Day Trading Mixed With Value Investing

A

Alan Au

Hi, I'm pretty new to trading/stocks. I've only traded two stocks but I've made 6% return on one (one day) and 20% return on the other (3 weeks?). Both of these are pretty short-term and I from what I know, value investing typically is held for longer terms based on Benjamin Graham's book "The Intelligent Investor" which is about the only stock book that I've read.

I'm just curious, how many of you DAY-trade ONLY high volume stocks that are undervalued in the market, with good earnings to price ratios? Or do you just hold them long term? I only ask this because I noticed lots of day traders invest in companies that are in debt, not earning anything, etc.
 
Alan Au said:
Hi, I'm pretty new to trading/stocks. I've only traded two stocks but I've made 6% return on one (one day) and 20% return on the other (3 weeks?). Both of these are pretty short-term and I from what I know, value investing typically is held for longer terms based on Benjamin Graham's book "The Intelligent Investor" which is about the only stock book that I've read.

I'm just curious, how many of you DAY-trade ONLY high volume stocks that are undervalued in the market, with good earnings to price ratios? Or do you just hold them long term? I only ask this because I noticed lots of day traders invest in companies that are in debt, not earning anything, etc.
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I mainly trade Futures either manually/automated, but when I was younger did both Index futures and stocks. If you are trading 100 shares, can do lighter volume stocks except when you have to get out, usually you have more slippage, when you doing heavier volume you want heavier volume stocks with movement unless you are only looking for pennies. I really don't know anyone who cares much of fundamentals when day trading. I am 100% system trader, and for long term using weekly bars, it is automated trading Dow30 and handful of Nasdaq stocks, never take into consideration of the fundamentals, only rules must pay dividends and have options. When day trading, value isn't even considered as many of trades, in stocks out in less than 30 minutes and futures 3.5 minutes, I am only interested in movement and good volume so I can get in/out with my price. Even undervalued stocks take huge dumps for no reason.
 
Alan Au said:
Hi, I'm pretty new to trading/stocks. I've only traded two stocks but I've made 6% return on one (one day) and 20% return on the other (3 weeks?). Both of these are pretty short-term and I from what I know, value investing typically is held for longer terms based on Benjamin Graham's book "The Intelligent Investor" which is about the only stock book that I've read.

I'm just curious, how many of you DAY-trade ONLY high volume stocks that are undervalued in the market, with good earnings to price ratios? Or do you just hold them long term? I only ask this because I noticed lots of day traders invest in companies that are in debt, not earning anything, etc.
More...
sounds like me. I bet on black on my first spin and doubled my money.
Now, if you have read a book which tells you how to identify an unbalanced table, that would certainly help.
 
what you are talking about is the old "Dogs of the Dow" strategy, only speeded up to days instead of years. The thing is, when your trading goes to hell, you might end up owning good fundamental stocks which you entered at a good price.

otherwise, I like your idea. My strategy sometimes forces me to take positions I fundamentally disagree with in order to rebalance my risk. But I always hate them and can't wait to get back on the right side.

you are asking the right questions. Day trading (or week trading) or better yet quarterly trading high volume stocks that you believe are undervalued is the very best place to start. Not necessarily for making money, but for understanding the divergence between momentum and value.

the old joke is a position trader is a scalper who got stuck with a loser
 
I think there is allot of potential to combine value with short-term trading strategies. Ive been doing it for years to good effect, but in small-to-mid cap stocks. I'm not talking day trading, more looking for 10-20% return over a few days to a few weeks (on an ideal trade that works)
 
that's the problem with value investing
by the time you finally get it all on, it's fairly valued or over valued and time to unload
 
Day trading stocks that meet Grahams definition of enterprising investor or defensive investor makes no sense.

If Grahams margin of safety approach appeals to you, and you believe your timing models have merit,than you may be one step ahead of the game by avoiding value traps.

None the less,IMHO your talking time frames of weeks,not minutes.
 
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