled with a ten or twenty percent yearly return, I would be surprised if I didn't make that in a month. Up almost thirty percent today and will probably close out by end of the day. So rather than taking the time to criticize Gilead, why not put that time into learning to do what he's done.

When you say "Up almost thirty percent today" you mean on that particular trade, right?

Right. Just today on the money in that trade so not on account because some money was in cash. I think I made about four or five percent yesterday in the same trade. If you believe the people that tell you it can't be done then they will probably be right.
Title: Re: Is Day Trading Worth It?
Post by: Dragonstrike on October 05, 2016, 12:50:06 AM
Holy Hell guys!

I'm off the grid for a few days and I see something close to a crossover of "The Dictator" with Emperor Palpatine: "yes, let the hate flow through you".

Ok, so to back up, 1) This topic merely was to gain some sources about day-trading.  I have very little time as it is to even devote research to it, and I'm just collecting these resources right now.  Thank you to the posters who provided the simulations and articles: I'll definitely look those over.

2) I'm not sitting here with my life savings on hand ready to fling cash over a cliff and to the wind. This at most may be an experiment to use a thousand dollars with. 

3) When I say "day trading", I'll admit, the fault is probably on me for a lack of knowledge for terms.  In all sense, I mean to say opening a trading account, buying some shares in a company, i.e. Cyberoptics Corp, buying as many of those shares on a thousand dollars equivalent (no swing trades, no options, nothing: just the equal stock value), so if its at $25 today, then buy at $25 per share (40 in total) and selling when it hits $30 or when I feel comfortable that  a profit is made.  I know I'm not taking into consideration taxes, then commission for trade, etc., but I'll get to that point when I pick up a few books at Barnes and Noble on day trading, investment, millionaire next door, etc. 

4) The hate war on Gilead and his 20-30% returns, really, I don't care much for, but I'll enjoy sitting back and eating some popcorn, staying for only the comments.

5) Otherwise, that's all I have to say for now.  I appreciate the concern and firm advice from everyone, but rest assured I'm not going to do anything until I have the wisdom for it first. 
Title: Re: Is Day Trading Worth It?
Post by: AdrianC on October 05, 2016, 06:12:31 AM
I have enjoyed reading a lot of the post on MMM but so many posts are so conservative and attacking like this. So what if Gilead feels lucky. I don't day trade but did learn how to trade on my own. I did loose money at first but now I kill it because I knew that I would if I stuck with it. It takes time. While some of you are thrilled with a ten or twenty percent yearly return, I would be surprised if I didn't make that in a month. Up almost thirty percent today and will probably close out by end of the day. So rather than taking the time to criticize Gilead, why not put that time into learning to do what he's done.

When you say "Up almost thirty percent today" you mean on that particular trade, right?

Right. Just today on the money in that trade so not on account because some money was in cash. I think I made about four or five percent yesterday in the same trade. If you believe the people that tell you it can't be done then they will probably be right.

So how much are you making per year trading as a percentage of your total portfolio?
Title: Re: Is Day Trading Worth It?
Post by: waltworks on October 05, 2016, 08:08:12 AM
Wisdom will make the decision very obvious.

-W
Title: Re: Is Day Trading Worth It?
Post by: The Beacon on October 08, 2016, 09:35:00 AM
For most people, active trading is not worth it because it will take a tremendous amount effort to become consistently reliable.  That requires passion and hard work.  Lack of either one will kill it.

However, if you love trading even if there is no money involved, you might make it.   The field has extremely high barrier of entry.  As a retail trader, you are against machines that do not have any emotions.   

Title: Re: Is Day Trading Worth It?
Post by: steveo on October 08, 2016, 03:33:51 PM
For most people, active trading is not worth it because it will take a tremendous amount effort to become consistently reliable.  That requires passion and hard work.  Lack of either one will kill it.

However, if you love trading even if there is no money involved, you might make it.   The field has extremely high barrier of entry.  As a retail trader, you are against machines that do not have any emotions.   

I think the main thing to mention is that you need luck. You are trying to predict the future. To add to that most people fail. It's basically like gambling with the edge against you. What rational person would do that ?
Title: Re: Is Day Trading Worth It?
Post by: waltworks on October 08, 2016, 06:44:07 PM
However, if you love trading even if there is no money involved, you might make it.   The field has extremely high barrier of entry.  As a retail trader, you are against machines that do not have any emotions.   

If you love it and are good at it, you should get a job doing it where you get 2/20, not trade your own money. Hell, you can do that even if you're not good at it at all!

If you're making a client millions of dollars (because the client has 10s or 100s of millions) you'll get way wealthier on fees than you would even if you were just killing it with your own $10k (or whatever not-FIRE amount). And there's zero risk, unlike trading your own money...

Actually, you'll get wealthy pretty fast on fees even if you lose money.

So when people start talking about how if you're smart and good you can win at day trading, I have to wonder how smart they can be if they're not working as traders already and making money the safe AND fast way.

-W
Title: Re: Is Day Trading Worth It?
Post by: eddy20 on October 10, 2016, 05:55:32 PM
Interesting subject; I keep thinking about a little day trading and my wife says "NO"! i traded before the tech bubble because I love the leverage of options; trade out of the money leaps or puts and if you GUESS correctly you will make money. But day trading is way to stressful and a zero sum game; eventually unless you GUESS correctly you will loose money. Just my .02 and worth every penny of it; just like free advise you get what you pay fore.
Title: Re: Is Day Trading Worth It?
Post by: BTDretire on October 13, 2016, 07:39:09 PM
I have a friend that day traded. He lost money, he now thinks the market is rigged and will not put money in the stock market.
 He has lost well over $500,000 in the last 6 years, because his money was in a bank, instead of VTSAX.
Title: Re: Is Day Trading Worth It?
Post by: Rubic on October 14, 2016, 05:32:03 AM
I have a friend that day traded. He lost money, he now thinks the market is rigged and will not put money in the stock market.

I hear these stories a lot.  The kind of story I never seem to hear:

"I had a friend who once put his entire savings in a Vanguard Total Market
index fund 20 years ago.  Lost it all, every penny."

Title: Re: Is Day Trading Worth It?
Post by: LiquidLen on October 14, 2016, 09:07:02 AM
I work for a company that does compliance for investment banks. From what I see, every type of market manipulation we secure against mainly protects day traders. I'll give you an example:
Let's say I want to manipulate a security's price to be lower, and you just bought it. Let's say I manage to manipulate it to be 2% less than it was when you bought it. you'd likely sell it at a loss and lose money on the sale.
Let's say you have had the same security for 10 years now and it has already increased its price by 100%. I managed to do the same type of manipulation and decreased the price by 2%. you're not selling it at an optimal price, but this 2% decrease from the new price is not going to harm you much.
If I get caught I face a hefty fine, but you don't get your money back.
This is only one scenario where someone manipulated the market for his advantage, but there are an endless number of scenarios where you didn't manage to predict the right outcome. I love all the different layers (like running averages) you can add on these market graphs. they make you feel like you understand the market and have more control than you actually have.
I met a few people who claimed that at one time they managed to predict the market pretty well using them and make a good profit, never met someone who became rich doing that and met a few people who became poor.
Title: Re: Is Day Trading Worth It?
Post by: steveo on October 14, 2016, 05:17:33 PM
I have a friend that day traded. He lost money, he now thinks the market is rigged and will not put money in the stock market.

I hear these stories a lot.  The kind of story I never seem to hear:

"I had a friend who once put his entire savings in a Vanguard Total Market
index fund 20 years ago.  Lost it all, every penny."


This puts it into perspective doesn't it.
Title: Re: Is Day Trading Worth It?
Post by: MoonLiteNite on October 15, 2016, 01:56:58 AM
I have a friend that day traded. He lost money, he now thinks the market is rigged and will not put money in the stock market.

I hear these stories a lot.  The kind of story I never seem to hear:

"I had a friend who once put his entire savings in a Vanguard Total Market
index fund 20 years ago.  Lost it all, every penny."


This puts it into perspective doesn't it.

Problem is, when you day trade you DON'T put all your money into one trade. That is how the stupid friend lost all of his money. You generally want to day trade with 2-5% of your total account.
That way, if you can lose 100% of your money week after week and still be OK.
Smart day traders look for trades where they have at worst 2:1 odds, so even if they are right only 40% of the time on their trades, they still come out ahead.

Now the better of a TA reader you are, the most often you win and the more often you get more money than you could lose
Title: Re: Is Day Trading Worth It?
Post by: steveo on October 15, 2016, 05:13:56 AM
I have a friend that day traded. He lost money, he now thinks the market is rigged and will not put money in the stock market.

I hear these stories a lot.  The kind of story I never seem to hear:

"I had a friend who once put his entire savings in a Vanguard Total Market
index fund 20 years ago.  Lost it all, every penny."


This puts it into perspective doesn't it.

Problem is, when you day trade you DON'T put all your money into one trade. That is how the stupid friend lost all of his money. You generally want to day trade with 2-5% of your total account.
That way, if you can lose 100% of your money week after week and still be OK.
Smart day traders look for trades where they have at worst 2:1 odds, so even if they are right only 40% of the time on their trades, they still come out ahead.

Now the better of a TA reader you are, the most often you win and the more often you get more money than you could lose

I've traded but not day traded. I believe though the concept is still exactly the same but probably more likely to fail if you are a day trader. The shorter your time period the lower your chances of winning.

All this talk regarding lines on a chart I've heard before. I've heard traders state this who don't make money. I also have never seen the applicability when I trade with my own money. I don't believe 99% of the stuff that people state about trading.
Title: Re: Is Day Trading Worth It?
Post by: torbisen on October 15, 2016, 10:39:36 AM
Hey everyone.  I'm curious if anyone here has had any experience day trading?  And if so, what qualifications or requirements do you need to start?  ( i.e., schooling, trading platforms and software, starting funds, certifications, etc?)

I'm actively interested in running a compounding interest experiment, though it may seem volatile to others, but I figured what the hell, I might as well try.  We've all seen that article that asks "What to do with $1000 on hand?", and granted there is a lot you can do with that.  I've also heard the compounding interest story since I was a little kid: "Choose one option: $1000 a day for 31 days, or you get a penny which doubles in amount every day after that until the 31st day.  Which would you choose?  Well the penny, because it would be $10 million on a 100% return."

Doing the math on something more feasible, if you started with the 13th day, which would be about $1500 (a reasonable investment amount), and were able to get a 25-50% return (yes, pretty high and possibly unachievable) just 13-18 times, you could have a portfolio worth close to a million dollars. 

I am from Norway, so i might misunderstand your text slightly, but my suggestion is this:

I have for many years (about 20) followed a magazine called "Dine Penger" or "your Money" in American language. Its a magazine with a lot of economical tips for normal people. They give a monthly stock tips, where they always have 8 stocks in their portifolio, shifting out 2-4 stocks every month.
Technically to get the accumulated interest they have, they rebalance the portfolio every month, something you would not do because you would have to buy and sell small amount of each share every month to do it, so your result would be slightly different, not necessary worse though because the winners run higher do to the accumulated interest than the losers run low typically and mathematically.
The point is that since 1987 they have made 24% annual return in average. The 100000,- they started with has today accumulated to 66000000,-  This is with no taxes or fees included. Typically if you run around 10000$ on each stock you would end up paying approx 0,5% of your portfolio value pr year in trading fee.
The other problem is that they give the tip on an evening and you have to buy the next day. The price might not be the same.
I checked this for an two years period and in average you had to pay 0,9% more and got around 0,3% less for the ones you sold on the closure price of the stock on the day after. It means around a 5% loss on your portfolio yearly for this tendency. I also statistically checked this by doing standard deviation and i dont know the american word for this but maybe standard failure.
This found that the 66 trades (over two years) I was researching gave me the results that it was a 95% probability that the accumulated portfolio loss due to this tendency would place itself between 2%-10% yearly, with the before mentioned average for the two years I investigated placed itself on 5% loss.
This means that if you did this yourself, you would expect to get not 23% but around 16% or so over a long period annually. That is a lot more than the index of the norwegian stock exchange which is around 7-8% i think.
I have tried this myself for a short period of 5months and then got 14% that was way more than the index`s 9% in the period.

Is this feasible?  Yes, but not unless I do a lot of research and understand the risks, true costs per trades, etc.

I figured I'd rather try then not, so to everyone here, what's your advice (positive advice) and knowledge? I'm happy to hear everyone's thoughts on the challenge.
Title: Re: Is Day Trading Worth It?
Post by: powskier on October 15, 2016, 11:44:43 PM
Day trading is fun and exciting, you should do it.
You should also do lots of drugs, drive 150mph on the freeway and have sex with strangers while under the influence.
Oh and don't worry about the fact that you are still new to securities, just do whatever strangers on Yahoo message boards do. Also penny stocks are awesome, and fun.





Trying to decide if I should mention words like "sarcasm" and "disclaimer". Naaaaa.
Title: Re: Is Day Trading Worth It?
Post by: Frugalman19 on October 16, 2016, 10:01:25 AM
There are going to be people who make money trading, just like there are going to be online bloggers who end up making millions (*cough* MMM, *cough*).   Does it mean you will likely make significant money blogging?  Statistics say no way.  Still, it does happen.

But if 99.9% of people who try trading lose, then it is probably not a good idea.

If you have made consistent 30% returns over the last 15 years, you are not lucky. You are simply one of the most successful day traders out there, possibly of all time. Your should seriously consider doing it as a profession, because I dont know of any mutual funds or hedge funds for that matter with that kind of return, and their money managers make $100+ million dollars a year to try and eek out 12% returns.

If you make 30% for one or three years thats luck. But to make 30% in the past 15 year, which is known for being a particularly tricky market, thats not luck. I think you have a calling.
Title: Re: Is Day Trading Worth It?
Post by: GuitarStv on October 16, 2016, 03:20:05 PM
There are going to be people who make money trading, just like there are going to be online bloggers who end up making millions (*cough* MMM, *cough*).   Does it mean you will likely make significant money blogging?  Statistics say no way.  Still, it does happen.

But if 99.9% of people who try trading lose, then it is probably not a good idea.

If you have made consistent 30% returns over the last 15 years, you are not lucky. You are simply one of the most successful day traders out there, possibly of all time. Your should seriously consider doing it as a profession, because I dont know of any mutual funds or hedge funds for that matter with that kind of return, and their money managers make $100+ million dollars a year to try and eek out 12% returns.

If you make 30% for one or three years thats luck. But to make 30% in the past 15 year, which is known for being a particularly tricky market, thats not luck. I think you have a calling.

We have people in this thread who claim to consistently make 20% returns each month.  :P
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 16, 2016, 04:42:08 PM
There are going to be people who make money trading, just like there are going to be online bloggers who end up making millions (*cough* MMM, *cough*).   Does it mean you will likely make significant money blogging?  Statistics say no way.  Still, it does happen.

But if 99.9% of people who try trading lose, then it is probably not a good idea.

If you have made consistent 30% returns over the last 15 years, you are not lucky. You are simply one of the most successful day traders out there, possibly of all time. Your should seriously consider doing it as a profession, because I dont know of any mutual funds or hedge funds for that matter with that kind of return, and their money managers make $100+ million dollars a year to try and eek out 12% returns.

If you make 30% for one or three years thats luck. But to make 30% in the past 15 year, which is known for being a particularly tricky market, thats not luck. I think you have a calling.

You do realize it has not been exactly 30% each year right?  Just an average of 30% compounded yearly over 15 years.  I had one year early on where I was down 80% and only the absurdly stupid move of Microsoft buying Nokia saved me.

How many investors would stick with someone who lost 80% of their money one year (even if they eventually made it all back and more to get the average 30% per year return)?  It is probably why I cannot reproduce the past 15 years with significant money.  It is one thing to see $5,000 drop to $1,000 but quite another to see $500,000 drop to $100,000.  I still can sleep while having $120,000 at risk, but it is getting close to my tolerance limit.
Title: Re: Is Day Trading Worth It?
Post by: PizzaSteve on October 16, 2016, 05:05:52 PM
IMO day trading is not worth it.

As has been said, one must make money in excess of transaction fees and also taxes.

Taxes are generally high on short term profits, so when you succeed you get nailed with high taxes.

If you fail, you likely to not benefit much from the tax losses.

It's usually a lose, lose 'opportunity.'  That said, good luck with your gambling experiment.  I understand Vegas has great pawn shops.
Title: Re: Is Day Trading Worth It?
Post by: arebelspy on October 16, 2016, 08:48:50 PM
Just an average of 30% compounded yearly over 15 years.  I had one year early on where I was down 80% and only the absurdly stupid move of Microsoft buying Nokia saved me.

Well this timeline doesn't add up.

15 years ago was 2001.

Microsoft announced the purchase of Nokia's phone assets in September 2013 and finalized the deal in April 2014.

You were down 80% "early" (2002?  2003?) but that acquisition just 2-3 years ago "saved" you...?
Title: Re: Is Day Trading Worth It?
Post by: steveo on October 17, 2016, 03:53:22 AM
I taught myself to trade and I use Stockcharts. There's a lot of educational info on their site. It's good to learn from other traders but before you play with a substantial amount of money, you have to become confident with your trading abilities and trade on what you feel, not what someone else feels. The more experience you have, the less risky it is. I have also heard that most traders fail. I don't know where the stats come from. Maybe it's true. It isn't easy but if you work at it, you can become successful. A lot of the advice that people give against trading is bullshit. If you are smart and tend to think out of the box, you can do it.
The bolded lines are what I have comments about. 

I think as one trades, success is just as likely to create the illusion that you are getting better as actually creating skills.  Some of the top traders I knew developed habit over time that actually reduced their effectiveness.  The best traders are like computer programs.  They don't succeed by getting better, they succeed by repeating something that works, flawlessly, and don't change.

Anecdotally, I have had some experience with professional trading firms, though I was in the strategy area, not trading.  When I worked with these two successful trading firms, I found that the key to their success was not skill based at all.

My conclusion was that they made money because they had:
   1) superior information in the markets they traded,
   2) access to cheaper capital than most people can get,
   3) operated at a scale that they could literally move and manipulate commodity prices in localized markets, and
   4) dealt in a markets with occasionally price insensitive buyers they could abuse.

So, if you have the 4 factors above, trading can be very profitable.  These guys still occasionally had someone rip their face off and took huge losses.  It is part of the game.

The challenge with stocks is that they are so liquid and globally traded, it is very very hard to make money in a consistent way.   #1 is either impossible or illegal; #2 is usually unattainable because cheap money always has at least some cost...still capital is cheap now.  No top traders risk their own money (bad), which should be instructive to you; #3 requires that you do this as a professional and as a company and usually invest in technology to compete (on the plus side the cost of tech has dropped, but negative side is globalize go markets are too huge to dominate mostly); #4 does still exist.  Finding stupid buyers or sellers is probably your best hope, but make sure you are not the stupid one when facing inefficiencies.  I hear. Bennie Babies are readily available.

I think that there is also some false beliefs here. I know a top trader. He risks his own money and doesn't use a stop loss. He made his money though trading other people's money and he has busted out more than once. He definitely isn't a robot. It's all feel.

He also came up with a trading algorithm with a programmer. It was all backed by other people's money. It was one of the failures.

The guy I know had positions so big at one time that unwinding them would have moved the whole market and this is the currency market. He couldn't figure out how to get out and eventually wrote some options that he knew would get triggered.

I don't believe anyone's ideas when it comes to trading. If traders were making money with all their great ideas like triple bottoms or whatever they wouldn't write books about it.

There is a tonne of money in trading. Taking the fees and the bid/ask spread from punters.
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 17, 2016, 06:53:42 AM
Just an average of 30% compounded yearly over 15 years.  I had one year early on where I was down 80% and only the absurdly stupid move of Microsoft buying Nokia saved me.

Well this timeline doesn't add up.

15 years ago was 2001.

Microsoft announced the purchase of Nokia's phone assets in September 2013 and finalized the deal in April 2014.

You were down 80% "early" (2002?  2003?) but that acquisition just 2-3 years ago "saved" you...?

Maybe the "early" part was not quite accurate.   I started getting into Nokia in way too early in 2009, after they had dropped a huge amount and I bought in again in 2011 and near the bottom at $2 something in 2012.  It was horrible.   It recovered some but I was still at like $6 cost basis with the stock around $3.xx.  Then microsoft comes and bails them out, and when the stock hit $8 on that, I sold everything.

It seems so long ago but maybe just because I tried to put it out of my memory.
Title: Re: Is Day Trading Worth It?
Post by: Frugalman19 on October 17, 2016, 09:39:47 AM
There are going to be people who make money trading, just like there are going to be online bloggers who end up making millions (*cough* MMM, *cough*).   Does it mean you will likely make significant money blogging?  Statistics say no way.  Still, it does happen.

But if 99.9% of people who try trading lose, then it is probably not a good idea.

If you have made consistent 30% returns over the last 15 years, you are not lucky. You are simply one of the most successful day traders out there, possibly of all time. Your should seriously consider doing it as a profession, because I dont know of any mutual funds or hedge funds for that matter with that kind of return, and their money managers make $100+ million dollars a year to try and eek out 12% returns.

If you make 30% for one or three years thats luck. But to make 30% in the past 15 year, which is known for being a particularly tricky market, thats not luck. I think you have a calling.

You do realize it has not been exactly 30% each year right?  Just an average of 30% compounded yearly over 15 years.  I had one year early on where I was down 80% and only the absurdly stupid move of Microsoft buying Nokia saved me.

How many investors would stick with someone who lost 80% of their money one year (even if they eventually made it all back and more to get the average 30% per year return)?  It is probably why I cannot reproduce the past 15 years with significant money.  It is one thing to see $5,000 drop to $1,000 but quite another to see $500,000 drop to $100,000.  I still can sleep while having $120,000 at risk, but it is getting close to my tolerance limit.

of course I understand it is an average. But you do realize, with that average you have beaten almost all professional money managers out there, and im talking hedge funds too where they have complete discretion to go into any asset class. There are plenty of funds out there that are specifically targeted for big growth. I would seriously start looking into this as some side work. Like I said before, if it was even 5 years it might be good luck, but 15 years, completely wipes out the notion of being lucky. The law of large numbers and statistics start coming into play and luck is out the window, thats like landing heads 50 times in a row.

I guess the difference between you and I, is if I did more than triple my money, I would have taken my profits long ago and moved them into index funds and just chalked it up to right place right time. Because day trading is simply gambling, yes you might have some skill added, but at the end of the day it is gambling. Every expert in finance will tell you that.

Title: Re: Is Day Trading Worth It?
Post by: waltworks on October 17, 2016, 12:12:06 PM
Dubious attempt to change story.

Pwned by Arebelspy. I don't know how anyone can take your story seriously after that.

-W
Title: Re: Is Day Trading Worth It?
Post by: MoonLiteNite on October 17, 2016, 01:12:14 PM
I know a top trader. He risks his own money and doesn't use a stop loss. He made his money though trading other people's money and he has busted out more than once.

Once again, this is why day trading is not worth it to most people.
You HAVE to use stop losses, if there is 50/50 chance you will be right on a stock price, or a micro jump. And you have your stop loss set 50% of the point of which  you think your gains will be, you will make money.

People lose in day trading by thinking they have to hold, which then ties up their capital which then stops them from day trading. And after a few days, they sell for a huge loss, rather than taking that small .25% loss.
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 17, 2016, 01:20:15 PM
Dubious attempt to change story.

Pwned by Arebelspy. I don't know how anyone can take your story seriously after that.

-W

I don't really care what they take seriously.   It isn't like I was getting paid to post exact trades.  I was not able to figure out how to get a history on Etrade back to 2001.   So excuse me if I called trading from 2009 to 2012 "early on".

The really early trades were mostly Microsoft Jan call options at about $30 strike IIRC.   This WAS back in the mid 2000s.

As for Arebelspy, I have taken his word that he is able to make $1000 to $2000 a month scamming credit card companies.  I haven't questioned his numbers.
Title: Re: Is Day Trading Worth It?
Post by: steveo on October 17, 2016, 03:41:44 PM
Roland - without meaning to be disrespectful to you I think what happens is people have selective memory when it comes to trading. My opinion is that every person may have some ability to trade well but it has nothing at all to do with what we are told works. It's much more like gambling on horses.

I doubt you've accurately documented all your trading costs/fees and each trade that you've made. You might think that your up that amount but it's really unlikely. It's also really unlikely that you will make any sort of reasonable return if you continue to follow that process. No one can predict the future with a high level of consistency.
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 17, 2016, 05:31:15 PM
Roland - without meaning to be disrespectful to you I think what happens is people have selective memory when it comes to trading. My opinion is that every person may have some ability to trade well but it has nothing at all to do with what we are told works. It's much more like gambling on horses.

I doubt you've accurately documented all your trading costs/fees and each trade that you've made. You might think that your up that amount but it's really unlikely. It's also really unlikely that you will make any sort of reasonable return if you continue to follow that process. No one can predict the future with a high level of consistency.

I did not document each trade along with the fees, but my account at Etrade has never had a dime added to it and was $1700 when my 401K at a former company was rolled over to a IRA at Etrade in 2001.   My current balance is around $120,000 (actually down a few thousand since we started this thread because Gilead has been performing poorly...I am not worried yet though).

So if you take 2016 - 2001 as 15 years, and realize it takes about a 7000% gain to get from $1700 to $120,000, you can calculate out the average compounded annual return it would take, which is about 32%.

If Gilead goes to zero tomorrow, then my gain would drop from 7000% down to about 500% (I have around $9,000 in cash in the account).  My average compounded annual return would then be a much less impressive 12% or so.

My actual gains each year have run from about -80% to +200%   Volatile.
Title: Re: Is Day Trading Worth It?
Post by: arebelspy on October 17, 2016, 06:08:35 PM
I don't think you're lying Roland. I think you believe everything you say.  And I think almost all of it is true, too*.

I do believe your high returns.  I don't think they're sustainable, or feasible, with larger amounts (as you have indicated as well), or necessarily a product of any sort of skill or particular rationale.  As you said, Microsoft not bailing you out means we're having a very different conversation right here.

*I say almost all, because it ties into the comments walt and stevo made: memory is faulty, and I think there's likely things you're mistaken on regarding that account.  I don't know what they would be, and I have no reason to question any particular item of information, but just like I know some of my own memories are wrong (but not which ones), I think the odds are overwhelmingly likely something in your story is wrong, just due to how the human brain works.

https://en.wikipedia.org/wiki/Preface_paradox (https://en.wikipedia.org/wiki/Preface_paradox)
Title: Re: Is Day Trading Worth It?
Post by: Roland of Gilead on October 17, 2016, 07:20:49 PM
With the volatility that I have admitted to, I think we can still say my returns really boil down to luck.

If you took $1700 right now and bought October $80 calls on Gilead for $0.03, expiring this Friday and then news comes out tomorrow that Gilead is going to merge with Merck, or split up into two companies, or anything else that drives the price up 15%, you would turn the $1700 into $226,000.  In one or two days.  Now you take the money and invest for the next 14 years relatively safely, in several blue chip stocks across different industries.

You can then say your average annual return is 38% or whatever it works out to be, when in reality you made some really big lucky trades.

I think this is what I am trying to say happened.   I have traded this account for 15 years but had some lucky breaks which overcame some big losses.  Nobody would want to risk serious money doing things this way.  Who would want to be down 80%, even for just a year?  It sucks.
Title: Re: Is Day Trading Worth It?
Post by: arebelspy on October 17, 2016, 07:28:53 PM
Definitely.

Hope you continue to get lucky, so it doesn't suck!  :)
Title: Re: Is Day Trading Worth It?
Post by: steveo on October 17, 2016, 08:19:51 PM
I know a top trader. He risks his own money and doesn't use a stop loss. He made his money though trading other people's money and he has busted out more than once.

Once again, this is why day trading is not worth it to most people.
You HAVE to use stop losses, if there is 50/50 chance you will be right on a stock price, or a micro jump. And you have your stop loss set 50% of the point of which  you think your gains will be, you will make money.

People lose in day trading by thinking they have to hold, which then ties up their capital which then stops them from day trading. And after a few days, they sell for a huge loss, rather than taking that small .25% loss.

I honestly don't believe this. It's the same concept in longer term trading. I'll tell you what the trader I know did. When he got a job running a big banks trading operations he told everyone that they had to take bigger positions and I don't think he ever said anyone needs to have a stop loss

The reason why is because stop losses shake you out of your positions. You need commitment to hold that position and make a profit.

What you state sounds good in theory but I don't believe it works in reality.

I'll state that there will always be a flip side. Some people might make money with stop losses. I'm not sure if it's rarer than day traders who make money but I think it would be.
Title: Re: Is Day Trading Worth It?
Post by: AlanStache on October 18, 2016, 06:44:21 AM
I know a top trader. He risks his own money and doesn't use a stop loss. He made his money though trading other people's money and he has busted out more than once.

Once again, this is why day trading is not worth it to most people.
You HAVE to use stop losses, if there is 50/50 chance you will be right on a stock price, or a micro jump. And you have your stop loss set 50% of the point of which  you think your gains will be, you will make money.

People lose in day trading by thinking they have to hold, which then ties up their capital which then stops them from day trading. And after a few days, they sell for a huge loss, rather than taking that small .25% loss.

I honestly don't believe this. It's the same concept in longer term trading. I'll tell you what the trader I know did. When he got a job running a big banks trading operations he told everyone that they had to take bigger positions and I don't think he ever said anyone needs to have a stop loss

The reason why is because stop losses shake you out of your positions. You need commitment to hold that position and make a profit.

What you state sounds good in theory but I don't believe it works in reality.

I'll state that there will always be a flip side. Some people might make money with stop losses. I'm not sure if it's rarer than day traders who make money but I think it would be.

Why would someone who is watching a price more or less full time need a stop loss?  I get why someone not watching full time would use one.

Title: Re: Is Day Trading Worth It?
Post by: lordmetroid on October 18, 2016, 10:48:01 AM
I know a top trader. He risks his own money and doesn't use a stop loss. He made his money though trading other people's money and he has busted out more than once.

Once again, this is why day trading is not worth it to most people.
You HAVE to use stop losses, if there is 50/50 chance you will be right on a stock price, or a micro jump. And you have your stop loss set 50% of the point of which  you think your gains will be, you will make money.

People lose in day trading by thinking they have to hold, which then ties up their capital which then stops them from day trading. And after a few days, they sell for a huge loss, rather than taking that small .25% loss.

I honestly don't believe this. It's the same concept in longer term trading. I'll tell you what the trader I know did. When he got a job running a big banks trading operations he told everyone that they had to take bigger positions and I don't think he ever said anyone needs to have a stop loss

The reason why is because stop losses shake you out of your positions. You need commitment to hold that position and make a profit.

What you state sounds good in theory but I don't believe it works in reality.

I'll state that there will always be a flip side. Some people might make money with stop losses. I'm not sure if it's rarer than day traders who make money but I think it would be.

Why would someone who is watching a price more or less full time need a stop loss?  I get why someone not watching full time would use one.
Because when news of the shit hitting the fan. Everything goes incredibly fast.
Title: Re: Is Day Trading Worth It?
Post by: DrF on October 18, 2016, 12:14:24 PM
Unless you're trading futures (real time 24 hours a day, ~5 days a week availability), your position could change 10-30% before you would be able to do anything (buy or sell). Even if you had a stop-loss, the price could jump well past it before the markets are open to you. Here is an example of someone shorting a pharmaceutical stock and not being able to get out.

http://www.joshuakennon.com/how-joe-campbell-found-himself-106445-56-in-debt-to-his-broker-in-a-matter-of-minutes-because-he-didnt-understand-the-risks-of-shorting-stock/
Title: Re: Is Day Trading Worth It?
Post by: Financial.Velociraptor on October 18, 2016, 12:52:09 PM
Hey Roland.  Gratz.  I trade too and do OK.  Not 30% annualized since inception but OK.  I keep a record of what I do at my blog and it has helped me realize my actual net returns aren't as good as I originally thought they were.  If you don't have it down on paper, its human nature to be a little biased.  But don't let the haterz stop you from doing something that works for you.
Title: Re: Is Day Trading Worth It?
Post by: MoonLiteNite on October 18, 2016, 12:56:29 PM
I know a top trader. He risks his own money and doesn't use a stop loss. He made his money though trading other people's money and he has busted out more than once.

Once again, this is why day trading is not worth it to most people.
You HAVE to use stop losses, if there is 50/50 chance you will be right on a stock price, or a micro jump. And you have your stop loss set 50% of the point of which  you think your gains will be, you will make money.

People lose in day trading by thinking they have to hold, which then ties up their capital which then stops them from day trading. And after a few days, they sell for a huge loss, rather than taking that small .25% loss.

I honestly don't believe this. It's the same concept in longer term trading. I'll tell you what the trader I know did. When he got a job running a big banks trading operations he told everyone that they had to take bigger positions and I don't think he ever said anyone needs to have a stop loss

The reason why is because stop losses shake you out of your positions. You need commitment to hold that position and make a profit.

What you state sounds good in theory but I don't believe it works in reality.

I'll state that there will always be a flip side. Some people might make money with stop losses. I'm not sure if it's rarer than day traders who make money but I think it would be.

Why would someone who is watching a price more or less full time need a stop loss?  I get why someone not watching full time would use one.

Watch some level 2s during an earnings report or during a lawsuit being shown on CNN..... when you have a 50cent spread and the price is jumping between 3.50 and 4.00 every 2secs, if that sucker hits 3.49 you want OUT now.
You want a stop loss.....
Title: Re: Is Day Trading Worth It?
Post by: AlanStache on October 18, 2016, 01:35:54 PM
I know a top trader. He risks his own money and doesn't use a stop loss. He made his money though trading other people's money and he has busted out more than once.

Once again, this is why day trading is not worth it to most people.
You HAVE to use stop losses, if there is 50/50 chance you will be right on a stock price, or a micro jump. And you have your stop loss set 50% of the point of which  you think your gains will be, you will make money.

People lose in day trading by thinking they have to hold, which then ties up their capital which then stops them from day trading. And after a few days, they sell for a huge loss, rather than taking that small .25% loss.

I honestly don't believe this. It's the same concept in longer term trading. I'll tell you what the trader I know did. When he got a job running a big banks trading operations he told everyone that they had to take bigger positions and I don't think he ever said anyone needs to have a stop loss

The reason why is because stop losses shake you out of your positions. You need commitment to hold that position and make a profit.

What you state sounds good in theory but I don't believe it works in reality.

I'll state that there will always be a flip side. Some people might make money with stop losses. I'm not sure if it's rarer than day traders who make money but I think it would be.

Why would someone who is watching a price more or less full time need a stop loss?  I get why someone not watching full time would use one.

Watch some level 2s during an earnings report or during a lawsuit being shown on CNN..... when you have a 50cent spread and the price is jumping between 3.50 and 4.00 every 2secs, if that sucker hits 3.49 you want OUT now.
You want a stop loss.....
ok, thanks.  in summary you are saying computer are faster than humans :-)
Title: Re: Is Day Trading Worth It?
Post by: PizzaSteve on October 18, 2016, 03:26:51 PM
Unless you're trading futures (real time 24 hours a day, ~5 days a week availability), your position could change 10-30% before you would be able to do anything (buy or sell). Even if you had a stop-loss, the price could jump well past it before the markets are open to you. Here is an example of someone shorting a pharmaceutical stock and not being able to get out.

http://www.joshuakennon.com/how-joe-campbell-found-himself-106445-56-in-debt-to-his-broker-in-a-matter-of-minutes-because-he-didnt-understand-the-risks-of-shorting-stock/

Or unless you are operating part of the market.  The successful traders I dealt with both traded and took positions within the markets they traded, including operating sub-markets.  Part of the strategy was to control some elements of overall supply and demand.

So in effect they were both day trading and taking long or long-short positions.  Ideally they used the short term trading to also help create supply for unwinding the long positions. 

It is analogous to the CEO day trading his own stock.  He has information not generally available and also can influence overall supply by issuing shares to raise capital.  In most markets this type of stuff gets regulated away....eventually.
Title: Re: Is Day Trading Worth It?
Post by: steveo on October 18, 2016, 10:29:12 PM
You want a stop loss.....

And yet the guy I know who managed a big banks treasury operations (basically trading) and a billionaire's hedge fund thinks they don't work. He is also a multi-millionaire from trading.

He taught me how to trade and one thing that I got out of it was the idea of following the so called rules doesn't work out that good in reality.

I accept some people may be different but I think a lot of the trading rules don't work.

I learnt that you need to have a big set of balls and hold onto a big position when it is making money. The flip side of this is that you may hold onto losing positions too long. If you don't do this though I think you will get cut with a thousand little cuts. You will get way too many losses and that will kill your account.
Title: Re: Is Day Trading Worth It?
Post by: pbkmaine on October 19, 2016, 12:42:42 AM
When I was a financial planner, I had a client with a PhD in Economics from Oxford. He ran the derivatives trading desk at one of the big investment houses. Where did he put his own money? Index funds.
Title: Re: Is Day Trading Worth It?
Post by: tyort1 on October 23, 2016, 01:29:19 PM
Good lord - just reading this post makes me stressed out.  WTF, just drop it into index funds and forget about it!  The point of MMM is not to get rich, but to enjoy life.  The whole point of FIRE (IMO) is to remove stresses like this from your life.