Day trading / Swing trading

[Duritz]

You absolutely can make money in the stock market. First you have to accept prices move in a random walk in the short term and are unable to predict though.

Buffett isn't exploiting 'patterns' in the market. He is exploiting the power of compounding returns and at times the short term irrationality of the market.

Now we get to the crux of it, the random walk theory. My personal opinion is that the random walk is rubbish. Humans aren't random, they're predictable. Therefore the market is predictable, IMO. I cannot believe so many subscribe to this random walk theory, and I intend to prove them wrong. I assume many people have proven the random walk theory wrong, but they're not talking about it. Why would they?

 

[Old M8]

Now we get to the crux of it, the random walk theory. My personal opinion is that the random walk is rubbish. Humans aren't random, they're predictable. Therefore the market is predictable, IMO. I cannot believe so many subscribe to this random walk theory, and I intend to prove them wrong. I assume many people have proven the random walk theory wrong, but they're not talking about it. Why would they?

Good luck to you, Duritz. I genuinely hope you do well. I'd absolutely love you to prove us wrong.

Can you update us good/bad as you go? I'd love to follow your progress.

 

[Duritz]

Good luck to you, Duritz. I genuinely hope you do well. I'd absolutely love you to prove us wrong.

Can you update us good/bad as you go? I'd love to follow your progress.

Sure.

 

[Embleberry]

If that's the case, no one could ever make money in the stock market. Therefore, how do you explain warren buffet?

Buffett takes the value investing strategy. Buying strong companies he understands and that are undervalued compared to intrinsic value. As others have stated his investments are long term holds. This highlights some of the principles: http://www.investopedia.com/articles/basics/07/grahamprinciples.asp

 

[Duritz]

Buffett takes the value investing strategy. Buying strong companies he understands and that are undervalued compared to intrinsic value. As others have stated his investments are long term holds. This highlights some of the principles: http://www.investopedia.com/articles/basics/07/grahamprinciples.asp

Yeah, I know his principles. What I am suggesting is that if the market is efficient, then Buffet couldn't win. He has shown that the market is not fully efficient. Therefore, it can be beaten, as he has shown. Just because he has found one way to beat it, does not mean there aren't others. In fact it's ludicrous to suggest that there could only be one way. He has proven it is beatable, there will therefore be many ways to beat it.

 

[Embleberry]

Now we get to the crux of it, the random walk theory. My personal opinion is that the random walk is rubbish. Humans aren't random, they're predictable. Therefore the market is predictable, IMO. I cannot believe so many subscribe to this random walk theory, and I intend to prove them wrong. I assume many people have proven the random walk theory wrong, but they're not talking about it. Why would they?

Human predictability comes down to rationality. I'd say most retail investors such as mums and dads will fall under the irrational investor where they'll succumb to emotions and fear mongering headlines. There's a whole field of finance now on behavioural finance that looks into the psychology of investors. It might be worth reading into. (FWIW random walk is an underlying assumption for Black Scholes Model and many other pricing models and it's highly studied in finance too - I can't recall much of it now... lol)

Have you looked insto and funds market activity and bots, algos and HFTs? They can easily ramp up or down a share price quickly which hurts a lot if you hold a position

I'm also interested in your findings from this. Good luck!

 

[Duritz]

Human predictability comes down to rationality. I'd say most retail investors such as mums and dads will fall under the irrational investor where they'll succumb to emotions and fear mongering headlines. There's a whole field of finance now on behavioural finance that looks into the psychology of investors. It might be worth reading into. (FWIW random walk is an underlying assumption for Black Scholes Model and many other pricing models and it's highly studied in finance too - I can't recall much of it now... lol)

Have you looked insto and funds market activity and bots, algos and HFTs? They can easily ramp up or down a share price quickly which hurts a lot if you hold a position

I'm also interested in your findings from this. Good luck!

I've looked into some algorithms and what they are doing is pretty straight forward stuff. I'm aiming to create my own ones that are successful. I'll let you know if I am able to disprove the random walk, etc.

 

[George Washington]

Yeah, I know his principles. What I am suggesting is that if the market is efficient, then Buffet couldn't win. He has shown that the market is not fully efficient. Therefore, it can be beaten, as he has shown. Just because he has found one way to beat it, does not mean there aren't others. In fact it's ludicrous to suggest that there could only be one way. He has proven it is beatable, there will therefore be many ways to beat it.

Keep in mind that Buffett's most successful investments are usually for the entire company. I.e not quoted on the stockmarket after purchase.

I don't think its useful to think of it as a 'game' he is winning, or a system he is 'beating'. The stockmarket isn't (or shouldn't) be about gaming the system or finding some edge or system no one else has. It should be about investing.

 

[Duritz]

Keep in mind that Buffett's most successful investments are usually for the entire company. I.e not quoted on the stockmarket after purchase.

I don't think its useful to think of it as a 'game' he is winning, or a system he is 'beating'. The stockmarket isn't (or shouldn't) be about gaming the system or finding some edge or system no one else has. It should be about investing.

Loads of people treat it as a "game" though. That's what day traders are all about, as far as I can ascertain.

 

[CarnDaTigg's]

Tell me which stocks you are interested in Duritz so i can short them before you buy

 

[Duritz]

Tell me which stocks you are interested in Duritz so i can short them before you buy

Sure. But I won't tell you if I am longing them or shorting them, K?


































pwnd

 

[Old M8]

Have you started yet, Duritz?

 

[Duritz]

Have you started yet, Duritz?

Not yet. We moved house so that's slowed me, and I'm still researching it a bit. Looking to start in the next week or two.

Am thinking its a good time to get into the market, tbh, but having said that watch it nosedive...

 

[Mofra]

Keep in mind that Buffett's most successful investments are usually for the entire company. I.e not quoted on the stockmarket after purchase.

I don't think its useful to think of it as a 'game' he is winning, or a system he is 'beating'. The stockmarket isn't (or shouldn't) be about gaming the system or finding some edge or system no one else has. It should be about investing.

Buffett doesn't simply invest in exchange traded stocks - he'll purchase non listed private companies if he believes the price is right. He is a classic value investor with the belief that the profit is made when you buy, not when you sell.

As for day trading and short term trading - I'm happy to trade derivatives short term where either your losses are strictly capped (very, very occasionally) or more often - selling theta via net-credit positions for those who understand the Greeks.
I'll even sell naked calls for a strike above a resistance level in the final 3 weeks until expiry, however that needs to be a fairly strong position before I'd execute that sort of trade.

ETOs is Australia are hard trading through because the MMs here leave a huge spread between the buys and sells but time/lifestyle/access makes trading CBOE very difficult.

As for stocks - a short term in equities for me is measured in months, not hours. Anecdotally a very high % of day-traders lose more than they win, even with tight stops and position limits.

 

[Duritz]

Buffett doesn't simply invest in exchange traded stocks - he'll purchase non listed private companies if he believes the price is right. He is a classic value investor with the belief that the profit is made when you buy, not when you sell.

As for day trading and short term trading - I'm happy to trade derivatives short term where either your losses are strictly capped (very, very occasionally) or more often - selling theta via net-credit positions for those who understand the Greeks.
I'll even sell naked calls for a strike above a resistance level in the final 3 weeks until expiry, however that needs to be a fairly strong position before I'd execute that sort of trade.

ETOs is Australia are hard trading through because the MMs here leave a huge spread between the buys and sells but time/lifestyle/access makes trading CBOE very difficult.

As for stocks - a short term in equities for me is measured in months, not hours. Anecdotally a very high % of day-traders lose more than they win, even with tight stops and position limits.

My cat's breath smells like cat food.

 

[Duritz]

You absolutely can make money in the stock market. First you have to accept prices move in a random walk in the short term and are unable to predict though.

I accept prices move in a random walk in the short term, my question is just how short is the short term? Slightly more than 50% of the time, a stock will move in the same direction it did the day before. Therefore, over a one day period, it is not completely random. Therefore there's a pattern, patterns can be analysed, yada yada yada.

So, in what time frame is it no longer random?

 

[Duritz]

By way of an update, hoping to start trading today or tomorrow. The only hold up at the moment is my account still is not open. I have opened the account in the name of a trust, with CMC, and it's taken literally more than a month now with many back and forths, they lost some of the information, it's been a nightmare getting it open, but will be trading as soon as it is ready. Have my "method" at the ready:

Ooh! It says buy BHP!

 

[Oraaaaazio]

By way of an update, hoping to start trading today or tomorrow. The only hold up at the moment is my account still is not open. I have opened the account in the name of a trust, with CMC, and it's taken literally more than a month now with many back and forths, they lost some of the information, it's been a nightmare getting it open, but will be trading as soon as it is ready. Have my "method" at the ready:

Ooh! It says buy BHP!

Trust? You won't be able to do anything with your losses

 

[Duritz]

Trust? You won't be able to do anything with your losses

Accountant told me this was the best way from a tax point of view. I'm not an accountant, he is, so I just go by what he says.

There'll be a company trading on behalf of the trust, too.

 

[Oraaaaazio]

Accountant told me this was the best way from a tax point of view. I'm not an accountant, he is, so I just go by what he says.

There'll be a company trading on behalf of the trust, too.

Yeah I was just making a s**t joke that you'll make losses from day trading.

You can't distribute losses from the trust to offset other income you've earned but if you don't have any capital gains personally then there's no great loss there. Under the assumption that you believe you'll make money from it, the use of the trust is the most tax effective strategy. Good accountant you've got there.

 

[Duritz]

Yeah I was just making a s**t joke that you'll make losses from day trading.

You can't distribute losses from the trust to offset other income you've earned but if you don't have any capital gains personally then there's no great loss there. Under the assumption that you believe you'll make money from it, the use of the trust is the most tax effective strategy. Good accountant you've got there.

Cheers, understood.

Yes, it's possible I might lose, of course. Let's hope not. However I won't be day trading, am looking at it now much more from a medium term point of view. Not buy and hold forever, buy buy and hold for the medium term.

 

[ash_1050]

Cheers, understood.

Yes, it's possible I might lose, of course. Let's hope not. However I won't be day trading, am looking at it now much more from a medium term point of view. Not buy and hold forever, buy buy and hold for the medium term.

Can you keep a running strategy of how it goes on here on a day by day basis? Would be interesting to see how it goes.

 

[Duritz]

Can you keep a running strategy of how it goes on here on a day by day basis? Would be interesting to see how it goes.

Running tally, you mean? Day by day is probably a bit too frequent, a roughly weekly update of how much is invested and what it's currently worth?

 

[Duritz]

As a quick aside, the acct with CMC is STILL not open. Here's a bit of a dot point rundown of how absolutely shithouse they've been:

- Late Jan, I fill out and send off a trust account application form
- A week later they get back to me saying they have received it
- A few days later they say they are processing it
- A few days later (while I am calling almost daily checking on the status of it) they say it is incomplete and list five items I need to provide
- I tell them four of those items I have already provided
- They tell me they have misplaced them and I need to get them again
- I get those items organised again (all needed to be certified docs, which I had organised the first time, so a complete pain in the arse that they lose them) and send them back
- A few days later they receive them (apparently the mail takes a few days these days, but they also usually don't get to today's mail until tomorrow, they tell me) and tell me it is now being processed by the account opening team
- A few days later I still haven't heard anything, no-one is returning my calls, etc
- The person who was dealing with my account finally gets back to me, they have misplaced my entire application, the whole thing needs to be filled out again
- FFFFFFFFUUUUUUUUU..............................
- Somehow they are able to fill out most of the application for me (they must've entered most onto their system before they lost it...) and send it to me, but several parts I still have to fill out, including getting my accountant to certify part of the trust document. I do this and send it back.

That's where I am at currently, again waiting to hear from them having sent it back yesterday.

I don't know if others have had similar experiences with CMC or with trust accounts, but this has been ridiculously, embarrassingly uprofessional and based on this I absolutely would not recommend opening an account with them.

 

[ash_1050]

Running tally, you mean? Day by day is probably a bit too frequent, a roughly weekly update of how much is invested and what it's currently worth?

More what you bought/held/sold during the week and at what price. Weekly would be awesome, dollar values of each trade can be left off.