Quote from interdigital:
yip1997: made $5k last year daytrading (in 2 months). So far this year I've made around $22k. Which statistical tools are you referring to?
Well the majority of my daytrading profits have come from shorting stocks right before they suffered severe plunges (CFC, ETFC, WM, SLM). So I thought those profits were kinda lucky. In fact when I started out daytrading, my profit jumped to 18k pretty quickly because CFC plunged 25% one day, and then over the next few weeks my daytrading wasn't good and the profit shrunk to 2k. I asked about Thursday because it was a typical bad day for me getting whipsawed a lot, although I wonder if the trading was unusual given the Ben speech and then later the CFC buyout rumor. Friday was the best daytrading day of my life in terms of just sticking to my plan, which I've been trying to refine, and I just wonder if I've finally got it down.Quote from yip1997:
Since you have made $22K this year (with 40K cash for day trading?!), why would you ask the original question and mentioned only 2 days result?
Quote from Batman28:
portfolio theory is garbage.. but be very afraid of statistics.. 'investment' is the only thing that should always be diversified.
Quote from blackjack007:
why are you guys trying to talk him out of this? he clearly understands the risks of putting most of his wealth into one stock. he's trying for the homerun ball. he'll either strike gold or strike out. so what if he wants to take this approach?
i've know people in similar situations, except their wealth was tied up in their company stock options. many got nothing out of it, but a lucky few became millionares a couple of times over.
Quote from Cutten:
Basic mathematics says 90% is too much to have in one stock. Let's compare a 90%/10% portfolio, to a 50%/50% portfolio, in both the big winner and big loser scenarios:
90/10 big winner: you make a huge profit e.g. 1.8 mill.
50/50 big winner: you still make a huge profit, it's just that it's only a bit more than 1/2 what the 90/10 would make e.g. 1 mill instead of 1.8 mill
90/10 big loser: you lose 90%, leaving you with a mere 10% of your life savings. He has 30k left instead of 300k.
5/55 big loser: you lose 50%, leaving you with 50% of your life savings. He has 150k left instead of 300k.
In the winning scenario, he only makes a bit less than twice as much by taking on 90% risk. In the losing scenario, he ends up with FIVE TIMES as much capital by taking the 50% risk instead of the 90% risk.
Heads you do less than twice as well, tails you lose five times as bad. That's why >50% bets suck.