Is it really possible to make money in this trading lark?

[Noahedwinbeach2]

To you guys that day trade. If you can make money day trading then good job. Some people can. Most people find it easier to find a good momentum stock and play that over several days to weeks if not months. It is just easier to me to time 1 stock instead of a different stock or the same stock day in and day out. What I was ref. to on the shorting is not shorting stocks intraday. All my posisitions are usually held for atleast 3 days or until my stop is triggered. I have tried day trading and I see how you can make money if you have enough capital to start with. Most guys don't have the chance to start with 25k so they can use margin day trading. A lot of guys like me are average joes with a family and they can't put a whole lot it. William starting with $500. Darvas started with $10,000. Both became rich NOT DAYTRADING. I don't know of any day traders that started with $500 and made it in the market. I don't know of any day traders that turned $10,000 into $2,000,000 in just 2 years. I'm not trying to say I am perfect and I know it all. What I am saying is 99% of people I think would find it much easier to trade in the likes of Darvas and William. It is much easier to get the hang of. I found day trading possible with the right tools. I noticed on some stocks the intraday chart is similar to the day chart so it is possible to day trade. Some stocks are just very fanatic and I do not beleive you can day trade with them. If I were to day trade my stops would have to be much closer like 1%. But since the return isn't usually going to be as high I think its a waist of time. My stops on my regular positions are 3% and average gains of 20%. If a day trader can average 1% a day that is a good return. Most cannot though I would have to say. In fact I would assume most would average 2% a week. Your going to have your bad days. Not everday is a good day. I beleive a day trader that is good can double there money every year. That can be achieved though without diving in and out of the market every single day. I rather purchase 5-6 stocks a year and double my money than place 20 buy orders a month. The reason I stand behind what I said about it being foolish to day trade is what seems more logical in the statements I made above. I would assume most people rather focus on 5-6 stocks a year and make the same money as someone who trades 20 times a month or even more. I think most people who day trade enjoy the rush and therefore are more like gamblers. I would honestly like to know all the day traders on this board who average 300% a year or more. Do day traders day trade for bragging rights? Day trading is almost like being a liberal. You are on the other side of the coin and just trying to defend your ignorant views.

 

[Noahedwinbeach2]

I forgot to reply on the fundamentals. Fundamentals are OK to use. What I am saying is fundamentals do not DIRECTLY influence the market. How many times have you seen good news or good earning come out on a stock and the stock price fall or not move? It happens all the time. It doesn't mean everything to have good fundamentals. Usually good fundamentals lag after performance and successful investors can tell you that. What I am saying is don't first look at fundamentally good stocks to find a good pick. First look for good technically sound stocks and then check the fundamentals to decide your picks. We can only look at the 90's though to see how the price of a stock can run wild even without good earnings. When the stock market runs entirely on supply and demand fundamentals are not an all out way to go. I have seen guys on tv rec. these stocks that have great fundamentals and then I look at the chart and I am wondering what the crap there thinking. The stock just zig zags all over the place with no sound pattern. I like the cup and handle pattern personally. Right now like I said I am in GRA. I look for two things in a stock:

Good volume patterns(high on up days low on down days)
Making new 52 week highs on a breakout after a base was formed

Fundamentals are not a primary target and like I stated in a previous post most stocks I pick happen to have good fundamentals anyways. That is why I do not look for fundamentals only. There are so many good fundamental stocks that do nothing I do not care to search for fundamentals first. I rather sort through good technical stocks first. This is supposed to be an easy job. I do not want to sort through 1000 stocks to find a winner when i can search through 100.

 

[the blades]

i'd like to see a stock with exponential earnings year on year that doesn't go up. i agree p/e ratio's can be vague at best but how you get your results i think is irrelevant. We should all be looking at getting our equity curves as steep and with as minimal drawdowns as is possible. That should be ppl's aim regardless of style. I find med-long term investing is the best way for me to improve my win/loss ratio etc etc

the problem is that the exponential earnings are already priced in.

I once believed in fundamentals. Then you realise that you can't possibly get an edge on the city folk who have access to far better info, far sooner. Then you realise that something like 80% of them fail to outperform the index, and finally you realise you have no chance - well I did anyway - LOL.

Using chart patterns and behavioural finance, at least you can use the fact that you are a nimble, insignificant operator, to your advantage. Something the institutions can't.

All IMHO.

UTB

 

[LION63]

Quite a few day traders make money, despite the fact that it is a very small percentage. You will find that there are numerous ways of creating an edge for yourself, for instance, most day traders only track about 10 shares at a time and they get a 'feel' for the way they move up and down on a daily basis. It is wrong to assume that they can only make marginal returns, as an example: If a trader is putting up 5% margin and the share price moves 2.5% he has made a 50% return on that trade. Neither is it unknown for traders to average 40 - 50 DOW points per day; now that is a decent return. Most day traders will average a minimum of 10 trades per day (and I am sure that many will say that that is too few); granted, they will also have losing trades but the good ones will still be ahead and make decent money every week regardless of which direction the market goes.

A decent day trader is very nimble and will very rarely assume that the markets will move in the same direction for 5 trading sessions and as a result they neither have a bullish or bearish bias for long periods.

The art of actively trading is surely being able to identify a system or trading method that works and yields reasonable returns for the individual, it cannot be a case of one size fits all. The risk/reward ratios are very diverse and one has to find his or her own comfort zone.

 

[lightning bolt]

how can 2-5 years earnings growth be priced in, if i'm wrong i'll go and start trading forex , but i'm up over 500% this year, and it takes more than one day to price in anything imo. We will see i'm still relatively new to the market

 

[longshot666]

A paralyzed 4'2" white man comes to a pro NBA forum and claims that he can consistently dunk a basketball as well as Michael Jordan on a standard basketball court.

Another member on the forum comes along and calls b**llsh*t. Simple logic tells us this is myth. He points out many obvious problems with the mans story.

The man continues to swear that he has done it and shows pictures of himself dunking a basketball, but everyone can tell he used photoshop.

He is asked to show a live video stream of himself dunking a basketball, at which he point he shuts up, tucks tail and runs. His bluff is called.

A third person comes on the forum and says its a shame we couldnt have a chat about this 4'2" paralyzed man dunking basket balls because of all the DOOM AND GLOOMERS showing up

Moral of the story: Learn to tell the difference between someone shooting down obvious myths , and someone who is a gloom and doom guy

Trading is full of story tellers, and shysters trying to sell you something. People should be happy when someone comes along and rationally explains the obvious flaws in the ridiculous claims.

Sadly, it may perhaps be nearly time for the moderators to step in here and declare the thread closed. Such a shame that we can't have a chat about much in these forums without the "doom and gloom merchants" stepping in and hijacking it, insulting people in the process. It's not about Being Right on every little point. It's just about keeping it simple and having a nice, solid, steady, reliable way to make an increasingly good living!

 

[the blades]

how can 2-5 years earnings growth be priced in, if i'm wrong i'll go and start trading forex , but i'm up over 500% this year, and it takes more than one day to price in anything imo. We will see i'm still relatively new to the market

all known facts are priced in, all future prospects are chewed over by analysts and the probability of success factored in. If you can beat the analysts then well done. But it isn't a doomonger who states that most fund managers themselves don't beat the market.

I don't want to paint a negative picture. I've been "in profit" for the last 3 years and I'm going part time at the game next year, so I belive money is there to be made.

I had 10 baggers based on fundamentals, yet experience told me I'd just been lucky. The day I learned that "the trend was my friend" allowed me to be honest with all my failings. But as someone already said, it takes all sorts.

All the best and as ever, UTB.

 

[Roberto]

But it isn't a doomonger who states that most fund managers themselves don't beat the market.

Perfectly true; not a doommonger at all. Most fund managers either don't beat the market or beat it by a percentage or two annually. But to be fair to them, they often have all sorts of restrictions that self-employed traders are mercifully free from, such as the inability to short, the inability to spreadbet and the inability to daytrade, to name but three which some of the doommongers have difficulty admitting can ever be profitable.

 

[LION63]

Roberto,

Accepted that most fund managers do not beat the market due to restrictions placed on the types of trades they can execute but what about the Hedge Funds? Recently, it has been shown that the majority do not beat the benchmarks that they follow and they tend to have few or no restrictions. Based on that, would it not be fair to say that they are not as good as they should be? Sadly, they are highly rewarded for below par performances at the expense of investors (it brings to mind the case of a chap running one of Amvescap's funds who received a £5million pound bonus after losing over 35% of the funds under management in 2003).

 

[zigglewigler]

Is it really possible to make money in this trading lark?

No, it's absolutely impossible to make money 'in this trading lark'. If that's what you think it is. If you don't take it seriously, so that it's just a bit of a lark, you can't win. It's no game to try a while, no lark to amuse your friends down the pub, it's a business, only when you get serious will you stand a chance.

 

[Roberto]

Very interesting post again, Noah ...

Most people find it easier to find a good momentum stock and play that over several days to weeks if not months.

Well, it depends on where you're coming from and what you're used to, I think. I daytrade for a living, quite successfully for 4 years now, and I find the idea of "swing-trading" (which, I think, is closer to what you're describing!) very difficult. And I'd feel really, really nervous about holding a position overnight! And I'd also feel a bit nervous about holding an individual stock at all (but that's just my ignorance and lack of education and preference for indices and forex, I admit).

What I was ref. to on the shorting is not shorting stocks intraday.

Ah, ok ... misunderstood you there. I was just curious why and how you apparently differentiated between 52-week highs and 52-week lows.

Most guys don't have the chance to start with 25k so they can use margin day trading.

Well, I actually started with a little bit less than that, but I take your point, and I concede that I got a bit lucky in the first instance before I really knew what I was doing.

I don't know of any day traders that started with $500 and made it in the market.

Fair comment, and neither do I, but that doesn't prove that trading stocks over a longer period is any better or easier.

I beleive a day trader that is good can double there money every year.

No argument from me on this point.

I would assume most people rather focus on 5-6 stocks a year and make the same money as someone who trades 20 times a month or even more.

Well, it depends on where you're coming from and what you know how to do ... if I thought for a moment that I could equal my income and capital growth by doing that, I'd be the first in the queue to learn. But as it is, I've found something else that seems to suit me well instead.

I would honestly like to know all the day traders on this board who average 300% a year or more.

The ones who haven't been driven away yet by the doommongers, you mean? I'm not trying to imply that you're one of them, by the way. But as someone wisely said higher up this thread, most of the successful ones do tend to stay out of the way of these discussions. When I first started posting here, I was roundly abused by two or three people who stated categorically that it's not possible to make a living (a) from spreadbetting or (b) from intraday trading! I'm not willing to show these people my trading records (why on earth would I? I'd get no satisfaction at all from proving them wrong, and I'd rather be making a living and building up my fund) so then they accuse you of "running away", of course, because what actually matters to them is Being Right, not making money.

Most of us don't bother to debate it with them. You can understand that, I think? Their problem, whatever it is, is not my problem.

Day trading is almost like being a liberal.

Actually I'm just trying to support my family. Liberals are allowed to do that too, you know.

 

[Roberto]

Roberto, Accepted that most fund managers do not beat the market due to restrictions placed on the types of trades they can execute but what about the Hedge Funds? Recently, it has been shown that the majority do not beat the benchmarks that they follow and they tend to have few or no restrictions. Based on that, would it not be fair to say that they are not as good as they should be?

It would indeed.

 

[GotGold]

The question is it possible to make money..........?

Of course the answer is yes, its like saying is it possible to make money in the property market?
In fact the original question is a contradiction of terms. The word trading implies a 'market' and by definition has the ability to make or lose money.

To make money you have to bring 3 things to the table. Without them you will (eventually) lose:

PERSISTENCE
DISCIPLINE
AN EDGE

 

[LION63]

Which of the three is more important? Would an individual be able to succeed with only two of the three?

 

[Noahedwinbeach2]

LOL at Roberto on the liberal response. Yes your allowed to make money too lol. This thread is obviously biased and if your a person like me who buys and holds till his stop touches then your gonna agree. If you are a day trader your gonna have your own views. If you can make money doing either one then I would say it doesn't matter what someone else does. I won't sit here and say you can't make money daytrading because I have made some money in the past day trading. My problem is I have a day job lol. I can't do day trading for that so I have to buy and hold stocks and put a stop loss order in to prevent losses in case it falls. I actually get to sleep at night if I have a stop loss on the stock AND my stock is technically sound. I will not buy and hold stocks with wish wash patterns or poor volume. The only stocks I find attractive are stocks like TASR back when it was making its rise. Notice the large volume on up days and mild volume on down days. That is the stocks I look for. Day trading is actually fun to me but man I can't handle the stress. For some reason I get seriously stressed out day trading. It is one of those things you have to look at the screen all freaking day. That is coming from books I have read on the subject. If any of you that day trade don't do that correct me. By the way Roberto on the $500 starting capital comment, that comes from William Oneil in his book. He lead a class and they started with $500 and turned it to some 25k or something. I forgot what it was. I am just curious you guys that day trade what do you actually day trade with. I don't see being able to day trade with less than $10,000 and make money. Besides that the rules on the NASDAQ prevent me from doing that. I have to have 25k.

 

[Noahedwinbeach2]

By the way I am only 22 years old and don't know jack lol. I have been trading stocks for about 4 years now. I have seriously been trading stocks for 2 years(learning for real that is). I started reading books my first being Darvas book and that is what inspired me to turn it on. Since then its been trial and error and now I am at the point where I feel very confident I will someday get there. Someday meaning when we have a bull market or bear market. I need a market that is normal. My stocks breakout and then fall right back. I have found some good shorts though I am considering. I am not biased on either side because I am not going to be a fool. If its a bad market obviously I will go with the tide. The trend is your friend as someone else said in this post.

 

[Trader333]

It is one of those things you have to look at the screen all freaking day

Well I certainly dont and on most days it is only about 2 hours maximum. I have things set up that mean I am alerted to setups that "may" become a trade and it is only when I get alerted that I look at the screen and then do a number of checks to confirm the trade or otherwise.


Paul

 

[GotGold]

No, you need each of the 3.

The 'edge' of course is the elusive one.
The Edge: The need to do something which makes us a better trader than the next person.

EXAMPLE
I went to a seminar by BO YODER, he said his edge was fading classic technical action. He reasons that so many players are following classic chart set ups and patterns that they become untradable. He moves one step beyond and anticipates where the technical players are positioned at any time. For example, in a rectangular consolidation, he looks for a failed breakout which triggers stops placed in the 'classic' location which is just out side the range. The triggering of the stops fuels an accelerating move in the opposite direction to the breakout.
Very stylish I'm sure you will agree. Thats just a brief example. His 'edge' was simply to be ahead of the herd in his thought process.

In summary, there has got to be at least aspect of you trading which is 'better'. Remember the herd always loses.

Footballers need persistence, discipline and an edge (otherwise known as talent). Traders are the same.

SOME DIFFERENT TYPES OF EDGE

Successful operation of a good system
Vast amounts of 'sleeves up' experience
Ahead of the herd tech analysis
Superior execution costs
Ability to change with the market (quickly and effectively)
Impeccable money management
Superior risk, reward calculations.
Mastery at a specific strategy (eg 'opening range break-outs')

The list goes on and on of course..........

 

[Roberto]

Noah ... I completely agree that you'd need a minimum of $10,000 to get anywhere realistic with daytrading (and preferably quite a bit more). I believe that in this game (or "in this lark" as the original poster put it!) being 22 years old is probably a great advantage. I was twice your present age when I started, and I certainly wished I'd become interested in trading 22 years earlier!

You say that you know jack, and don't we all? But in my view the ones who _know_ that they know jack are going to be much better off in the long run than the ones who think they know it all already and want to Be Right about all of it all the time. Ego is perhaps the trader's worst enemy.

You've clearly taught yourself something that's profitable, steady and sensible, and I wish you every possible good fortune with it in the future.

I enjoy reading your posts here. You have (among other things) made me wonder how I'd have got on if I'd come at it from a different angle and developed a different style.

When I started, I also had a "day job" which I naively planned to give up after a year or so. Not surprisingly it took me more like 3 years or so before I'd finished off all my other work.

To me, the ability to be self-employed and work from home at hours that suit me is almost as important as the money. But different people have different motivations for trading.

 

[Noahedwinbeach2]

Hey Roberto I agree with the working for yourself part. That is what I long for the most. I work 65 hours a week split between two jobs. I work at GNC during the day and go move boxes at Fedex at nights. It is pretty crappy. I believe we are all learning constantly because the market changes constantly. Just when you think you figured it out you haven't. I think a lot of folks want bragging rights more than the money or something? Bragging rights will not support my family so I rather humble myself and make the money. One day I will probably day trade when I have money to lose. It has taken me a while now to learn to trade the way I do which isn't swing trading. It sounds that way but I buy only new 52 week highs. I think most swing traders purchase stocks on dips? Day trading will take me just as long as it has now to get good at this current trading style. Plus it will be harder to switch to it from my current buy and hold positions. I am fortunate to be only 22 learning this stuff. I started studying the market in high school and got interested in it because I saw the potential to make real money without having to go work for someone my entire life. These kids all planned on going to college etc and getting out to go work for someone. Well I hate working for other people lol. My current jobs suck and dont pay a lot but I am saving $400 a month and putting that in the market despite having a child and wife to take care of. So basically I have learned good money management skills in my life so young. Now the reason for that is is because I got myself in 22k credit card debt and 8k student loan debt. Now that is enough to make anyone mad. I guess I learned my lesson the hard way. It was almost like when I first started trading I lost my entire capital on pink sheet stocks. That was my first lesson in stocks lol. It is funny how people learn the hard way. But the pros become pros because they can learn from there mistakes and not keep repeating them. I decided to do what the pros do and analyze my trades. I wanted to know what I was doing wrong. That is how I got to where I am now. I beleive anyone can win with a system if they will learn from what they are doing wrong. You can win as a day trader if you learn from what you did wrong. I do find the candlestick patterns interesting and bought a book on day trading. It was informative. I just don't have enough capital to day trade with plus I am not willing to dip into that right now until I have plenty of money to dabble with and lose just in case. Those initial dollars are like tuition in the market. I don't have tuition money right now lol. Take care guys.