Giving up on day trading?

[crater]

Quote from BeingProfitable:

Have to agree.

In a seminal 1985 paper by Werner De Bondt and Richard Thaler title "Does the Stock Market Overreact?", the researchers concluded in a study of market efficiency that most people tend to overreact to unexpected news events and that "substantial weak form market inefficiencies" were discovered in their analysis.

Apperently, MIT also did a study with the same conclusion "inefficiencies in the market caused by overreactions". However I can't find a reference to it.

There are lots of studies that show the market are not effiecient due to human behavior. However, I'm too lazy to list them.

Human emotions plus leverage = wild market moves.


Just like this job
http://www.collegehumor.com/video:1941259
Day trading is not for everyone.

Hello, BeingProfitable. Nice post -- very thought provoking.

I would like to pose a question to you on efficient markets. If my concepts are out of whack, let me know.

When we talk of efficient markets, we are assumiing a set of knowledge which becomes widely known to all investors, and which impels them to act in certain ways. Agreed?

But in the REAL world, if we look at n investors, traders and little old ladies, we will find not ONE set but many sets. There are bound to be similarities, such as those which tend to be relied on by scalpers as opposed to those which tend to be relied on by dividend seekers. So the number of unique sets would be somewhat less than n.

What does this do to the research in efficient markets? Instead of considering a single set, we find many groups of overlaying and interlocking belief systems, all of which (supposedly) get their information simultaneously. We get a vast, complex VENN DIAGRAM of market precepts.

Your thoughts?

 

[crgarcia]

Quote from ProfLogic:

It's too bad you aren't bright enough to validate trades on your own.

I DID validate them!
Just search for my journals with REAL TIME TRADES!
Real time trades rule, everything else is after-the-fact photoshop BS!

Quote from TraDaToR:

Seriously Garcia, Are you sure you are working in the "real world"?

Yes, in the real world of real hard work, and real money.
You know nothing about the real world as you live in your pathetic gambling shilling little world.

 

[crater]

Quote from TheBigMan:

That gives me the ability to buy and sell more expensive stocks which are less volatile.

Interesting! You go for the less volatile stocks, but I trader ONLY in volatile ones. As Willy Sutton said about banks, "That's where the money is!"

 

[crater]

Quote from crgarcia:


You know nothing about the real world as you live in your pathetic gambling shilling little world.

Garcia. I think it's time for a refill on your meds.

 

[Fireplace]

Why do you lie?

Quote from crgarcia:

I DID validate them!
Just search for my journals with REAL TIME TRADES!
Real time trades rule, everything else is after-the-fact photoshop BS!

 

[TraDaToR]

Quote from crgarcia:

Real time trades rule, everything else is after-the-fact photoshop BS!

Have you ever used Photoshop for real? I find it easier to get an authentic statement from my broker than to fake it using this software...LOL

 

[crater]

Quote from Redneck:

Please count me in also


Thank You Sir

RN

Here is a little more on how to improve your success. I have had the good fortune to do fairly well, except for a few REALLY STUPID ERRORS.

Were it not for them, I would have done a lot better. Bonehead mistakes can hurt.

One of the posters recently said that the results of a system of investment will change over time. I think that's true in many cases. Lets look at an example.

Suppose I decide that if my dog poops on the North side of the yard, my stock will go up, and if she goes on the South side, the stock will go down.

Probability tells us that if we observe enough cases, we will find a period of time in which dog poop can be used successfully as a predictor.

Now, if I happen to hold this crazy belief about my dog, and if I find, by chance, a string of cases where it comes true on 15 out of 20 days, then I can go the ET board and post that my success rate is 75%. Does that make me a hotshot? Nope.

Because chance also dictates that there is some likelihood that after the 15/20 successes, the relationship will end at some time. After all, it was only by chance that it began in the first place.

As the relationship ends, the rate of wins will decay, slowly. And after I have lost enough money, I'll start grumbling about my dog.

Now, what was the problem here? THERE WAS NO REAL RELATIONSHIP TO BEGIN WITH. THERE WAS NO LOGICAL CONNECTION BETWEEN DOG POOP AND THE MARKET. I simply did a lousy job of testing my hypothesis before I started betting on it.

You will see it happen all the time, if you do a lot of testing.

Now, if you'll excuse me, I have to run out and shovel all the poop to the North side.

crater

 

[NoDoji]

Quote from crater:

Now, if you'll excuse me, I have to run out and shovel all the poop to the North side.

And there you have it, folks: market manipulation right out in the open

 

[mindtrade]

Quote from crater:

Here is a little more on how to improve your success. I have had the good fortune to do fairly well, except for a few REALLY STUPID ERRORS.

Were it not for them, I would have done a lot better. Bonehead mistakes can hurt.

One of the posters recently said that the results of a system of investment will change over time. I think that's true in many cases. Lets look at an example.

Suppose I decide that if my dog poops on the North side of the yard, my stock will go up, and if she goes on the South side, the stock will go down.

Probability tells us that if we observe enough cases, we will find a period of time in which dog poop can be used successfully as a predictor.

Now, if I happen to hold this crazy belief about my dog, and if I find, by chance, a string of cases where it comes true on 15 out of 20 days, then I can go the ET board and post that my success rate is 75%. Does that make me a hotshot? Nope.

Because chance also dictates that there is some likelihood that after the 15/20 successes, the relationship will end at some time. After all, it was only by chance that it began in the first place.

As the relationship ends, the rate of wins will decay, slowly. And after I have lost enough money, I'll start grumbling about my dog.

Now, what was the problem here? THERE WAS NO REAL RELATIONSHIP TO BEGIN WITH. THERE WAS NO LOGICAL CONNECTION BETWEEN DOG POOP AND THE MARKET. I simply did a lousy job of testing my hypothesis before I started betting on it.

You will see it happen all the time, if you do a lot of testing.

Now, if you'll excuse me, I have to run out and shovel all the poop to the North side.

crater

haha. this is a great post.

 

[SteveH]

To the original poster to this forum:

My condolences to your efforts at trying to be successful at day trading.

I've been trading the Russell 2K e-mini futures contract for 7 years and have been through a lot of tough times emotionally along the way. I think I was fortunate to have picked such a good, volatile contract to trade and made the connection very early on how you could figure out a lot of what to expect from its moves based on a couple of simple market internals.

I always kept my losses very small ($70-$100 max loss per contract on any one trade) and, eventually, learned that the main key to overcoming my bad days was to GET LARGE INCREMENTALLY IN THE STRONG TRENDS when I was fortunate enough to see a move building. You cannot believe how strong an idea that really is: risking 1 lot for $70-$100 per contract and building up to 3-10 lots over the course of 4-15 pt moves. It just takes one super trade to pull back over 30 small losers.

Also, I figured out early on that if I was going to make it, I had to be able to make a minimum net of $200 a day avg with only being 50% right in my trading decisions over the long term and make that within the 1st 2 hours of the trading day (i.e., the very best time to trade the e-minis).

As a fellow trader, I'm sorry it didn't work out for you. Good luck in your future endeavors.