Day Trading

frizzfreeling · #1 08-02-2004, 08:22 PM

Currently I play poker for a living, but I have been seriously considering learning how to day trade. I want to make sure that if my poker career hits some sort of snag in the future, that I have an appreciable source of income to fall back on. I have read a few of the books out there and so far have a very basic grasp of technical trading, and I realise that it may take years of practice and study to become a profitable day trader. However, one aspect of day trading that I am having trouble with is finding information on the "true" profitability of this type of trading.
Searching on the web, I constantly find what I believe to be outlandish claims of "steady" gains, some as high as 1200% a year! I think this is highly unlikely to be the case. What I would like to know is this: Is day trading for the professional truly that much more profitable than, say, investing in a mutual fund, or holding stocks for long periods of time? If I am going to spend hours each and every business day trading stocks, or looking for buy signals, etc. , I would definitely want a return of more than the 15% a year or so that I may expect from a long-term holding, but I also know that the idiotic claims I see can't be true. So what is reasonable? Are there any day traders that post here that can honestly give me some sort of Idea of the profitability involved?

lu_hawk · #2 08-03-2004, 11:42 AM

Anybody that tells you that you can make > 50% /year day trading is just trying to sell their book. Honestly, I don't know that the successful day traders make but I do know that it is extremely rare for anyone to be able to make a decent amount of money trading from home on a limited capital base.

playerfl · #3 08-04-2004, 11:58 AM

you don't realize it but here is what you just said....

"in case my gambling career hits a snag in the future, I would like to have another form of gambling to fall back on."

I am a newbie at poker but have plenty of experience in the stock market. I can tell you with absolute certainty that the stock market is a casino, and daytrading is gambling.

I can also tell you that all u.s. financial markets are unusually risky at the moment. The pro's are playing against the pro's and you would not even be a fish, but a tadpole.

the daytrading frenzy of 1998-2000 was when amateurs had a chance and we may not see another period like that in our lifetimes.

MMMMMM · #4 08-04-2004, 12:35 PM

"the daytrading frenzy of 1998-2000 was when amateurs had a chance and we may not see another period like that in our lifetimes."

Could you please explain why?

GeorgeF · #5 08-04-2004, 01:17 PM

"120%/yr" for 20 years is 700 million percent.

Consider reading the 'Market Wizards' Books. Atleast they are fun to read, possibly for free at your library.

"income to fall back on"
Read 2+2s poker dealer book. That might be a better plan B. No insult intended.

playerfl · #6 08-04-2004, 03:23 PM

Basically because there were periods of weeks and months at a time when you could throw a dart at the wall street journal to pick 10 tech stocks and if you went long you would make money.

There were a lot of "bull market geniuses" at the time. The only time period like that in recent history was the late 1920's, or roughly 70 years previous. There was another bubble before that in the 1800's.

lu_hawk · #7 08-04-2004, 03:51 PM

If you are young there is a chance you might see it again, if you are older then you probably won't.

Mass hysteria in the financial markets, like we saw in the dotcom bubble, does not happen very often. When it does happen there is a looong period of time before it happens again. Basically everybody involved in the last bubble needs to die or retire before it can happen again. It was 70 years between hysterical periods in the US(1929-1999), I don't know if it will be quite as long until the next one but it won't be much shorter and it could be longer.

Paluka · #8 08-04-2004, 05:15 PM

[ QUOTE ]

Consider reading the 'Market Wizards' Books. Atleast they are fun to read, possibly for free at your library.

[/ QUOTE ]

The Market Wizards books are pretty silly. After reading some of the interviews I decided a more appropriate name for the books would be "Dudes Who Got Lucky".

MMMMMM · #9 08-04-2004, 06:03 PM

Paluka,

I read those books and some others years ago, and have always considered it an interesting subject. Do you have some "best book" recommendations? Thanks.

gvibes · #10 08-04-2004, 06:07 PM

That's really all they probably were (lucky, that is).

If you start out with 1000 day traders, then let them go for ten years, there are bound to be a few that end up a bit of money (even with -ER, a random probablility distribution will dictate that some end up positive). You hear the stories about the 3 who made it - You don't hear the stories about the 997 who didn't.