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Strategies & Market Trends : Market Gems-Trading Strong Earnings Growth and Momentum -- Ignore unavailable to you. Want to Upgrade?

To: Lane Hall-Witt who wrote (5924)	3/6/2001 8:58:26 PM
From: Dave Gore	Read Replies (1) \| Respond to of 6445

DAYTRADING DANGERS I have been observing a few daytrading rooms and am finding that, imo, there is too much trading going on by most. While the pro's can perhaps get away with scalping in a narrow trading range environment, I suspect most are not doing all that well, day in and day out. Many trades are being forced and are predicated more on hope than calculated risk-taking. Here's the problem. For most of the last two weeks the trading has been choppy and the Market spends most of the day in too-tight ranges. If you are watching the NQ futures, you may get a 20-30 point bounce, but problem is that if you wait for 2-3 five minute sticks to confirm, you often end up buying just as the futures are pulling back. If you buy on 2-3 one or two minute sticks you are gambling even more. The same can be true of the short side. Today, judging from the close in the NAZ, seemed like a pretty good day to make a profit on the long side, and many (including me) did, but it wasn't nearly as easy as you might think. Why? Because you had to pay a premium on stocks at the open and many finished near flat or even down from their "open" price. For the most part there wasn't a quick pop and then a significant 9:50 pullback to the 20 period ema, and a subsequent bounce. The problem is that even when the NQ's pulled back and then would run up and take out new highs they would almost immediately stall. I have seen this quite a bit lately. There is just not enough buying conviction and the MM's are taking advantage by sucking buyers in at high prices and whipsawing them. Shorting was okay today as long as you waited until the last hour or so, but even then the futures did relatively minor rolling over and it was a bit risky. Of course, the biggest problem now is that people don't know if "bad news is good news" again or not. AMCC's warning and stock advance gave us hope as did TQNT's, but how long will that last? I hope that daytraders are examining their strategies and noting how they are doing on a day to day basis, and re-adjusting as necessary. Hopefully serious newbies are paper trading. I am doing far fewer trades in this environment until the trends are more definite. It's best, imo, to be patient and preserve your capital and perhaps build it up with a few lower risk trades, but that's about all. I'm waiting for more rewarding opportunities.