Daytrading

[Modee]

This is the way day trading happens for close to 100% of people. They buy at a certain price, sell for a little more, feel like a king. But at some point later realize they would have made much more money just holding it longer.

Then they figure they have the cycle of the stock down, buy back in, but eventually on one or more of the trades, the stock misbehaves and they lose more than they ever made.

In short: day traders sell themselves short and do not earn enough money on the good trades, and when they get stuck on the bad trades, the slight profits on the good are eclipsed. Been happening every day since the beginning of human wagering on events.

[Modee]

I have been doing some "position trading" lately. Example: buy 1000 shares of BAC at 5.5, sell at 8.5 Buy 500 shares of BAC at 10.2, sell at 11, etc. etc.

I sold out my latest BAC position Friday, because BAC is due to report Monday morning. Been burned too often years ago on "earnings plays" (buying stocks in anticipation of good numbers at earnings report). Lately, even after a good report stocks go down (example, Citigroup, reported, beat the street, stock still went down slightly).

Feel the market is due for another correction, because the over all economy is still weak. I travel A LOT and the malls across America and especially the high end stores look like ghost towns as far as purchasing customers. People milling about, few buyers. Until consumer spending (especially for luxury items) increases, I see no end to the recession.

[Modee]

As I predicted
Market Report -- Story Stocks (BAC): Briefing.com Business News - MSN Money
so I am looking to buy back in to BAC now at under 9. It was a good move for me to sell the BAC I had at 11 on Friday.

[Modee]

I bought back in - two trades - one @ 8.75 (I was too busy, could have gotten it for much lower), and another, in the PRE market this morning, for 7.25. My average cost 8.

I sold today at 8.5, nice little profit. On these BAC trades I am not getting the absolute highs at sale or the absolute lows at purchase, but I am making money consistently which is the name of the game.

I have a GTC + extended in for 7.5 may change to 7.65, to see if it dips tomorrow.

So far, so good...but I stand by my premise that for MOST people daytrading does not end up profitable, especially if you have not done it for a long time and are therefore inexperienced.


Part of the reason I am doing so well on these trades is I am being advised by a friend who has done this for over 20 years. His advice lately is dead on to the point of telling me, BUY NOW at this price LOOK TO BUY at this price, and AVERAGE YOUR BUY IN NOW like this, so it's pretty good we are working as a team.

The other reason daytrading is working right now is that the market is moving sideways over all - up a lot, then down a lot, then up again, then down - while it follows this sort of pattern it is not so hard to shave points off the steady cycles.

Reminds me of certain Baccarat shoes: bank player bank player bank player - follow the chop! Or even ones where it would go two players, one bank, two players one bank, two players, one bank.

Of course - just as in Baccarat, while the trend may be your friend:

1. You must determine WHAT the trend is
2. You must FOLLOW the trend
3. AND, you must change up quickly or stop playing (trading) completely when the trend switches up or becomes completely random.

[Modee]

BAC hovering in the mid-8s. I am not back in yet.

[John14789]

Trading stocks seems to be a bit confusing if you ask me. I've always preferred the forex. But people have made millions from the stock market. What info would a new trader need to learn?

Also how much is need to get started?

[Modee]

Read this:
Stock picking - screens to find the best stocks - Free EBAY, PayPal, Business and Law Forums - Ebay Suspension, PayPal Limited

as for the rest...it really takes time and trial and error to figure out what to do and when to do it. Just like most anything else.

[Modee]

BAC on a tear lately, as is most of the stock market! My long term holds are back to where they were a year or so ago.

I feel that there will be some dips, but if this keeps up, the stock market may really take off.

[Modee]

Okay back to my original argument of why investing is superior to daytrading.

BAC got as low as 3 and change. I bought in and out several times, made cash each time, but if I had just bought at five, or even EIGHT and kept it, right now with BAC pushing 15, I'd have made as much if not more just sitting there.

Plus, since I do not own any BAC at this moment, if it jumps to thirty, I am out in the cold since I am still waiting for another dip to buy. Not to mention all the TIME I spent daytrading.

Daytrading can be profitable, IF you really know what you are doing, BUT
1 - you can also LOSE a lot on it (and most daytraders DO lose)
2 - over time even if you are good at it you should end up making more investing long term in the same stock than trading it, especially when you consider transactional costs (commission)

[Modee]

Been following BAC closely. It seems that lately whenever it goes down to 10.7ish, it rallies back to at least a half point higher, rather quickly. The opportunity is there.

I have been holding out to rebuy below 10, but 10.7 or so may be the ticket for some swing trades.

[American Psycho]

When you say daytrading, do you mean spread betting?

[Modee]

No, I mean buying and selling for points, half points, quarter points even, rapidly and repeatedly during the course of the day. That is daytrading.

I've been holding all the stocks I buy these days for minimum 18 months. Luckily, I haven't needed the money, so at this point my stock accounts are becoming more like retirement accounts than anything else. Retirement for me is a long ways away, but still, I think I've done better buying and holding over the past ten years than I did in the last 1990s even, day trading.

[American Psycho]

Yeah, most people say they do better buying and holding than day trading.

[Modee]

There may have been a time in the late 1990s when day trading was quite profitable, but even during that period most people (including me) would have been better off just buying and holding.

[American Psycho]

Do you think this is largely due to broker fees? If you could find a broker (like I have in Hong Kong) that offers ultra low brokerage fees, do you think day trading would be a lot more viable?