As a professional trader, head trader at a firm, who loves to see our clients do wonderfully day trading, swing trading and buying quality for the long haul, try to understand the following:
8 out of 10 traders don't make it. A ragin bull market makes up for a lack of experience and skill. Luck carries the weight as well. As a day trader, you have no foundation, nothing substantial to turn to if the market goes against you, your luck runs out or they change the game so you can't partipate.
I have seen traders have great weeks months andyears only to get hammered by taking home something and waking up with a percentage point loser.
I get calls from Doctors, lawyers other with established careers who have been following themarket for some time. They have expressed a desire to become a real, real active trader and infact consider giving up their profession to do so. Like i said, only about 8 out of 10 make it.
For most people Iwould recommend becoming intimate with the markets, knowing how it works inside and out, using your greater knowledge to be active and trade when possible, but I would never recommend giving up a career flat out to do so. Perhaps mix the two a bit, (a machine at work etc.) while you test the waters. Then perhaps take a leave for a few months and give it a shot. Giveyourself $75,000 of play money and ifyou make it great, good, if not go back to your job and just enhanceyou income,gains with the market. It is a lot of fun, you day is over at 4, starts at 930, etc.
But there is a lot of downside and opportunity cost.
As well, even ifyou did do well, how much do you think you can earn? How much of an account can you reasonably and prudent manage especially in a highly volatile market.....$200, 300,000....300 would be alot to day trade....you would need to do a bit more swing trding and investing with that kind of principal. For most traders, 200 is probably the max they could manage during the day, given the intraday buying power.
How much do you think, being OPTIMISTIC , you can earn a day?
$1000 a day, that would be on the high end if we get a bad market for a number of months or years, even if you are lucky and good. But then you are capped at about 200,00 or so for the year. Yes, this is a great amount of money but you also face great risks. Don't kid yourselves, day trading is not less risky but is as risky as it gets, leveraging your cash into a relatively small number of positions.
Understand that I am a PROFESSIONAL trader, I trade all day every day on behalf of clients, as agency-only (we don't make markets, act as principal), I love my job, couldn't be happier, but I manage and run this firm, I don't have a limited upside. I have clients and other areas of business andmy livlihood, my family's security does not hinge on a bad move of taking a stock home.
Anyone who has followed my postings here or on the trading desk Subject 15840 thread, knows I love doing this and talking about it but it is NOT FOR EVERYBODY. and it is not as easy as you see on TV. I was watching CNBS last nite and they were talking about a few active traders who had given up carreers to do so. I wonder if they will be content with this in a few years.
Done properly, day trading can be a great education, a way to make money and to have some fun. But do yourselves a favor, do more with it than simply makemoney. If you are good, think about starting a hedge fund or managingcash for a %. Think about joining a small or large firm as a trader, etc. Hey, ifyou are really good, give me a call...lol!
A few thoughts, sale of the Hong Kong Fund was a good close, made the 8% overnight. 1stSunRay who said to not follow the crowd has it wrong. The trend is your freind. Go with the flow.. you dont need to pick the bottom or the top, just get onboard while its moving up. Contrarians get them right a few times but they end up picking up OXHP preopen at 39 and seeing it at 35 and then 29 before 10am.
Regards,
steve@yamner.com |
