8 Reasons to Not Be a Daytrader

[dst888]

Quote from killthesunshine:

what's this return to you per year?

I am still in the development/improvement of this strategy and I SIM most of the time, as I work full time. That is also the reason I can't adopt the bar to bar analysis approach. I just start reading Al Brook's book, just a few pages and I like his writing in general.

I could use my strategy for swing trade if I use longer time frame chart. But I would say so far the forward tests look good, as I record all the alerts and I could analyse them after the market closes. Besides, I can keep track of a few instruments simultaneously.

 

[billyjoerob]

Investing/trading is a cottage industry with diminishing returns to scale. That's why the biggest hedge funds never get to a trillion AUM, not even close. There is no Walmart of trading that puts every other trader out of business. Smaller traders have the enormous advantage of quickly getting in an out of the market, which partly explains why plenty of one-man trading shops succeed and big hedge funds regularly fail. And how many big traders had an institutional imperative to be in the market throughout 2008? That's why they lost 50%. AQR is not going to go to cash while sitting on $30 billion. Small traders don't have that obligation.

I don't get Altucher's argument that enormous stamina is required. If you're sitting in front of a screen circa 1999 and watching every tick, that may be true. But I don't think most successful traders trade like that today.

 

[TRS]

Quote from Vishnu:

Post I just did. The full post is at: http://jamesaltucher.com/2010/11/8-reasons-not-to-daytrade/

But here is the first part:

8 REASONS NOT TO DAYTRADE
November 6th, 2010 | Author: James Altucher | Edit

Day trading is difficult but not impossible.
As with everything in life, it's all about balance. Take time out, take holidays/travel, treat yourself.
The monetary cost of this is an investment that returns a dividend far exceeding the initial outlay.

 

[max_skinner]

James,

Why did you mention "not productive" as one of the points?

Doesn't getting exposed to ultra short time frames help in speeding the learning curve making higher time frame trades (swing / position) easier to work on?

And is it not possible that experienced day traders make dough on higher time frames too? Kind of like day trading for bills and longer trades for the goodies?

I think you are referring exclusively to the "video game" day traders who scalp here and there and tied only to next few minutes in market ?

Don't get it

Best,
Max

 

[Bob111]

Quote from Vishnu:

Well, I promise I will never tell you what to do.

But lets look at what has consistently made money over the past 20 years. Two approaches:

A) Hold forever. Buffett, Gates, etc held their shares of their companies forever and made billions (I dont know any billionaire daytraders. Not even Stevie Cohen, who made his money from fees)

B) Trade super high frequency, a la Goldman Sachs.

Most people in the 99% in the middle lost money. Daytraders, investors, etc.

we are going into same exact conversation we did have with garcia and failed trader(daytraders are all losers and they going to lose it all someday)...yes i agree-99% (maybe less than that) did lost their money. but not all of them. tell me,how buy and hold forever is working for those,who bought stocks\us indexes 10-11 years ago and hold them until today? imagine,where they would be, if there is no bailout...
tell me how this did work for those,who did same with japan indexes(i believe US is heading this way at full speed)?http://finance.yahoo.com/q?s=^N225
i can post screenshoots of my accounts once again,but i don't think it is necessary..for at least 5 years i did make money every month,every week. yes,no losing week for at least 5 years,regardless to market direction. i did not make 10's of millions,but i believe i did pretty pretty good..one of the reasons is amount of money per trade. i did not trade something crazy with margin x10..slow,small, conservative approach that i'm comfortable with..that's why i don't have eating disorder and no sweat during trading day..i'm not that greedy..those 99% of losers not going to understand this..and i'm using for daytrading only very small portion of my capital..realized profits are out periodically,so lose it all in one day is not an option..i'm not gambling,because i'm absolutely not interested in casinos,races, not even any sports..
today, my "edge" is slowly dying for many reasons,that i do understand(unlike those "daytraders" from end of 90's-2000) and i have to come back to a drawing board,but i have no problem with that..i can afford longer frames now..
i'm not trying to convince anybody that daytrading is fun and there is a lot of easy money..no,it's not. it's probably harder than any other field i was in,but it's certainly not impossible. but your mentality have to be on totally different level, far away from "common" sense.
me, personally-i can't see myself doing anything after my daytrading career. it will be trading forever..maybe longer frames..but some regular 9-5 job? fuck no.
i did this for fun,challenge mixed with courage,not just for money and will do that again..

"Only those who attempt the absurd will achieve the impossible" M.C.Escher

 

[tomahawk]

While I do agree with alot of what Altucher says about daytrading, I have to take exception to 2 of the items on his list:

Under "Nothing Productive" he likens daytrading to pick-pocketing. If these two activities are to be lumped together, then long-term investing should equate to trying to rob someone's bedroom safe ... it may take a little longer and the loot may be larger, but there's still a personal loss to someone on the other side of your trade. Get over yourself with thinking buy and hold (or swing trading, etc.) is any more noble than daytrading ... the general intent is EXACTLY the same.

And his last paragraph makes no sense. He first states "Its Impossible" (learn some basic 4th grade punctuation please James), and then the next 3 or 4 sentences go on to describe how it IS possible and the qualities that it takes. The only arguments he offers that it's impossible are "it's hard", "it takes years", and that HE has none of the necessary qualities (and neither do we). Well, he could probably never be a lawyer, a doctor, a scientist, or a teacher either (all of which are "hard" and take years), but that doesn't mean those things are impossible for everyone.

 

[Baron]

Quote from Vishnu:

Post I just did. The full post is at: http://jamesaltucher.com/2010/11/8-reasons-not-to-daytrade/

James, this is probably the worst article you've ever written because of the many glaring contradictions, such as:

The title of the article is "8 Reasons Not to Daytrade", yet you say in the second paragraph that "I still occasionally daytrade." Then you turn around yet again in the next paragraph and tell people "Don't do it. Here's why:".

In your last point you say that day trading is "Impossible", then in the very next two sentences, you say "I know some very good daytraders. In the long run it is possible to make money daytrading."

WTF???

But even if this article wasn't contradictory, it has no place on this site. You can post articles like that on your own site all you want, but posting and linking to that article here is unacceptable. This is a site for people who want to day trade, not for detractors.

So with that said, this thread will be closed shortly.

 

[CEO_STI]

Amen. Lot of BS in that article.

 

[gaj]

james - thanks for the tip * cough *. somehow, i haven't gotten on eating binges, am not suicidal, have a social life in the evenings, am fine with just 2 monitors, don't think about the markets constantly, etc.

i just wish someone had posted this before i quit my job 11 years ago to start trading for myself.

oh, i'm still doing it, 11 years later.

there's tons of other inconsistencies and errors in your original post. baron pointed out a few, i especially like the part about there's only 2 types of traders, the buy and hold forever or the high frequency traders. the william o'neil/IBD followers (darvas?) would disagree just a little bit.

 

[Tauvros]

Yawn.....more defeatist drivel from someone who's taken their "piece" out of the industry in a vain attempt to sway the lowly independent daytrader out of a chance to realize their dreams.... this is the same nonsense that elitists such as Buffett, Soros, Gates et al endorse through policy designed to keep other ambitious "dreamers" out of their respective playgrounds.

Competition is a sin.
John D. Rockefeller