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HarryCarysGhost (99.74)

Day Trading, is it really worth it.

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August 18, 2010 – Comments (12) | RELATED TICKERS: T , RAD , E

Hello, what follows will be a story from real life that involves investing. If that is not your cup of tea, heres your chance RUN AWAY, RUN AWAY!!!

As always the story your about to hear is true, only the names have been changed to protect the innocent.

About a month ago I attended a Chistening on my wifes side of the family. And there was a dinner afterwards, Greek food and music. Weird thing is neither my wife or I is Greek, good time though.

Heres the investing part-

Was looking forward to seeing my Sister-in-law, who happens to be a day-trader. Last time I saw her was Chistmas 2008 and we always have a conversation about stocks. I give her full kudos for getting out before the crash and getting back in after.

 Heres the conversation-

Me- (smiling) so how'd Mr Market treat you last year?

Tipper- Not bad, gained a few percent.

Me- (puzzled) but everything went up.

Tipper- (with a furious gaze, and eyes made of fire) NO S**T!!!

She then told me about some biotech that she had recently shorted, and can't get out of since shes in the middle of a bitter divorce, and her ex froze the account. I remembered the stock at the time since I saw it made a huge run-up one day, but have completley forgot about it since.

Want'ed too add the conversation on the drive home-

Me- why did'nt you tell me Tipper was getting a divorce?

Mrs msftgev- I don't know, never came up, why?

Me- Cause I almost asked her how Al got out of coming to the Christening.

Mrs msftgev- Ooh, that would've been bad.

Me- (laughing) yeah I know talk about your ackward silences. 

(remember the names have been changed:)

So I guess the point of this is, for all the time she spends day-trading to only eek out a few percent hardly seems worth it. Pesonally I made over 100% in 2008, and I'm convinced that if I were a more experienced investor I could have made much more.

So what do you Fools think? And to the day-traders out there is a few percent acceptable, or does Tipper just suck at it.

 

ps- when I was trying to figure out the tickers for this blog E looked interesting, gonna have to do some research.

12 Comments – Post Your Own

#1) On August 18, 2010 at 9:42 PM, portefeuille (99.44) wrote:

The good thing is that no matter how bad you are at day trading you can always pretend that your "trading account" is just a small part of your "real account" and you have actually mostly been invested in gold since 2001. I think I have read something like that from about 10 different "caps" game players, hehe ...

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#2) On August 18, 2010 at 10:56 PM, Option1307 (29.97) wrote:

This argument has been made several times before and I tend to agree. I think the average day trader gets slammed, not to say that some aren't successful but it's harder than most imagine I bet. EverydayInvestor wrote alot about this subject way back when, check out some of his blogs for more details.

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#3) On August 19, 2010 at 12:16 AM, Momentum21 (96.83) wrote:

It depends on how much money you have. If you have enough you can kid yourself and act like it is your job...if you don't you wind up divorced with a bad short ravaging your life savings. That thought is going to give me nightmares... : ) 

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#4) On August 19, 2010 at 11:02 AM, Momentum21 (96.83) wrote:

OK, going to try my hand at it (Portefeuille-style)...just bought ATPG at 11.75. I am already long but added a chunk for a day-trade.

My rationale: it seems to be holding up well on a day where the high flyers are getting smoked. And ATPG itself usually gets smoked on a day like today...and darnit, I like ATPG so much I might just hold it if we make it through today!!

Hold on tight...wish me luck! : ) 

 

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#5) On August 19, 2010 at 6:17 PM, HarryCarysGhost (99.74) wrote:

Correction- Pesonally I made over 100% in 2008

Should have read 2009.

portefeuille- very true, it must be nice to have unlimited resources like that :)

option- thanks for the reminder, I'll have to see what the reapers been up to.

Momentum- yeah that is a scary thought. And as for your ventures into daytrading,

Godspeed my freind, Godspeed :)

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#6) On August 19, 2010 at 7:52 PM, guiron (< 20) wrote:

The only day trades I like are when I can sell puts after a big plunge and buy them back quickly, and the right moment doesn't come around all that often. This is always a discretionary trade with an offsetting put to make it a spread, and would not want to tie up too much money doing that.

The only day traders I know who make money consistently have strict strategies and are completely in cash by the end of the day as a rule, and quite a few (most?) trade spreads on FOREX these days. It's pretty stressful, and I'd rather not churn so much and be tied to so much leverage. Am more into options spreads, swing trading and value investing.

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#7) On August 20, 2010 at 7:55 PM, HarryCarysGhost (99.74) wrote:

Guiron- Thanks for the info , Honestly I'm not smart enough to pull that off. So I stick to my strategy of long term investing with DCA and DRIPing. Ocassionaly throwing in short term trades (usually six months or so) when Mr Market looks cheap.

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#8) On August 23, 2010 at 7:55 PM, Valyooo (99.64) wrote:

2009 was definitely a great year, I made 228% doing nothing but swing trades without margin. Man I wish I had margin and more money then, but the taxes are horrible, and it is too risky/time consuming.

A point to consider:

If you make 100k a year at a job, you can invest 20k of it and make more off that.  If you make 100k a year daytrading, all of your money is tied up in your job, and you cant make extra money on the side, plus your taxes suck.

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#9) On August 25, 2010 at 4:16 PM, chk999 (99.98) wrote:

I've never been any good at rapid trading and don't try anymore. There may be people who are good at it, but I'm not one of them.

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#10) On August 25, 2010 at 4:30 PM, catoismymotor (36.11) wrote:

#7 - Ditto.

As I see it the stress is not worth it. Going long is far better suited for me.

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#11) On August 25, 2010 at 8:55 PM, HarryCarysGhost (99.74) wrote:

Valyoo- For sure 2009 was a traders delight. Thats why I dabbled somewhat, was too chicken to take on margin. The one time I was tempted was when 3M was under $50. Would've got out at $80 and used the profits to own the stock staight up.

And I also regret that I was learning on the fly, there were some 10 baggers I spotted left on the table.

chk999- Ditto.

cato- yep!

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#12) On August 25, 2010 at 9:00 PM, HarryCarysGhost (99.74) wrote:

Valyoo- For sure 2009 was a traders delight. Thats why I dabbled somewhat, was too chicken to take on margin. The one time I was tempted was when 3M was under $50. Would've got out at $80 and used the profits to own the stock staight up.

And I also regret that I was learning on the fly, there were some 10 baggers I spotted left on the table.

chk999- Ditto.

cato- yep!

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