Day Trading is Back

[ethics]

Not sure how many of you invest in the Stock Market but I am sure those that have already know what day trading is.

In basic terms it's selling and buying at a very low spread (price between a buy and a sell or bid and offer if you will) on high volume levels (buying and selling many times on a same or different stock throughout the day).

If anyone even tried this I'd give them a medal for it's VERY stressful. It's so stressful that I would not be surprised that suicide and violence will follow.

When the dot.com bubble burst I thought we should have been dancing. Not so... It's baaaaaaaaaaaaack... (http://story.news.yahoo.com/news?tmpl=story2&u=/nm/bizfinancial_daytrade_dc)

Now experts say a new breed of day trader has emerged. Although there are not nearly so many of these investors as the estimated 8,000 that joined the profession in the late 1990s, their influence on the market is growing.

Day trading transactions often are still a matter of pennies, conducted in seconds. But veterans of the field say it's a different game now, and today's day trader is better trained, more averse to risk, and more knowledgeable about the market.

And I don't buy it. It's still day trading and even with the risk being none issue you still have to hedge with the same security or others and KNOW what will happen.

In other words, I still think the potential to lose extra-ordinary money is there.

[Domh]

This has been rolling around in my head for years and I need to get a wrap on it and soon.

If I have 10grand in cash, and I research and ID a stock that costs 2 bucks a share and I have carefully researched it and feel confident that it will go up even a few pennies over a day or so, why would I not go ahead and make the profit?

Yes, its obvious I dont get the whole picture, but my post is a cry for help! I need to be edumacated.

;)

[SixofNine]

If I have 10grand in cash, and I research and ID a stock that costs 2 bucks a share and I have carefully researched it and feel confident that it will go up even a few pennies over a day or so, why would I not go ahead and make the profit?

Yes, its obvious I dont get the whole picture, but my post is a cry for help! I need to be edumacated.

That's what the smart day traders do - they open and close positions rapidly, settling for pennies per share gains.

There are reasons why day trading is not for everyone:

- It requires constant attention. You have to monitor price movements of your open positions like a hawk. To do it right you have to make it your full-time job.

- Many day traders rely upon technical analysis as opposed to fundamental analysis. To summarize is to lie, but the former views movements in the price of stock as a behavior independent of the company's underlying fundamental performance. Technical analysts believe in price momentum, head-and-shoulders patterns, moving averages, and other analyses of stock price completely divorced from measures such as revenue, net income, etc. I won't mock technical analysis (well, maybe I will if I'm in a really bad mood :) ), but it's not my cup of tea.

- You don't have to do this, but some day traders will take positions in which their risk is theoretically infinite, such as writing naked calls or shorting a stock. Not for the faint-hearted.

Brian

[ethics]

If I have 10grand in cash, and I research and ID a stock that costs 2 bucks a share and I have carefully researched it and feel confident that it will go up even a few pennies over a day or so, why would I not go ahead and make the profit?

Yes, its obvious I dont get the whole picture, but my post is a cry for help!


It's one of the most frequently asked questions and heres a simple answer. Market, many times, does not react in a logical manner. You would see your positions going down and you would be wondering "WTF!!!" That panic would nudge you to sell real quick and minimize your losses but right after you sell, the stock goes up.

Now it's not what happens all the time but, as Brian mentioned, you have to watch your positions and you will always feel you are missing a piece of news or something, prompting you to act or react irrationally.

[MemphisMark]

This has been rolling around in my head for years and I need to get a wrap on it and soon.

If I have 10grand in cash, and I research and ID a stock that costs 2 bucks a share and I have carefully researched it and feel confident that it will go up even a few pennies over a day or so, why would I not go ahead and make the profit?

Yes, its obvious I dont get the whole picture, but my post is a cry for help! I need to be edumacated.

;)
Listen to Dave Ramsey (http://www.daveramsey.com). He'll tell you to put that 10 grand in a Roth IRA investing in a good mutual fund that will average 12% annual growth. Keep adding to it and you'll retire rich with very little risk to your position.

Get into that day trading crap and I promise you'll lose your shirt. You have a better chance of hitting the Powerball with that 10 grand in tickets than making a profit in day trading.

[Stiofán]

I rather go to Santa Anita and play the ponies. At least I'd get some fresh air. Odds of making or losing money is about the same.

[Domh]

Well - I guess what Im considering isnt quite day trading but '3-7days' trading.

Anybody familiar with Cabots newsletter? I was just given a 3 month membership to ths new Cabot China Market Letter.

My new years project is taking that 10grand and pretending to invest it and seek 'short term' returns. I am going to keep on this for 6 months and see where I end up before putting any real money in.

Good way to learn.

[SixofNine]

When you're ready to start this trial you might want to download the free trial copy of Quant IX Software's Portfolio Record Keeper software. It does an excellent job of helping you to manage your portfolio and track returns. The free trial is 45 days. It's a 20MB download, but you can also order a CD for $5:

http://www.quantixsoftware.com/demo.html

Brian