Yeah, I think we are all 100% in agreement that strict daytrading is foolish, that’s why I’m getting frustrated with people who keep popping into the thread to restate the fact.
H.
The biggest non-catastrophic risk of daytrading is (imo) trying up your money when there are medium-term positions you could have taken for better profit. Don’t get tied up into a mentality where you have to trade every day and pass up cheap stocks that you could flip for 2-3x it’s value in a few months. And remember that playing with under 25k means you have a 3 day clearance requirement between trades.
Guilty, I read your first post and didn’t bother to read any of your followups.
Can you go into details about the clearance requirement? I’ve never traded that quickly, but you never know.
H.
All trades clear T+3(unless specifically deemed otherwise). What he is referring to is that if you have less then 25k, firms will make you wait for the trade to actually clear before giving you your money to trade with again. If you have over 25k, most places will allow you to transact on margin until the funds clear.
Ah, thanks.
In other news, would the market hurry up and crash again? This constant inching upwards is hampering my future luxury lifestyle.
H.
So when are you going to rename the topic to What are the non-obvious risks to short-term investing?
Or: will everyone just shut up and tell me what I want to hear.
Patience , patience :)
No problem you are correct. But I dont invest, I trade and speculate :)
If you are going to short term trade then market timing is important.
As you say if you want to invest long term then it doesnt really matter, but thats so boooooring :)
No problem you are correct. But I dont invest, I trade and speculate :)
If you are going to short term trade then market timing is important.
As you say if you want to invest long term then it doesnt really matter, but thats so boooooring :)
Yes, well … carry on, I guess.
I had forgotten we could edit post titles now, but of course I’ll keep it the same to spite you. Especially since we established the difference in the first few posts.
H.
I think the biggest non-obvious risk is, as has been pointed out, the potential to fall into the gambler’s trap, in which you start taking out loans, cash advances, etc. just until you “get even”. The next biggest non-obvious risk is the unlimited downside associated with more advanced trading options, such as writing options. Buying any security (whether an option, stock, etc) has a limited downside: whatever you spent on the buy; so avoid selling options or shorts unless you are very familiar with the potential risks.
All the other risks ought to be obvious going in, or you shouldn’t be going in in the first place. There’s a reason day trading is far less sexy now than it was in 1998-1999.
I spent a few days with the guy I was talking about, watching him doing the day trading. It is seductive. You’re picking out a few targets before the market opens, watching for certain “signals” then hitting the buy button like a person trying to snipe on eBay, then watching the real time movement up and down, second by second, with alarms set for the various stocks your playing with at any time, watching as the one you bought starts to jump up, then down right before it hits your sell target, then closer, closer, further, closer, closer, then BOOM hit the sell button! Score!!!
Or the software analyzes and tells you it now is unlikely to hit your target, and you might set a lower target to get out and minimize your loss, while watching the other ones moving around, etc.
It was mesmerizing. Fun. Would make a great computer game. And I can completely see how the adrenaline rush could be addictive.
Like some people are with craps or Vegas casino games, I suppose, but this one, with all the technical analysis and tracking software running, the 4 or 5 screens all around you displaying the moment by moment movement of your stocks of interest, it all feels so much more sophisticated and less like random gambling when you’re in the middle of it all.
Which really explains how we got into this bailout mess.
There’s probably a control issue to it.
IIRC, people like to take risks/gamble more when they have an element of control in the situation, even if the odds are essentially the same either way. Maybe skedastic or someone knows of a study about this or I can dig one up.
Control would have to heighten the sense of accomplishment on a win, wouldn’t it? Extended to absurdity, nobody would play a game where you walk in, they take 17% of your money out of your pocket, and then you walk out. Thus buttons and levers and geegaws.
H.
Actually, if you’re a psychology junkie (I am!) you should go look up all the articles on the psychology of gambling and how the casino’s are extremely sophisticated in understanding and using that psychology. Fascinating stuff.
Linkies? I’ve read that sort of thing before, but I wouldn’t mind reading more. We all know about the clocks and windows and exits, but there has to be more.
I have utter faith in Vegas, because it’s built on a few scant percentage points that always come out in the end. In that way, gambling is probably the single most logical industry we have. Unfortunately I don’t have the money to start a casino.
H.
Stir craziness working at home
Letting personal hygiene slide
Chair sores