Author Topic: Is Day Trading Worth It?  (Read 25356 times)

Dragonstrike

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Is Day Trading Worth It?
« 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.

pbkmaine

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Re: Is Day Trading Worth It?
« Reply #1 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.

Tyson

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Re: Is Day Trading Worth It?
« Reply #2 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. 

dandarc

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Re: Is Day Trading Worth It?
« Reply #3 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.

Roland of Gilead

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Re: Is Day Trading Worth It?
« Reply #4 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.

BigHaus89

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Re: Is Day Trading Worth It?
« Reply #5 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.

Dragonstrike

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Re: Is Day Trading Worth It?
« Reply #6 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.


Dragonstrike

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Re: Is Day Trading Worth It?
« Reply #7 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?

AdrianC

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Re: Is Day Trading Worth It?
« Reply #8 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.

trailcamaddict

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Re: Is Day Trading Worth It?
« Reply #9 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.

Dragonstrike

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Re: Is Day Trading Worth It?
« Reply #10 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. 

sisto

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Re: Is Day Trading Worth It?
« Reply #11 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^^^^

BigHaus89

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Re: Is Day Trading Worth It?
« Reply #12 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.

talltexan

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Re: Is Day Trading Worth It?
« Reply #13 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)

AlanStache

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Re: Is Day Trading Worth It?
« Reply #14 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. 

steveo

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Re: Is Day Trading Worth It?
« Reply #15 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.

thunderball

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Re: Is Day Trading Worth It?
« Reply #16 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.



« Last Edit: September 23, 2016, 06:01:42 PM by thunderball »

Roland of Gilead

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Re: Is Day Trading Worth It?
« Reply #17 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.


FB2020

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Re: Is Day Trading Worth It?
« Reply #18 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

TomTX

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Re: Is Day Trading Worth It?
« Reply #19 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.

financialfreedomsloth

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Re: Is Day Trading Worth It?
« Reply #20 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.

Scandium

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Re: Is Day Trading Worth It?
« Reply #21 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?

Dragonstrike

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Re: Is Day Trading Worth It?
« Reply #22 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. 

                                         

waltworks

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Re: Is Day Trading Worth It?
« Reply #23 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

jjcamembert

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Re: Is Day Trading Worth It?
« Reply #24 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

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.

lordmetroid

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Re: Is Day Trading Worth It?
« Reply #25 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.

Financial.Velociraptor

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Re: Is Day Trading Worth It?
« Reply #26 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'.

hodedofome

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Re: Is Day Trading Worth It?
« Reply #27 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.

FIPurpose

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Re: Is Day Trading Worth It?
« Reply #28 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.

AdrianC

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Re: Is Day Trading Worth It?
« Reply #29 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.

Rubic

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Re: Is Day Trading Worth It?
« Reply #30 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).

DrF

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Re: Is Day Trading Worth It?
« Reply #31 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

steveo

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Re: Is Day Trading Worth It?
« Reply #32 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.

FIREby2021

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Re: Is Day Trading Worth It?
« Reply #33 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.

Roland of Gilead

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Re: Is Day Trading Worth It?
« Reply #34 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.

Dragonstrike

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Re: Is Day Trading Worth It?
« Reply #35 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.

AdrianC

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Re: Is Day Trading Worth It?
« Reply #36 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.

Roland of Gilead

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Re: Is Day Trading Worth It?
« Reply #37 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.

steveo

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Re: Is Day Trading Worth It?
« Reply #38 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.

Roland of Gilead

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Re: Is Day Trading Worth It?
« Reply #39 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.

AlanStache

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Re: Is Day Trading Worth It?
« Reply #40 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. 

Roland of Gilead

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Re: Is Day Trading Worth It?
« Reply #41 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. 

jjcamembert

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Re: Is Day Trading Worth It?
« Reply #42 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.

MoonLiteNite

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Re: Is Day Trading Worth It?
« Reply #43 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





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.
« Last Edit: October 01, 2016, 04:51:37 AM by MoonLiteNite »

MoonLiteNite

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Re: Is Day Trading Worth It?
« Reply #44 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.

swamimeister

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Re: Is Day Trading Worth It?
« Reply #45 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.

Rubic

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Re: Is Day Trading Worth It?
« Reply #46 on: October 01, 2016, 10:27:30 AM »
If you can get rich by merely avoiding dumb mistakes, why take unnecessary risks?

frugalkristen

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Re: Is Day Trading Worth It?
« Reply #47 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!

whodidntante

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Re: Is Day Trading Worth It?
« Reply #48 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. 

whodidntante

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Re: Is Day Trading Worth It?
« Reply #49 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.