Swing/Day Traders

[Cpt_Kirk]

Does anyone here actively swing/day trade at all?

It's been somewhere in my mind for a few years and I've finally met a buddy of mine who is in it a few months ahead of me. We're getting together and sharing information/knowledge on it so we can have someone to turn to for questions. I'm reading all the books I have on it and will use online trading sims before even attempting to put my pennies at risk but I wanted to ask someone on here if they have any tips, information, or recommended reading material to add. Or, general discussion about trading/stocks/etc.

I've been told I'll be throwing my money away many times already. Save they keystrokes.

 

[dans2992]

If you find its viable long term, let me know. With all the high-speed trading going on out there, I assumed long ago that the average person had no ability to make money consistently doing it.

I know a guy who makes a living trading emini futures; so I guess it's possible.

 

[warthog1984]

Are you able to deal with huge swings in your net worth? Can you kiss your trading money goodbye and make the mortgage? Do you like dealing with money 24/7?

If so, you can make a good income - after you go broke 4 or 5 times.

 

[Cpt_Kirk]

I'd start out with something I can afford to lose. I don't plan on it being my only source of income right now, but I can't see into a crystal ball either. The real challenge would be turning a few thousand into tens or even hundreds of thousands. Instead of wringing the account out of all initial profits, I would plan on keeping everything earned in and only pull what I needed.

I understand the danger of emotional trading.

How else am I going to fund this flying thing?

 

[JCranford]

The real challenge would be turning a few thousand into tens or even hundreds of thousands.

Or more likely hundreds of thousands into tens of thousands.

 

[Warrior]

Or more likely hundreds of thousands into tens of thousands.

I am currently doing a buy and hold strategy with some Vanguard Index Funds. You said that you would take some discussion, I would expect about a 7 percent return long term from Vanguard's 500 Index Fund. What sort of return do your sources think you can get from day trading?

 

[denverpilot]

I am currently doing a buy and hold strategy with some Vanguard Index Funds. You said that you would take some discussion, I would expect about a 7 percent return long term from Vanguard's 500 Index Fund. What sort of return do your sources think you can get from day trading?

This.

I don't expect 7% from indexes since the world has gone debt crazy, but whatever I do happen to make from various investments, it would take a LOT of my time to beat those by even a couple of percent in the stock market over the very long haul.

I've dabbled in trading with money I could afford to lose.

Net/Net I beat some of my professionally managed stuff and didn't beat others. It took considerable effort and the resulting tax paperwork (depending on your tactics) can be somewhat evil.

What I really prefer now is something a number of us petitioned one employer and got... we asked for self-directed investing inside the company 401K. We were limited to a percentage of total money invested, but they did it, and we could choose things we wanted to invest in instead of the God awful options their 401K management company was pushing. THAT was a significant "win" for all of us, and we traded notes but none of us really invested in the same things it turned out. The corporate options really were just that poor.

Right now with an employer too small to have a 401 so doing the IRA thing and letting a guy in Texas manage it with hints from me on what I like and don't like for risk. He's doing fine and his fees aren't outrageous, he definitely makes enough to pay them and then some, and he beats inflation. He has a lovely lady who's been his secretary for almost two decades who is a whiz at any paperwork needed and is a delight to chat with on the phone, and he even took a few bucks of his cut to send us a nice basket of goodies last Christmas.

He also offers to buy breakfast when he's in town and wants to do an annual sync up on things, he chuckles that I'm fine with the $4.99 special at the local 50's diner chain as long as the coffee keeps coming while we are reviewing things (he deals with much richer customers and their tastes run a tad higher I think) and he's only ever made one significant mistake which was almost predictable and I should have caught it, which didn't cost me a whole lot in the end other than some extra paperwork. I'm not even sure I should call it "significant". Just something he forgot to follow up on that's relatively rare and specific to our particular circumstances.

I treat him as a "trust but verify" type of business agreement and he hasn't caused me any headaches yet. Letting him skim off his cut for the work he does, saves me a boatload of time and effort and he enjoys it more than I do. And that's saying something, because I enjoy research and markets and tactics.

(About the only thing I don't like is making spreadsheets do what I want. I often sit with pencil and paper and figure things out and then decide if it's even worth turning whatever I was figuring out into a tracking spreadsheet. Usually, it's not worth it.)

 

[airdale]

... day trade ...

BTDT, to a degree. And there's nothing wrong with it. My business partner, who has far more money than he will ever need, enjoys going to the casino. Others play the lottery. Some like the dogs. It's all the same. The dream of "turning a few thousand into tens or even hundreds of thousands ..." Good entertainment as long as you understand that the statistics are overwhelmingly against you.

... I'm reading all the books I have on it and will use online trading sims before even attempting to put my pennies at risk ...

Investing is somewhat unique and far different from science in that when a scheme or a pattern is identified, exploitation of that scheme or pattern will quickly become ineffective. Isaac Newton's discovery of F=MA, for example, did not affect the trajectory of the apple. But consider what would happen if you discovered that a certain asset class always went down on Mondays and went up on Tuesdays. You'd begin trading it, right? But eventually (and fairly quickly) thousands of others would too, and the pattern would disappear. Investing history is replete with examples.

The point of this that that if the schemes in your books and simulations ever worked at all (very speculative), they are not going to work going forward. After all, if someone really did have an effective scheme, why would he sell it for pennies instead of exploiting it from a nice white beach somewhere?

... recommended reading material ...

Your post doesn't indicate what your investing experience is. If you don't thoroughly comprehend the basics, you really need to do that in order to understand the machine you're proposing to operate. Start with the latest edition of Burton Malkiel's A Random Walk Down Wall Street. In Nate Silver's the signal and the noise, read at least the material on economic forecasting and (especially) on the problem of "over-fitting." After that, keep studying until you are able to understand and benefit from William Bernstein's Investing for Adults series. When you get to that point, you should be able to make an informed decision about day-trading.

 

[warthog1984]

I'd start out with something I can afford to lose. I don't plan on it being my only source of income right now, but I can't see into a crystal ball either. The real challenge would be turning a few thousand into tens or even hundreds of thousands. Instead of wringing the account out of all initial profits, I would plan on keeping everything earned in and only pull what I needed.

I understand the danger of emotional trading.

How else am I going to fund this flying thing?

No matter how you pre plan, assume you will lose your initial stake 3x before starting to figure out the real market.

Assume 10% year over year or 2% short term is a great gain.

 

[docmirror]

Yes, I have done it for a short time, but this was more than 10 years ago, and the market has changed so dramatically in that time that I consider day traders to be mainly associated with the churn folks now. They only trade to generate a share buy/sell commission.

I started out with E-trade, set up a brokerage account(proxy of course) and funded it with what I was going to seed. After I was up for 6 months, I asked and was granted a decent line of credit with E-trade securities, after the usual credit check, and pledging certain assets.

Back then, there was no twitter feed, and no social media presence. I can tell you today that there are dozens if not hundreds of automatic algorithms which are used by the big houses to do massive trades based on complete spec. This is how the market has changed in the past 10 years where I won't touch day trading anymore. That is not a cautionary tale, because you don't want to hear that, it is why I chose to leave.

My success rate was no better and no worse than others of the same era. I had a few quarters where I did real well and I had one quarter which was disastrous and another quarter which was simply bad. All in all, when I got right down to it, I was making the brokerage house rich, even at very small commissions on high volume trades and I wasn't really making much per hour even though I commanded large volumes of shares, and money at times.

I had to go back and find the article from 3 years ago that confirmed my spidy sense was the right thing.

http://www.usatoday.com/story/theov...ey-associated-press-hack-white-house/2106757/

When the AP twitter account was hacked and a false story was put out, with no other confirmation just a twitter feed, the Dow went down 128 points in a matter of minutes. the bond market also went into a tailspin, and I later confirmed from some folks at E-trade that many big players in the market had automatic twitter and FB, and other social media crawls that would react to news and begin trading(sell) ahead of the curve.

This scared the hell out of me, and if you don't keep up minute by minute on the goings on of the workings of the country, you will always be behind the trading curve. In fact, I will go further and say that unless you are on the floor of the exchange you are trading it's very hard to keep up with the 'big boys'. When Buffett farts, the exchanges move. I don't really like that kind of volatility, but hey - that's what the day trading game is all about. If there was no volatility, there would be no need for day trading, we could all just buy and hold.

YMMV, objects in window, don't try this at home, may cause anal leakage.

<edit: a better link to a more financial focused account of the power of twitter on the US economy: http://www.usatoday.com/story/money...yrate-wildly-after-fake-terror-tweet/2107089/

So, the Dow went down 147 points in 3 minutes. If I recall my quick calculations that was a swing of about 700 billion dollars in trade value. Someone, somewhere got the probe, and some other guy somewhere got some nice float. Of course you can say it was all 'corrected' in a matter of minutes, but this is the life of a day trader. Easy to lose a million on paper in a matter of seconds. Not for me.>

 

[airdale]

... If there was no volatility, there would be no need for day trading, we could all just buy and hold. ...

There's a need for day trading?

 

[docmirror]

There's a need for day trading?

E-trade, Ameritrade, Schwab, and many other houses set up low cost, high volume accounts for such traders. It's making money for someone so as far as 'need' based I guess the litmus test is if someone, anyone made money at it, then they need it. If there is no profit motive along the chain, there is then no need.

E-trade made $1.8 billion dollars last year. You decide.

 

[airdale]

... E-trade made $1.8 billion dollars last year. You decide.

Yup. By your logic, the wire houses need it. No argument there.

Schwab (whom I use) is kind of funny. At the same time they are trying to lure the day traders and to lure traders in general, they are now offering "Intelligent Portfolios," a robo-visor that automatically allocates assets to various index funds. So their investment credo is essentially agnosticism. Not unreasonable at all.

I just entrusted some money to their robo-visor. It will be interesting to see how it goes.

 

[Wingsofglass]

With a little over 1,000 hours and nothing more than an instrument rating, I'll be the the first to admit I don't know much about aviation. But I have a lifetime working in various financial functions including floors of exchanges so here's the truth about day trading from someone who knows. Making money as a day trader (and by making money, I mean consistently beating the market net of expenses over many years on a risk-adjusted basis) is both a skill and a gift. Some people can do it. Just like of the millions of people that play basketball, some make it to the NBA. I'd bet the percentage of successful day traders vs. people that make it to the NBA is about the same. Do you really think you're that special? It's also a full time job that takes many thousands of hours to master. So if you're not willing to devote 50-80 hours a week to the effort, it's not going to end well.

On the other hand, we all have hobbies and we spend money on them. If you want to day trade as a hobby and enjoy slightly better odds than blackjack in a Vegas casino, go for it. But treat it as a hobby with a budget just like aviation.

 

[eman1200]

...On the other hand, we all have hobbies and we spend money on them. If you want to day trade as a hobby and enjoy slightly better odds than blackjack in a Vegas casino, go for it. But treat it as a hobby with a budget just like aviation.

if I dabble and make, oh I dunno, $2-5000 a year, is that bad? I know I'm paying more at the end of the year if I buy/sell within a year, and I know you can break it down for me how I'm not doing it correctly, but at the end of the year, if I had a lil more money than I would have if I didn't dabble, is that bad? seriously, I have no idea what I'm doing but with the exception of 1 catastrophe, I feel like I've done 'ok' for someone who knows nothing about trading.

example: if I buy $x of xyz stock and within a month or so it jumps up 8% and I sell, why is that bad, other than paying more taxes at yearend?

 

[airdale]

... Making money as a day trader (and by making money, I mean consistently beating the market net of expenses over many years on a risk-adjusted basis) is both a skill and a gift. ...

There's no argument that there are people who make money day trading (and trading in general) and have a multi-year track record of doing so.

The question is whether their record is due to luck or skill. If you put 10,000 day traders on terminals and have them each flip a coin eight times, about 40 of them will flip eight heads in a row. Many more will flip 5,6, or 7 heads out of eight flips. So maybe the successful flippers have a "gift" from some cosmic donor, but they are not exhibiting "skill."

Another factor is "survivorship bias." It's a little too complicated to explain here but the general idea is that the fraction of lucky traders appears to be significantly larger than it really is because the unlucky traders have dropped out and are no longer visible.

Fooled by Randomness by Nassim Taleb is another worthwhile read. He can be a little over the top from time to time, but he's fundamentally sound.

 

[docmirror]

I didn't add up every hour I spent on trading activities because it was mixed in with a lot of other stuff along the same time, but my dartboard guess is that if I broke it all down, at the end of the day I think it worked out to ~$13/hour spent actively managing a relatively small portfolio. So, I could have made more driving a truck if I had a CDL. There are many others who lost, and some few who made a lot more than me.

What finally got me out completely was my inability to decide and just slam a trade. I kept waiting, and looking, and checking, and watching before I would trade and that became the death knell. Unless you have a portfolio that can move the stock/bond by your own trades, you are constantly chasing and guessing and then the delay in trading is fatal.

For a very short time I was going to make the mother of all trader algorithms to sell to brokerages. It would be a linear equation about 20,000 x 40,000 and take into account everything happening on the planet. Of course, once I got the small test matrix built and implemented it with some spoof trades - it failed miserably, so I gave up.

 

[Warrior]

I agree with airdale's recommendation of "A Random Walk Down Wall Street."

 

[FastEddieB]

I agree with airdale's recommendation of "A Random Walk Down Wall Street."

I was about to recommend that.

Also "Fooled By Randomness" by Taleb.

For long term strategy - not day trading, I recommend "One Up on Wall Street" by Peter Lynch.

Also seek out a RadioLab episode called "Speed". Fascinating episode contained therein about program trading.

As an aside, I do invest in securities. Maybe a dozen transactions in a typical year. And in 2014, not a single sale to report on Schedule D. I buy if I like a company's prospects, and normally only sell if I sense a sea change in those prospect. On average, it's worked well for me.

 

[FormerHangie]

A few years ago, a guy who was day trading lost it and wound up shooting a number of people. At the time, it was estimated that 85% of all day traders lost money while in a rising market. In a stagnant market, I can only guess it's up in the 90's.

There are a couple of guys in my office who do some trading. One of them drives a 17 year old Maxima he bought used, and the other one just sold his truck and is now part of a single car family. The Maxima driver's wife got sucked into one of the financial MLM's, so that's probably a drag on the budget as well.

I just have to think that for the average person, going up against the big hedge funds is kind of like bringing a slingshot to a nuclear war.

 

[airdale]

... I just have to think that for the average person, going up against the big hedge funds is kind of like bringing a slingshot to a nuclear war. ...

Actually, it's not even that. The big investment managers, on average, do not beat their benchmarks. Worse, future manager performance is statistically independent of past performance except on the downside.

There is a mountain of academic research, going back 20 years or more, that documents this. The immense amounts of money that investment managers take from their clients, though, is more than enough to keep these inconvenient facts from becoming common knowledge. Do you think Money magazine is going to report this, given the amount of advertising that they book from the big managers? Hardly.

For interesting reading search "S&P SPIVA" and "S&P Persistence Scorecard." The back pages of the reports themselves can be heavy going but the summaries are very readable. There are also very readable articles like this one: http://www.cbsnews.com/news/s-p-spi...passive-scorecard-active-underperforms-again/

 

[Cpt_Kirk]

I appreciate all of the feedback.

I'm more interested in "swing" trading (1-4 days). I don't think I'll ever be able to keep up with a day trade deal. I don't know. It would just be a hobby to see what I can do with a few bucks.

Like I said before, I'm nowhere near clicking that first button to buy. It's many months down the road.

 

[Jimmy cooper]

Why is it Warren buffet has willed his childrens money to be invested in index funds. Is it because he's not as well versed?

 

[FormerHangie]

Actually, it's not even that. The big investment managers, on average, do not beat their benchmarks. Worse, future manager performance is statistically independent of past performance except on the downside.

There is a mountain of academic research, going back 20 years or more, that documents this. The immense amounts of money that investment managers take from their clients, though, is more than enough to keep these inconvenient facts from becoming common knowledge. Do you think Money magazine is going to report this, given the amount of advertising that they book from the big managers? Hardly.

For interesting reading search "S&P SPIVA" and "S&P Persistence Scorecard." The back pages of the reports themselves can be heavy going but the summaries are very readable. There are also very readable articles like this one: http://www.cbsnews.com/news/s-p-spi...passive-scorecard-active-underperforms-again/

I'm a big fan of index funds for my investments. Day trading is not investing, it's speculation, but if for any individual who wants to do it, he needs to realize there are people with much better tools for it than are available to the average person.

I used to listen to the two guys at my office who were trading, until one of them said you needed to be able to "intuit" the market. The odds might be more favorable in day trading than they are in Vegas, but it's still mostly gambling.

 

[Apache123]

I appreciate all of the feedback.

I'm more interested in "swing" trading (1-4 days). I don't think I'll ever be able to keep up with a day trade deal. I don't know. It would just be a hobby to see what I can do with a few bucks.

Like I said before, I'm nowhere near clicking that first button to buy. It's many months down the road.

I'm an HFT, and apparently one of the best. Sending a PM.

 

[denverpilot]

Note about books:

If you were a brilliant trader, and could amass a fortune trading, why would you take the time out to write a book about Wall Street?

Do you need the royalties? Is it a strange form of diversification?

Or do you just know there are a lot of desperate people out there who will buy books about Wall Street? Way more than will ever know how to trade?

 

[dans2992]

You write the book when the trading isn't working out so well...

Let's face it, if lots of people started using "your" method, it would eventually stop working. Who would do that?

 

[eaglepilot]

So in 2014 I finally went net positive in my trading account (not my investment account} after 8 years of being in the market. I read for 2-3 hours everyday and place one order a day, usually hold about 3-4 days. I have only 2 trades open at any time.

Can you make money swing trading? People do, but the odds are heavily against you. Some will tell you the market is rigged (it's not), or that you can't compete against High Frequency Traders (you can, but it's much harder than it used to be).

Don't think that sim trading is like the real thing, there is no real commitment, and you don't have real pleasure/pain when something happens. Kind of like sim flying, you crash, so what, just reload and try again. Not so in the real world.

Not saying don't do it, but don't think it is easy. You are competing against people that have better resources and sources than we do. You can grind it out, but it's exhausting.

Having said that, if you have the passion for it, it can be rewarding (in other ways than $$), and you can be involved with a community of others with a similar passion.

PM if you want, I'll let you know about my journey, and where I am now.

 

[FastEddieB]

So in 2014 I finally went net positive in my trading account (not my investment account} after 8 years of being in the market. I read for 2-3 hours everyday and place one order a day, usually hold about 3-4 days. I have only 2 trades open at any time.

Can you make money swing trading? People do, but the odds are heavily against you.

Good for you.

Best to remember that even random walks can end up in positive territory for a while. This is what Taleb points out in "Fooled By Randomness". Remember that some few people will end up "net positive" playing the lottery. That does not mean there's a system or algorithm to do it consistently.

I imagine two scenarios. First, imagine a day/swing trader tracking Apple stock. Using charts and algorithms he or she finally, after 8 years and hundreds of trades and enormous effort and time invested finally goes "net positive", even after taking out transaction costs and taxes. Hooray!

But imagine another investor that "intuited" back in 2007 that Apple was still a good company, with possible home run products still in its future, and simply bought the stock. Maybe just invested $10,000 and sat back and did virtually nothing over those 8 years except maybe keep an eye on the tech world to try to "intuit" if Apple ever "lost it" and was no longer worth holding. As an exercise, I encourage anyone to look up the stock price then and now and see by what multiple their investment would have increased. Oh, and don't forget the dividends Apple paid along the way.

Conservative investors often look at day/swing trading as fighting to eke out pennies here and there all the while leaving the dollars from really big gains on the table.

More to follow...

 

[Stingray Don]

I appreciate all of the feedback.

I'm more interested in "swing" trading (1-4 days). I don't think I'll ever be able to keep up with a day trade deal. I don't know. It would just be a hobby to see what I can do with a few bucks.

Like I said before, I'm nowhere near clicking that first button to buy. It's many months down the road.

I have been doing this for the past 7 years and I have made money every year. I trade daily and make thousands of trades per year, so my track record is well beyond random luck. I can tell you that the odds of you making money trading are extremely remote, and the overwhelming majority of people that attempt this will fail after heavy losses. I would strongly discourage anyone from doing this. Invest in index funds/ETFs instead. I'll send you a PM with some advice.

 

[airdale]

... my track record is well beyond random luck. ...

No way to know that. Could be luck, could be skill. Academic studies of active managers (a slightly different breed) say even this kind of track record is still almost always luck. Maybe always. No way to tell for sure.

I again recommend Fooled by Randomness and a review of the S&P results on manager persistence.

I can tell you that the odds of you making money trading are extremely remote, and the overwhelming majority of people that attempt this will fail after heavy losses.

Yes. In fact, with 125 day traders flipping coins the statistics predict that one of them will flip seven heads in a row. As Taleb points out, that lucky trader will then conclude that he is a genius at coin flipping. Same numbers would result from 125 monkeys flipping coins but the lucky monkey would draw no conclusions.

I would strongly discourage anyone from doing this. Invest in index funds/ETFs instead.

Depends. That's investing, which is not what the OP asked about. If he wants a toy to play with and understands the statistics, then his chosen hobby is really no different than playing the slots. Except the slots might pay off better.

if I dabble and make, oh I dunno, $2-5000 a year, is that bad? ... I have no idea what I'm doing but with the exception of 1 catastrophe, I feel like I've done 'ok' for someone who knows nothing about trading. ...

Nothing bad about it at all. You appear to understand what you are doing and to understand that your results are basically luck. In that, you're ahead of the vast majority of traders.

... It would just be a hobby to see what I can do with a few bucks. ...

That's the right way to view it. Just don't count on funding your retirement by "turning a few thousand into tens or even hundreds of thousands." It ain't gonna happen.

 

[RJM62]

With a little over 1,000 hours and nothing more than an instrument rating, I'll be the the first to admit I don't know much about aviation. But I have a lifetime working in various financial functions including floors of exchanges so here's the truth about day trading from someone who knows. Making money as a day trader (and by making money, I mean consistently beating the market net of expenses over many years on a risk-adjusted basis) is both a skill and a gift. Some people can do it. Just like of the millions of people that play basketball, some make it to the NBA. I'd bet the percentage of successful day traders vs. people that make it to the NBA is about the same. Do you really think you're that special? It's also a full time job that takes many thousands of hours to master. So if you're not willing to devote 50-80 hours a week to the effort, it's not going to end well.

On the other hand, we all have hobbies and we spend money on them. If you want to day trade as a hobby and enjoy slightly better odds than blackjack in a Vegas casino, go for it. But treat it as a hobby with a budget just like aviation.

Yep.

Personally, when I feel like gambling for a day, I just go to the track and play the ponies.

Rich

 

[Apache123]

That's how I do it. I write software for HFT and I like to "gamble" with tech stocks for fun. I'm basically constantly at a scratch. I had one big day of luck where I bought some ouy of the money options for AMD at $5/contract and due to speculation the next day the underlying spiked up about 40% and I sold all my contracts at $37ea (over 200 contracts too). It was a good day but purely luck. Everyone was expecting a negative statement from another silicon company. They made more than anticipated do people jumped on amd and Nvidia. Two days later it was back to the original range.

 

[FastEddieB]

seriously, I have no idea what I'm doing but with the exception of 1 catastrophe, I feel like I've done 'ok' for someone who knows nothing about trading.

That cognitive bias is often referred to as "remembering the hits and forgetting the misses", a form of confirmation bias.

Talk to many busted day traders, or even broke gamblers, and they will regale you with sob stories about how they'd be rich now, if not for_________.

Fill in the blank. The most common one is, "If I had only stuck to my plan and not done...".

I hope the reality of your successes weighed against that one "catastrophe" corresponds with your "feelings".

On another point, don't ever forget the inexorable downward pull of inflation. It's fine to finally go positive after 8 years. But being slightly positive can really mean being slightly negative after inflation is factored in.

 

[docmirror]

After reading some other posts, it brought back one other aspect of the trading that I now think was interesting. If you do it right, the learning curve of the market is beyond logarithmic. When I started, I knew the basics, but all the ins-and-outs of the trading game were discovered only after a few months and lots of study. I look back now and it was shocking how little I understood the entire trading mechanisms while moving investments around.

One of my best(you can say luck, I'll say skill) was timing the quick uptick and death of KKD(Krispy Kreme). It was a flash in the pan sensation when I started and I caught it right at the uptick, and then saw the big slam coming. Much of my gains were result of knowing that it was massively oversubscribed, and putting the stock at the top, then reaping the rewards on the down side. I was pretty proud of that, but in retrospect, could it all have been luck? I studied the hell out of their product shipments, store traffic, and media hits. After that I decided that the money I made getting in, was a fraction of what I could make getting out. I got out, and luck(skill?) paid me off.

I was also active in HD(Home Depot) at the time, and I kept thinking I was ahead of the curve by all my analysis of the 10Q and other media info. After looking back, I was not nearly as good as I first thought, and barely got out with any gains at all. Before that I took some serious hits on ORCL(Oracle), thinking I was a tech genius. Sadly, the street doesn't really care that much about tech advancements right as they happen. Good lesson there.

So I would say, a certain amount of learning the methods and mechanisms of investment research and study plays a part. No question that luck plays a part, but if you do put in some serious study, you should be repaid. Ultimately, the market is pretty efficient, and winners gain, and losers decline. But for the day trader, you can't wait around for the trends, you need to hit the wave, and ride it but get out before you reach the surf line.

 

[Stingray Don]

No way to know that. Could be luck, could be skill. Academic studies of active managers (a slightly different breed) say even this kind of track record is still almost always luck. Maybe always. No way to tell for sure.

I did some quick math. Across the total volume of trades I have made over the years and my win/loss ratio (which I do track), the odds of random luck would be approximately 1 in 10 to the 133 power. A trillion is 10 to the 12 power. A DNA match in criminal cases is estimated to be 1 in 133 billion of unrelated people having the same genetic markers. Odds of winning the powerball jackpot are 1 in 175 million. Call it luck if you want. I call it thousands of hours of hard work and I take it very seriously.

I can also tell you that those that think they can read a book, pony up a few thousand bucks and make a go of it, are kidding themselves. You are going up against professionals and they will happily take your lunch money.

 

[denverpilot]

Yep.

Personally, when I feel like gambling for a day, I just go to the track and play the ponies.

Rich

I like craps. Usually a bunch of goofballs being entertaining around the table and a "free" adult beverage or three.

 

[FastEddieB]

I did some quick math. Across the total volume of trades I have made over the years and my win/loss ratio (which I do track), the odds of random luck would be approximately 1 in 10 to the 133 power. A trillion is 10 to the 12 power.

That is fabulous!

For comparison, I highly recommend everyone take the short amount of time necessary to listen to this segment of RadioLab, mostly about program trading.

http://www.radiolab.org/story/267195-million-dollar-microsecond/

Spoiler alert: they had to ensure that all the fiber optic cables leading to data sources were the same length, since even at the speed of light, having a speed advantage of even a couple nanoseconds would give one computer an edge when dueling algorithms against others.

Makes me skeptical of an individual's ability to tease out market inefficiencies well enough to cover transaction costs. But the proof is in the pudding, so to speak, so if your data is accurate, congratulations!

Regardless, I still think slow and steady is a better way to go, but whatever floats your boat!

 

[docmirror]

That is fabulous!

For comparison, I highly recommend everyone take the short amount of time necessary to listen to this segment of RadioLab, mostly about program trading.

http://www.radiolab.org/story/267195-million-dollar-microsecond/

Spoiler alert: they had to ensure that all the fiber optic cables leading to data sources were the same length, since even at the speed of light, having a speed advantage of even a couple nanoseconds would give one computer an edge when dueling algorithms against others.

Makes me skeptical of an individual's ability to tease out market inefficiencies well enough to cover transaction costs. But the proof is in the pudding, so to speak, so if your data is accurate, congratulations!

Regardless, I still think slow and steady is a better way to go, but whatever floats your boat!

This is what drove me out of the deal. Program trading took massive strides in the early 90s, and basically took over by early 2000s. I realized my little algorithm I tried was heuristically useless compared to what was out there.

 

[FastEddieB]

I do not want this to come across as bragging, just as the end result of a lot of long term investing.

As a caveat, a list like this will be skewed towards winners, which I tend to let run, and away from losers and stagnaters, which tend to get sold.

Also, I've been in some of these positions for 30 years.

Without divulging holdings or dollar amounts, here's the "gain/loss" column of the 25 stocks I currently hold:

I'll mention the 8,752% "87-bagger" is Apple. My split-adjusted basis is $1.41.

And the 1,531% "15-bagger" is Polaris - which I'll relate about later.

The reason for the 235% repeated is that's Google which had a 2/1 split issuing new shares of a different class.

Again, one plus to this form of long term investing is the minimal effort this took.