Hi TraderAlan; Re those 20 something traders you mention not infrequently...
We are constantly reminded that daytrading is an activity that requires capital, and since the ownership of capital is concentrated in older people, we should expect to see more older people try daytrading than younger. My observation from a year of scalping at a direct trading office is that this is the case. Further, it is my observation that the older people were usually better financed than the younger, also as expected. In fact, the quite successful guy who taught me, got his initial stake of about $20,000 by running up stupid credit card debts, at around the age of 24. (I should note that he started long enough ago that scalping had less competition than now, and may have been easier.) The worst traders I have seen were the older ones, who frequently were gamblers, or particularly inept at entering orders. I had to sit next to three of them that burned out their accounts, and it was not a pleasant experience for me. When they did make money, it was by doubling down in the most stupid ways possible, and other dangerous techniques that I only barely avoided emulating. This observation applies only to novice traders. I have seen several older traders that were excellent, but they had been in the business a long time, they were not novices. The sage of Omaha, for instance, seems pretty good at picking stocks for the long term, but he has had many years of experience doing it.
So my observation on the survivability of novice daytraders is that the young have some distinct advantage, or, at least, the older have no particular advantage from their extra initial capital. This observation, is supported by posts on this thread mentioning examples of particular novice traders auguring in. The age of the trader, for some reason, is frequently mentioned. (Human interest, I suppose.) Here are some examples of unsuccessful older novice traders, and successful younger novice traders, culled from this thread, by looking for posts that mentioned "old":
scanshift: pro an old guy ... he lost 50 million #reply-11297342
Dave Osterfeld: 40s, trader: 61 year old with health problems was an active trader? #reply-11286915
Bilow: 41, amateur scalper: 60-year old guy probably had no business trying to learn to scalp. #reply-11224798
News: 57-year-old lost $75,000. 33-year-old lost $200,000 ... scalp #reply-11220489
News: 43-year old ... 2.8% in the first six months #reply-10775045
News: Successful traders: all in their mid to late 20s #reply-11171497
On the other hand, one can find examples of older novice traders who are expected to be successful, or other statements in favor of the odds facing older novice traders:
Dan Clark: Mid 40s, trader: (And, of course, to take their money!) #reply-11319990
OZ: 33, trader: you old guys took all their money! #reply-11319109
KM: 39+, trainer: 74 yr old student right now from Irving who is sharp as a (buggy?) whip #reply-11286990
TraderAlan: 40s, trainer Scalping should only appeal to the naivete of youth. ... The average age of those taking my TA-based trading course is 51 years. #reply-11225196
KM: 39+ trainer: A 61 year old child #reply-11285992
As I mentioned above, I have seen older traders that were successful, but every one of them had been playing the game for a long time. I have not seen the "Grandma Moses" (who took up painting in old age and was a great success) of daytraders yet, I suspect that he/she is very, very rare, particularly compared to the legions of successful 20 something traders. There are probably people reading this who will deny that there exist many successful young traders. This makes me laugh. Look at who the big market makers choose to train to trade.
I have also seen successful older traders try to train older novices, but I have never seen this work out yet, while I have seen the successful training of younger traders. It is my conclusion that most of those successful younger traders are being trained to take advantage of very fleeting opportunities, opportunities that are not available to those who have slow fingers. I think that successful older traders have more robust chart reading skills, skills that stun and amaze me, but that those skills are so subtle and intuitive, that they are exceedingly difficult to learn or teach.
I am beginning to suspect that the people who make substantial money telling others how to trade are ignoring, or minimizing, the difficulties involved in teaching older traders to trade. Note that KM posted that he has only had to give returns to two people, and they were both older. I think that the real disaster in daytrading has to do with getting people in their late 50s to 60s to trade away their retirement by using direct connect workstations. I will never sit next to one of them again, it is too depressing.
The older guys I have known, that taught trading, should have been multi-millionaires and retired if their techniques had actually worked as well as they hoped. That they were still trading small accounts was due, I believe, to the fact that they always overtraded, and while they were usually profitable, the occassional slam would put them back to square one regularly in their careers. This was a lesson that they never seemed to learn, instead simply taking the slam as a lesson that that particular type of trade needed modification. If they had simply reduced their risk, their accounts would have grown exponentially for ever. While they had good trading skills, except for the overtrading, their students never seemed to catch on. But maybe I lost track of some of them, and after a while, some of them learned to trade as well, (maybe better, if they didn't make the mistake of putting on too much risk).
The scalping I do is very simple, and can be reduced to "press the keys before the other guy, after waiting for various situations." Contrary to the comments on this thread, it is obvious to me that this style of trading is very simple to teach to those who have the finger speed and accuracy, it is not the naivete of youth that allows it, it is the strength and speed of youth. Once you have watched someone scalp for a week or two, it is pretty clear what you are supposed to do. After that, most of the effort is in controlling yourself to trade the plan, as with other forms of trading. But reading stock charts seems to be something that is almost beyond teaching.
I know that this post is going to catch hell, in part, that is its purpose. It is only the observation of one person, you can ignore it if you like. But I especially look forward to replies from older traders about what they went through to learn this trade, how old they were at the time, and how their trading style has changed over the years, and why.
-- Carl |
