Day Trading

Dont ever think like this :)

Oops - I forgot, nearly got another hair cut there!

Well, this one is better anyway, as it shows what really goes on :D

cartoon%20sharp.gif
 
qwertyuiop said:
Hey WHiskey,

I will have to disagree with your analysis.
While it appears to make sense, upoin analysis it is flawed.

Firstly - you are making a direct comparison between daytrading and buy-and-hold by using a nominal 20% gain.

Daytraders and position tradres(i.e. holding a position for a week or 2 or so) make money on volatility - not on long term gains.

SO - using your example above - lets say it rose 20% from one end of teh year to the next.
In this scenario the buy-and-old merchant will make 20%.

So - lets say for arguments sake that thos asset started at 100 and ended at 120 on year end.
Howver - it is quite possible that during the year it couild have risen to 150 - then dropped to 50 - risen to 140 - dropped to 60 - and eventually risen to 120.

The daytrader will attempt to make money from all these swings.

What you were doing is only looking at the start and end price and calculated the average daily gain to see what a daytrader would have made.
But as i say - it is the volatility where the day trader hopes to make his gains.
The buy-and-hold merchant on the other hand only compares the start price to the end price and ignores the volatility in between.
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Good point.

Yep, clearly the price of most shares does not rise in a straight line on a graph with time, there are spikes. However, the volitility can work both ways, sometimes a share will rise a lot in a short space of time enabling a quick profit for the day trader, but at other times the share will fall a lot in a short space of time, making for big losses.
Trying to predict short term volitility which results in a sudden rise in a share price is surely difficult. Nobody knows the future. At any given time, the probability of an upward spike in a share price is probably little greater than the probability of a downward spike in a share price. Volitility can hurt a day trader as often as it benefits him/her.
OK, this is my last post on this topic, I'm not really qualified enough in this area !
 
Whiskey said:
Good point.

Yep, clearly the price of most shares does not rise in a straight line on a graph with time, there are spikes. However, the volitility can work both ways, sometimes a share will rise a lot in a short space of time enabling a quick profit for the day trader, but at other times the share will fall a lot in a short space of time, making for big losses.
Trying to predict short term volitility which results in a sudden rise in a share price is surely difficult. Nobody knows the future. At any given time, the probability of an upward spike in a share price is probably little greater than the probability of a downward spike in a share price. Volitility can hurt a day trader as often as it benefits him/her.
OK, this is my last post on this topic, I'm not really qualified enough in this area !
Click to expand...

This might be of help to some!

Volatility is nothing more than WRB's - or Wide Range Bars.

Volatility is the daytraders friend, as a daytrader makes money by trading these WRB's, no matter what way they are going.

What matters most is the BR - bar's range.

The ability to view a chart with numerous WRB's and NRB's - Narrow Range Bars - and pick the least risky entry point to make some money, is an ART in itself that requires a systematic approach coupled with strict money management rules.

This is what daytrading is all about - and very few are cut out for it due to the way most people logically deduce, but anyone can learn how to do it, if they but change their way of thinking and take some good sound practical advice when offered, which very few do, for many reasons, but the main reason being, the education that they received.
 
"the probability of an upward spike in a share price is probably little greater than the probability of a downward spike in a share price".. Not strictly true Whiskey. Very large (as in 'spikes') movements are more likely to be downward.. this explains the volatility skew observed in option pricing, people will pay more for out of the money puts than calls. Upward movements are likely to be smaller but more numerous..
 
Market Monkey in the Tribune talks a good game too, but las time I looked I think he was up maybe 40 euro after at least a year of trading.
 
if he went short at the dow at 12700 then he is down again
 
Whiskey said:
Good point.

Yep, clearly the price of most shares does not rise in a straight line on a graph with time, there are spikes. However, the volitility can work both ways, sometimes a share will rise a lot in a short space of time enabling a quick profit for the day trader, but at other times the share will fall a lot in a short space of time, making for big losses.
Trying to predict short term volitility which results in a sudden rise in a share price is surely difficult. Nobody knows the future. At any given time, the probability of an upward spike in a share price is probably little greater than the probability of a downward spike in a share price. Volitility can hurt a day trader as often as it benefits him/her.
OK, this is my last post on this topic, I'm not really qualified enough in this area !
Click to expand...
I agree, Today i held of buying some irish bank stock believing that the stock was on the way down and twice i was incorect, the stock rallied and i missed the trades, But i believe tommorow has more opportunitys so roll on.
 
Hi T69,

I hope you sold those bank shares before they dropped?

NZT
 
markets are v messy at the moment. if the dow undercuts its january low then we are in a very big drop, all over the world
 
trader69 said:
Hello NZT, I decided to short with the airlines and made some profit, How are you getting on with your trading.
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Just lost my post as I forget to tick the stay logged in - so very quickly - not trading right now - vix is high so volatility is high - bad time to try and pick bottoms - hourly chart is best friend in this market - reduce size for short term holds until vix settles - great market for daytrading - watch sectors and commodities - defensive stocks will attract money but need to trail stops as there is bound to be another "announcement" to lift the market a bit - but don't be fooled - lower levels may well be on the cards - so short as well as go long - why cut your opp by 50% if you don't have too ;)

Rgds,

NTZ
 
jimbob1234 said:
markets are v messy at the moment. if the dow undercuts its january low then we are in a very big drop, all over the world
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Not neccessarly - markets are controlled - any down move will be followed by an up move - the problem is that you can't tell what they will do for too far out - this is why they are the experts who make the big money and the public is the public who make small money - or lose most of their money.

It is a game of odds - play the odds and you can partake in the game - listen to what you want tohear and you will probably get screwed - I bet this sounds familiar to a lot of people - some things never change in life unless one takes it upon onself to change oneslf - it is the only way to make progress!
 
NikolazTesla said:
Not neccessarly - markets are controlled - any down move will be followed by an up move - the problem is that you can't tell what they will do for too far out - this is why they are the experts who make the big money and the public is the public who make small money - or lose most of their money.

It is a game of odds - play the odds and you can partake in the game - listen to what you want tohear and you will probably get screwed - I bet this sounds familiar to a lot of people - some things never change in life unless one takes it upon onself to change oneslf - it is the only way to make progress!
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markets are controlled - any down move will be followed by an up move - this is a rubbish statement, totally untrue
 
jimbob1234 said:
markets are controlled - any down move will be followed by an up move - this is a rubbish statement, totally untrue
Click to expand...

Which part of the statement do you have an issue with - the "controlled" or "down move followed by an up move" part.

For a statement to be untrue it has to contain false information - and the charts seem to back up what I say in relation to downmoves being followed by upmoves - otherwise the chart line would just go down to zero!

click on the 5 yr tab

http://finance.google.com/finance?cid=983582

So, can I say that you have an issue with the bit about the markets being "controlled"?
 
obviously markets go up as well as down. so if u were invested in the dow in 1929 and it lost 80% of its value. not far from zero . of course i reliase that its not going to go to zero but markets can fall for a lot longer than we can stay solvent.

plus markets controls only kick in when an index falls about 10% in one day. if it keeps falling 8% per day then no control is goign to kick in and it will keep dropping until people think a bottom has been reached.
 
if the dow drops 1000 points in one day, there is no guarantee whatsoever that it will rise the next day. the up moves when they do arrive could be far less than the preceding down moves
 
JB - this might help to clear things up and see who is telling the truth!

http://dictionary.reference.com/browse/control

1.to exercise restraint or direction over; dominate; command.

Q. why does the market index price change?

A. It is due to the underlying instruments change in price - fact.

Q. Why does the underlying prices move up and down.

A. Because the shares are either bought or sold - fact.

Q. Who buys and sells most of the shares?

A. The major players like GS, LB, Pension Funds, Hedge Funds (to a lesser degree the public investor / trader) - fact.

Q. Who then is controlling the price movement?

A. The one with the biggest checkbook - who is usually the BIG MAJOR PLAYERS like GS and LB - as these fat cats have both sides of their bread buttered - they are market makers and "institutional traders" at the same time.

To the untrained eye the market movements are random - this again is nothing more than ignorance - ignorance being lack of REAL knowledge in relation to the subject matter.

But - some people only pretend to be ignorant - at the back of it they know too well how and why the index prices move - but they do what they do so that the "cycles" may continue and democracy may exist - as the fundamental basis for the existance of democracy is a sound economic structure for people to do business.

There is a reason for everything - it is called "Cause & Effect".

Randow walk theory is for those who fail to understand thre facts- or to put it in a more blunt statement - those who think they are right about, and know about, everything in life - whereas, the reality is that they are but ignorant people - see above description of ignorance, just in case anyone gets offended by this word.
 
jimbob1234 said:
if the dow drops 1000 points in one day, there is no guarantee whatsoever that it will rise the next day. the up moves when they do arrive could be far less than the preceding down moves
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You are right to question - as it is the only way to acquire new knowledge:)

There is no guarantee that any event will transpire at a future date - if there was then the present would be the future and we would be living in a world of chaos!

One must look at the whole picture - not the nice slim figure or the bulging muscles - as back of the image may lie a thousand reasons!

The ability to read charts "correctly", based on what I have written above, does nothing more than put the odds in your favour - there can never be a guarantee for a future outcome - even God did not try to tell the future, although many will try and tell you otherwise, again, due to either ignorance or self gain motives.

Once you really understand that the markets are not random - then, and only then can you use a logical and systematic approach to beat the fat cats at their own game.

You can belive what I say or not - that is entirley up to you, and anyone else who reads what I write - but I will now tell you, that when I say that the markets are "controlled" -I am speaking the truth as I see it - as I do not rell lies. Whether another sees what I see will be dependant on many things - namely trading experience, many wins as well as many losses, many psychological ups and downs, many many days and nights of har5d and gruelling work, many many times letting the family down on commitments made, many many other little things as well.

What I have just described to you is otherwise called an "Ideal"

Most live in the world of "ideas" - and the ideas by themselves are of limited value unless they are part of the "Ideal".

Summary - believe nothing your read or hear until it awakens a desire deep down insiide that will spur you into action to do something - as most go thru life thinking about everything and accomplishing nothing of any real value!

When I turned on the radio this morning anyone would think that Ireland is going to evaporate off the face of the Earth - what a bunch of ignorant peolpe we have to listen to every day, really!
 
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