Jerry, you and I differ on whether "letting it happen" actually works well in these choppy markets. From everything I have observed or heard, daytrading is extremely difficult even among experts in these choppy markets even if you have every chart type and every indicator on the screen "live" and decades of experience.
I advocated on SI a few weeks ago that finding just a few stocks makes the most sense and buying them whenever they get down to the lower end of their trading range. A sort of Bollinger band play. CIEN has been a great buy every time it has hit 48 or so lately, even if you didn't hold overnight, which I agree is not smart.
Ditto ARTG a few weeks ago when it bounced between 22-28 over and over and over. Now ARTG bounces between 14 and 20. JNPR and VRTS also have wide ranges and can be played wheenver they get near 50. Of course, once they break their lower range, all bets are off, but that's what stops are for.
I know you believe Daytrading is the way to go and have the charts to prove it, but you also have to admit that while chart-reading is easy in hindsight, it is very difficult "live". Scalping and tight stops are okay, but even that can be tough in this market with these choppy intraday trends and fakeout breakouts and sucker traps galore. I saw Friday that even when stocks like INTC and ELNT broke below 28 and 30 (i.e. whole numbers), respectively, and looked like they were falling out of bed as the NQ's were dropping, they were horrible shorts at that point. A fakeout breakdown.
From what I can see the easiest money is buying the RMBS at 16-18 when it showed slight signs of stabilizing, on a classic overreation, or the Biotechs the other day when the index got very near their annual low. Odds are that you could buy stocks like AMGN that was dropping on panic selling near 46-47, when it stabilized a bit and started back up or on a double bottom test, which I did. I didn't hold overnight, didn't have to. It ran back to 54 at day's end.
Daytrading is great and fun stuff when you win, but I hope people weigh the odds because from what I hear most everyone who is not a pro is getting chopped up. And even the pro's are often losing money. They are just better at minimizing losses. I've had the best luck in the first hour or two, but after that it just gets too tough. Better some days just walk away or watch.
Once we get multiple days or definite trends, I'm the first one to say daytrade away. But not every day, not when there are too many false signals and mini bounces or falls. Most are best served preserving capital until trading gets easier when the Market turns, or at least waiting for a true breakout rally or a true breakdown collapse. Lately we haven't seen too many of those but people are trading anyway, every day, even in the doldrums. I see too many feeling itchy like they HAVE to make a trade or many trades. After all, they say, I'm daytrading", right?" And I see too many experts of trading rooms or websites feeling like they have to encourage people to make at least 1-3 trades a day, every day. "After all, that's what they're paying for, right?", they probably tell themselves.
That said, you are one of the best at telling people, especially beginners to be careful. I give you credit for that. I hope things do get easier for everyone soon, but until then I recommend not even trading unless it's on the easier trend days up or down or better yet, a real multi-day rally or collapse. We haven't seen either lately much. If people must trade, I advise them to make their first trade or two the highest reward/risk play they can and if they lose, stop trading for the day.
Again, trading will get much easier than it is now at some point and people need to preserve capital until then above all else. |
