Richard, I figured I would repost your message to clarify my response:
"1. While you say it is fool's gold, you berate Don for an overnite trade. Driving home an impression that the fool's gold is real."
- Nobody berated Don. I vehemently oppose taking home stock bought for a trade and then additionally doubling down in a down market. It very likely will have made him fantastic money. IN MY OPINION, it leads to unreasonable risk. Don used numbers, detailing his gains and what he was making in dollars per day, and where he bought the amat and rmbs. My use ofnumbers clarified my opposition to this style of trading. Don is a strong individual; Using his trade as an example of the dangers of such a strategy will not cause him listless nights.
Infact, given that AMAT is up 1 15/16 today and RMBS up 5ish, I am sure he is quite happy. Yet nothing says that we shouldn't have sold off 500 points yesterday. The argument that these are good companies and will come back is not one that traders shouldbe making. Leave that to the investors and don't blur the disciplines. As I said, i wish him and every traderthe best. If you don't like my opinion, argue the opinion.
"2. A broker that has an account that trades >250 trades a year, should make more money on a customer than the one that trades 20 times. If daytrading is fool's gold, why encourage it?"
- What have I encouraged? I would challenge you to find one post of mine that recommends that someone pursue daytrading rather than other professional opportunities. Infact, I am a strong believer that most individuals should not eveen consider daytrading as a career as only 1 in 10, in my opinion, are ultimately successful. You do not hear the gruesome stories, yet Ihave seen them, firsthand. Those individuals are nolonger in the business. Call up Block trading and ask them their turnover, I would bet its tremendous.
Yet 1 in 10 are successful and perhaps threads like these, learning about execution systems, trading firms, warstories, might help just a few be more successful. Or perhaps someone says that "steve doesnt know what the hell he's talking about" and going against eerything I say makes them a better trader. That is why I post here.
3. No matter what their cost is, the customer pays the bill. The one that can't stay in a stock at close, pays more.
- That you might have to pay an extra commission is a poor argument.What does $40 on 1000 shares mean? Nothing. Its less than a 1/64. Its like being pennywise and pound foolish. YOu try to save $50 by taking the stock home and it gently wifts down 1/4 at the open.
I would never make a decision to buy or hold a stock based on commissions, regardlessof whether its my trade or a clients.
If you think that i might suggest that a client sell the stock so that I can "generate" a commission means that 1) you don't know me very well 2) you don't know my firm very well to know that less than 10% of its business might come from individuals who would be in such a position to "hold ornot hold" a trade overnight. Most who are in that position make their own decisions anyway.
4. I think you should be objective and have the numbers to back up any assertion that becomes a part of a trading plan. Yes this bull has allowed many to throw darts. A "trader" without backup numbers and a idea about probabilties is playing a "feelings" system. Sounds like someone picking the best slot machine to play by the color of the lights.
- Pretty good point, similar to Robert G.'s argument about trading void of emotion, except that I never claimed to have a set, fixed, regimented plan for trading. I have certain things I look to, feel for, base my decisions on. Ultimately, succesful traders see the same data as everyone else and buy xyz,already up 1/2, selling at the close up $1. Infact, at the very same momment that that trader is buying the stock, someone else is selling it, infact he is buying from someoneelse with a different take on things. If any fixed system worked, you would know about it. I do look to fundaments, technicals and anyother methodology that might help me make a decision, to determine the underlying strength of the stock, whether it be for a trade or an investment.
re: "numbers to back up my assertions...."
- I am clearlyno statistician. I don't spend my timewith lots of reports or other market reports that run the studies on market percentages, etc. I am not sure if they exist. But I will suggest that you ask your firm/fellow trader/people on this thread, what they thinkthe number one reason that traders fail is, and I bet it is they lacked discpline in taking stocks home and not keeping losses small.
".....Making sure you are out by close. Sounds easy."
I am sure we are all aware that day trading is byno means easy. Anyone who has said that it is or says theyhavent had any losses or hasn't felt pain, hasn't been around the block. Buying stocks is easy, you pushthe button. Selling them, having the discipline to not take them home is easy, you pushthe button. Skill and a bit of luck determine the profitability between the two.
Its not easy, its real tough, which is why only a small percentage succeed long term. Those that lose, not only lose their job, but lose their familie's assets, items that are hard to replace.
Regards,
Steve@yamner.com |
