Day trading

No I have no crystal balls no special tricks up my sleeve just hope and a lot of balls. I will play around with it on paper first though if I don't feel comfortable doing it after that I won't do it at all- I won't waste my money. I don't even have a lot of money to lose- the thing is you get a lot of leverage with currency, which gives you more money to play around with, but since someone is backing me I won't be able to lose any more than what they're giving me! Thanks Gugi and jimbo, you guys are absolutely right about it being a gamble!

I think Day Trading is a great thing. My recent day trade was a Gillette DE for a Wade & Butcher DE. The key to day trading, is to get it done before the post office closes. Then you can ship it the same day. The worst trade is done on a Friday night, then you have to wait until Monday to mail it.

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Originally Posted by Hirlau

I think Day Trading is a great thing. My recent day trade was a Gillette DE for a Wade & Butcher DE. The key to day trading, is to get it done before the post office closes. Then you can ship it the same day. The worst trade is done on a Friday night, then you have to wait until Monday to mail it.

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The Post office is not open in Florida on Saturdays?

I just had to look on GOOGLE, everytime I drive by on Saturdays, it's closed. :shrug:
GOOGLE states it 's open till 2pm on Saturdays. :beer1:
Thanks Martin, now I can get up early on Saturdays & day trade. :tu

The original concept of day trading was for the trader to buy whatever issues interested him early in the day and have them sold by the end of the trading day at 4:00 PM. That way he could sleep well secure in the knowledge of his net worth. I spent many a day in front of my computer until after 4 PM. It's a very stressful lifestyle not very profitable for me.

Jerry
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Gugi is right of course - casinos are hugely profitable because, of course, the odds are in their favour. I'm not really up on all the ins and outs of day trading, but what I do know is that predicting into the future is predicting into the future regardless of whether that future is in 5 minutes or 5 years. The scale is not important.

So you get a system (or if you are a company, you call it a "model"), you train your system on current and historical data, then you use that to predict an outcome for which you have no data - the future. In statistics we call that extrapolation. I tell my students the "extra" in the word extrapolation refers to the extra testicles one needs to make any decisions based on such a prediction.

And that's not even considering the margin of error associated with such a prediction - mathematically this error increases with the square of the distance the prediction is from the mean of the data upon which it is based. You rarely see such error margins being implemented in practice, everyone just focusses on the predicted value which is usually an average.

Volatility models that focus on quantifying variability may perform better in the day trading area I'd imagine. But there are still a lot of assumptions that go into those as well. Most people I know in this area (developing stochastic volatility models, for example) make their money from selling or developing the algorithms, not from using the models themselves. But the people in the finance sector don't ever seem to notice that.... :)

James.

Yes, Jimbi, but knowing what happens before your competitors and being able to outrun them by few microseconds is a definite advantage and those who can afford it are monetizing it all the time. The problem with it, of course, is that such market inefficiencies can not last too long, so wall street quickly set up a market on this advantage - now you have to pay to have it and then it depends on whether you can turn enough profit to cover your investment.

This has been going on since trade existed - those who could get information faster or act on information faster and were smart enough to know how to monetize it have made fortunes.

It's a little bit like insider trading (apart from the legality). It gives you a definite advantage and surely if you're incompetent enough you can lose money on it, but most guys who engage in it manage make quite a lot (again it has to be worth the risks related with its illegality).


You know you should make some friends among the buyers of those financial models. Those who manage to keep their jobs for years are definitely doing something right :)

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Originally Posted by Matt69

An acquaintance of mine does this, and he advised me (if I wanted to try it, which I don't really) to spend 6 months doing it as a paper exercise, keeping notes of what you would have bought/sold/made/lost, before committing any money. Sounded sensible.

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If you can't survive 6 months on paper like Matt says, then don't bother trying with real money :)

But as a small fish, you're basically just gambling. High frequency trading is done by firms with supercomputers and microsecond fiber connections to the trading houses, staffed by some of the brightest kids of the math classes. They're moving billions per minute to turn point percent differences into huge earnings. You really don't have a snowballs chance in hell at beating them at their game.

All you can do is ride their tail and hope that you correctly guessed which way they are going.