Do you have to day trade to trade full time?

[Mr J]

Really?

Those quotes were just me having a bit of fun.

The point I'm making is there is always a difference between theory and practical application. Theory is important as a starting point but it is the practical application that actually makes the money.

I admit if I'm guilty of something, it's drawing conclusions based on limited experience. I say trading is easy, I am confident I'll do well etc, but it is truthful for me. I can see how some would only expect these from someone with a lot more experience, but I'm just being truthful. I do find trading easy.

In poker or sportsbetting, it was always far easier to to judge skill based on the actions rather than a sample of results. Results weren't all that important, because we know that over time, skill will likely achieve good results. My confidence comes from the trust in the theory of my trading strategy, and from the analysis of my actions rather than results. When I make trades, I'm placing them when the probabilities are in my favour. I can see whether or not I'm getting a good price, and how things play out compared to the way I expected. I know my trades have an edge, and I know I can apply that edge over time. I know I seem a bit too sure of myself for a novice, but it's just how I'm used to analysing skill - actions rather than results.

50k to 100k in 12 months in theory is achievable and might even sound like "a walk in the park" but in reality it is not so easy and very few traders can actually do it and even less can do it consistently. Maybe you are one of these traders but neither of us know that yet.

I have no idea how many traders can achieve this. I just know that even a small edge applied over good daily volume will see seemingly unbelievable results. I was regularly involved in this sort of discussion in sportsbetting. Most people just couldn't believe the possible returns, but they also had no idea that one could be making 30+ bets to achieve that return. A good example is TH's Nothing to Something thread. I know that is exceptional, but even with a far smaller edge and far lesser volume, it would achieve a very strong return.

what I'm calling you out on is how you bang on about how easy it is and how this & that is possible but you haven't actually done any of it yet. I think you'll find the practical application of some of these claims will be a bit harder then you think.

Sure, and it's logical that you're skeptical. I may not have done it, but I'm doing it. While I may have a small sample of results, past experience tells me that I almost certainly have an edge, and that any conservative estimates with a small edge are triple figure returns. It's just maths. A 400% return wouldn't make me a great trader, it would make me one who took a small edge and applied it to a large number of trades. Quantity alone can achieve. I don't think I'm a good trader, just a trader with a small edge that knows how to apply it. I think most people could probably be taught to do what I do reasonably quickly. Unlike what TH does, it's not rocket science .

 

[MRC & Co]

You say a sports star adds value, but not a day trader?

I would argue, TH has provided as much excitement, inspiration, hope and belief to a large number of people (obviously not on the same scale of distribution as a mainstream sports star), but to me, that is adding a LOT more value to society than a regular day job generating a measly % of GDP.

These emotions are more important than a tiny bit more tangible consumption.

Some find the markets spectacularly fascinating, and for them to be able to live out this fantasy, or live that fantasy, could be a life-long accomplishment, a whole lot more fulfilling than a regular job and perhaps the difference between a 'complete' life and a life of regrets and boredom (let's not pretend everybody loves their job).

Now, we do need the monkeys to do the regular jobs, but society also needs a huge element of fantasy, the backbone of childhood and something that should not end with adulthood.

 

[Krusty the Klown]

Am somewhat surprised at the amount of heat generated by my fairly innocuous (and to me obviously factual) post on the social value of day trading.

It could be worse - you could have said you were a financial planner!!!!!:

 

[skc]

Trembling Hand.

If you are doing 1 or 2% of the turnover of the "aussie futs" (what is that - the whole exchange, AUD currency futures, interest rates), then you are obviously operating towards the top end and providing a reasonable amount of price discovery. However, you only have to read posts on this and other forums to know that lots of day traders (most) are not.

And I said a "few hundred k" not "a few k"

So volume determines contribution?

So a factory worker who is but a small part of the whole system, that he can be replaced or fired without affecting the production does not contribute to the society?

 

[beerwm]

You don't trade do you?

I can see this discussion is getting to you TH, but are the put-downs regarding other's trading ability necessary.

Many people seem to think insurance is a bad bet because the insurer makes a profit but actually both parties usually benefit.

This doesnt make sense,
- if my home insurance cost $1000
- and my house burnt and i receieved $100,000
:. the insurance company is -$99,000 ... they have lost.
:. if my house doesnt blow up, im -$1,000 worse off.
-how can both parties benefit?

if you are looking at whether insurance "adds value" to society, i cant see how it does?

The value argument is a poor one. I don't think you are going to get a trader saying that they are more important than say, someone who cures cancer or discovers a life changing technology.

But if you think a capitalist system can work without price discovery that a large group of traders provide you are kidding yourself. They are just as important as any 1 level on a food chain. Take out the plankton and the whales starve to death.

im open to being challenged on this debate, I dont care if im wrong.

but i cant see how if you have

Oil CompanyA/B/C selling oil. and Qantas/British Airways/Virgin buying it.

you need a middleman to create value.
-now if the middlmen increases the production/sale of oil. that adds value.

 

[Trembling Hand]

I can see this discussion is getting to you TH, but are the put-downs regarding other's trading ability necessary.

Its not a put down its a legit question. From your answers it makes me think you don't know why prices move.

Illiquid markets are very erratic.

 

[Mr J]

This doesnt make sense,
- if my home insurance cost $1000
- and my house burnt and i receieved $100,000
:. the insurance company is -$99,000 ... they have lost.
:. if my house doesnt blow up, im -$1,000 worse off.
-how can both parties benefit?

Insurance provides a hedge against what would otherwise be a catastrophic loss. It's not a good bet by itself, but is for most when risk management is considered.

As far as Gooner's comments go, much of society is service-based, in services that we could do without. If you really want to contribute, do medical science or something.

 

[Trembling Hand]

This doesnt make sense,
- if my home insurance cost $1000
- and my house burnt and i receieved $100,000
:. the insurance company is -$99,000 ... they have lost.
:. if my house doesnt blow up, im -$1,000 worse off.
-how can both parties benefit?

if you are looking at whether insurance "adds value" to society, i cant see how it does?

Mate sorry to attack you but here goes,

You sure you cannot see the value for both parties here?? I'm sure you don't think that an insurance company has 1 customer or that all their customers houses burn down surely you can see why an insurance company issues the insurance.

I cant see how if you have

Oil CompanyA/B/C selling oil. and Qantas/British Airways/Virgin buying it.

you need a middleman to create value.
-now if the middlemen increases the production/sale of oil. that adds value.

Your definition of value is too limited.

 

[MRC & Co]

im open to being challenged on this debate, I dont care if im wrong.

but i cant see how if you have

Oil CompanyA/B/C selling oil. and Qantas/British Airways/Virgin buying it.

you need a middleman to create value.
-now if the middlmen increases the production/sale of oil. that adds value.

You have been challenged and you are wrong.

Without speculation, i.e. traders (most done through funds and proprietary trading), you will not have a free market. You cannot always guarantee a buyer and a seller argeeing at a given point in time at a specific price, which will cause market shocks, inability to budget for given costs and hence no way to forecast profit. At the same time, you will get great companies going bust and many others that do not begin in the first place due to unknown risk.

There is a reason there are locals in markets, nearly all day traders.

Of course, speculation can go over the top at times, but to say it does not add a large amount of value, makes you completely wrong.

 

[skyQuake]

This doesnt make sense,
- if my home insurance cost $1000
- and my house burnt and i receieved $100,000
:. the insurance company is -$99,000 ... they have lost.
:. if my house doesnt blow up, im -$1,000 worse off.
-how can both parties benefit?

if you are looking at whether insurance "adds value" to society, i cant see how it does?

The relative utility of money as mentioned a few posts above. The insurer loses maybe 0.1% of their fund pool when they pay you out. They are relatively not that much worse off.
When you pay the $1000 prem, assume $500k avg family networth, you are 0.2% worse off... Not a crippling blow. But losing your home + contents, you're significantly worse off as its such a large hit. Insurance merely tries to set things even.

Oil CompanyA/B/C selling oil. and Qantas/British Airways/Virgin buying it.

you need a middleman to create value.
-now if the middlmen increases the production/sale of oil. that adds value.

Speculators also help match durations. If airliner ABC wants to hedge oil for the next 5 years would the oilers do it? Probably not. A speculator will. Speculators actually create stability and smooth out things :O
If an oil company dumps futures onto the market cause it needs $ and airliners won't buy, the markets get screwed.
Globalization also allows efficient arbitrage and price discover -> which in turn leads to competitive advantages of countries being brought to bear.

 

[Trembling Hand]

Just on that thing about middlemen. Have a look at the mess each year with iron ore price fight/negotiation without a transparent market.

 

[beerwm]

Mate sorry to attack you but here goes,

You sure you cannot see the value for both parties here?? I'm sure you don't think that an insurance company has 1 customer or that all their customers houses burn down surely you can see why an insurance company issues the insurance.

Your difination of value is too limited.

ok,ok

the way i see it,

an insurance company collects
$1.1 million in fees.
pays
$1 million in claims

0.1 million risk premium

society has paid 1.1million and recieved 1million.
0.1 million is paid for doing this service.

apple grower
buys $1million of trees, labour
sells $2million of apples

value created = $1million

 

[tech/a]

I reckon most day traders are simply gambling.
Few directly add anything.

 

[motorway]

There are plenty of historic example

they revolve around shortages

Speculators cause prices to rise above the current barriers of supply
such that reward and risk get back into balance

speculators price tomorrow's price today
Such that is does not have to be ..

example

Blockade during WAR
Speculators cause prices to rise so high
That some will run the blockade ( Food, FUEL, ARMS etc )

However governments often ban speculation and hoarding
and no rewards means no one prepared to run risks
of the supply barriers
HENCE severe shortages even starvation


Same principles with less extreme examples
Speculators make what might well be tomorrow's price happen today such that endeavours arise that mean it does NOT, have to come to pass.

( OIL at $150 )

PRICE is INFORMATION
Speculators price tomorrow
So it does not have to happen in a bad way

motorway

 

[MRC & Co]

I reckon most day traders are simply gambling.
Few directly add anything.

ha ha, sneaky.

 

[awg]

ok,ok

the way i see it,

an insurance company collects
$1.1 million in fees.
pays
$1 million in claims

0.1 million risk premium

society has paid 1.1million and recieved 1million.
0.1 million is paid for doing this service.

apple grower
buys $1million of trees, labour
sells $2million of apples

value created = $1million

OR

Warren Buffet buys Insurance company

uses cash flow to buy other solid companies, creating goods and jobs


Apple farmer spends $1 million on crop

hail and fireblight ruin his harvest

value destroyed

 

[wayneL]

I reckon most xxx traders are simply gambling.
Few directly add anything.

Corrected for accuracy.

 

[Trembling Hand]

I reckon most day traders are simply gambling.
Few directly add anything.

No not true. They pay for my holidays.

 

[Nick Radge]

I can't see the point of the argument. I have been a foster parent for 10-years as well as raising my own kids. I can assure you that there is plenty of scum walking the streets, not only abusing children but abusing any part of society they can get away with. Just in my local area there are 65 kids a month needing a home.

I think the least of societies issues are what constituents the value-add that traders offer.

 

[tech/a]

Corrected for accuracy.

Yes quite correct--apologies for the glaring error!

No not true. They pay for my holidays.

Yes of course and everything else.
Good to see you have a positive expectancy .