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Strategies & Market Trends : Your Worst Trading Enemy.. You -- Ignore unavailable to you. Want to Upgrade?

To: E. T. who wrote (116)	1/20/2001 1:34:30 PM
From: shawnwolff	Respond to of 223

To: ET Re: Daytraders and the market changes You bring up a lot of good points that made me stop and think. The last 8 months certainly was an interesting turn of events from the previous bull-run. During that bull-run, any reason to buy was a good one. Whether that reason was a dart board, or chart, or fundamentals, everything was going up. During that bull-run we seemed to get a rush of amateurs with dreams of getting rich overnight, and many of them did. Many fledgling daytraders, with no real discipline or methods, still made out quite well. A person really didn't even need a strategy. Just buy something and hold. If it went down, chances were good it would be carried back up with the tide. I saw a lot of daytraders develop this strategy where if they were caught in a down-draft and did not stop out, they just tucked that stock into their long-term port and waited until it got the next news flash, or the next time the ceo wore a nice tie on CNBC, and they still came out with a gain. So they began to rely on that. A lot of them were still buying into Nasdaq 5000. This last year, anyone who was still relying on that strategy, and holding stocks from Nas 5000, had their clocks cleaned. So any daytraders who were using that "dartboard" method, or who had become a hybrid daytrader/investor with no discipline, and I have a hunch there were a lot of them, I believe have died off. There's a really big difference though between the professional daytrader, the one with methods and discipline, and the amateurs. I believe an experienced, skilled, and disciplined daytrader will out-perform just about anyone as far as percentages go. A true daytrader is not reliant on the market direction. They don't really care whether we dive back to 2300, or climb back to 5000 at this point, because they are flexible enough to move in any direction. They don't have to predict the future movements, they simply identify them as they occur, and react. It is a time-consuming, and intense job, but those who are good at it have a huge advantage. Even in a choppy market, they can pull consistent gains out. So I understand and accept people likening daytraders to dart-throwers. We have a bad rap, with Greenspan blaming us for volatility, and with Mark O. Barton as a poster-boy. But this year it really is the pro daytrader who is having the last laugh in my opinion. - Shawn

To: E. T. who wrote (116)	1/21/2001 6:05:54 AM
From: shawnwolff	Respond to of 223

Re: The changing market Another point about last year's market change.. I don't really think it was a difficult year because it was negative. The hardest part about last year for me was that it was very choppy. We had a lot of yo-yo-ing, up one day, and down the next. That made it a very unpredictable market, hard to anticipate. There was little consistency. It was also a very reactionary market. News events whipped us up and down at the drop of a hat, and there was little follow-through on initial reactions. - Shawn

To: E. T. who wrote (116)	1/21/2001 6:12:34 AM
From: shawnwolff	Respond to of 223

To: ET Re: Stereotypes It just hit me that by assuming that investors were cleaned out last year, we are assuming that they were undisciplined in their methods, and did not keep stops, but rather held the entire drop. That is just as much a stereotype as people saying daytraders use dartboard methods. I am saying this because I realized that I myself was guilty of making that stereotype about investors. I guess the point we need to keep in mind, is that ANYONE, regardless of the time-frame of their trading, who is undisciplined will lose. Those who go about their trading systematically, with a valid plan, and who have the discipline to adhere to that plan, will succeed. - Shawn

To: E. T. who wrote (116)	1/21/2001 6:29:31 AM
From: shawnwolff	Respond to of 223

To: ET Re: Courses of action last year Another point about your post..(that was a really thought-provoking exchange you had with NG, thanks).. is that you are assuming that the only courses of action over the last 8 months were: a. Not trading at all b. Daytrading c. Holding long positions long-term But one of the most profit-able actions last year may actually have been shorting. I think a lot of traders neglect to short, and that really minimizes their opportunities. Another option was momentum trading, swingtrading, whatever you want to call it, holding positions multiple days on larger market moves. That is something I did last year, and am doing now, and it is working well for me. It is harder for me to have confidence in longer term trends. I may be too close to the market for investing. I tend to become obsessive about positions, watching their every tick, and thats not a good habit for an investor. So I am trying to find a sort of happy medium, and ride positions from one market move to the next. It seems to match my personality and stress threshhold better too. - Shawn