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A case for "day"-trading (i.e. casual/lifestyle trading or investing)

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Nov 22, 2004
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A case for "day"-trading (i.e. casual/lifestyle trading or investing)

I created this thread on reddit yesterday and figured I'll post it here too since I frequent RFD so much. I have posted the OP here but have also interacted with other people in the comments. Feel free to give me your thoughts, thanks.

A case for "day"-trading (i.e. casual/lifestyle trading or investing)

I've seen people get a lot of crap for day-trading, especially if they are newbies. Maybe it is because this is /r/investing and not /r/daytrading where majority of us are passive investors where the money is put in some ETF/MF/Vanguard/others/etc and left there to grow over time and contribution is made periodically to help compound the growth.

I'd like to make a case for casual trading where you do trade more frequently than a buy & forget investor, including equities and derivatives, but not nearly as frequently as a day-trader that makes several trades a day every trading day.

I've been casually trading for 10 years where I went through the euphoria and the recession, made and lost a ton of money. When I started, I was discouraged like many others here but I kept at it, trying everything from commodities to f/x to ETFs to stocks. Took me about 8 years to finally lay the foundations of the ground rules that I follow for more successful results. You can see how I've fared in the last 2.5 years when I started tracking the results. Unless otherwise mentioned, there were NO additional deposits made to the portfolio during this period.

The point I'm trying to make is simply this - all the rules/adages of wall street and the market notwithstanding, casual trading IS a viable way of making money, but like all many other ventures, it has a high failure rate (considering the higher risk/reward ratio), requires a huge learning curve and discipline.

What I like about casual trading/investing is that you don't need a lot of capital start off with. However, like with any activity, you need to start at some point and get your feet wet. Success may not be guaranteed since one can't see the future, but there is no other way to learn and improve. Yes, that means taking some losses too but I believe the potential is worth it. This isn't a humble-brag to show how I'm beating the market, but just to show it is possible and can be learned.

About me: 30 year old with a finance/math background. I only deal with stocks and options of particular companies (i.e. no ETFs/commodities/funds/etc). I trade and invest somewhat infrequently with short to long-term outlook. I like this approach because I don't need to sit in front of the computer all the time and only check in from time to time. This isn't conventional day-trading nor is it long-term investing. I don't have a proper term for but I suppose you can call it casual or lifestyle trading. I have developed my investment ground-rules/philosophy/style that I use to invest and trade, and if you guys are interested then I can elaborate further.

tl;dr - "day"-trading (or casual trading) is a viable way to make money, it takes time and experience but it can be learned.

PS: While this isn't for everyone, if people are interested in learning my trading methodology/style, then I would like to create something (short ebooks/excel tools/blog with articles/youtube videos/podcast). Feel free to advise or give me any input as to what would work best.
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so, from this post I can guess that you are a gap trader ?

if not, what style?

many people get shot down on RFD too over this because robotraders ruined most day trading techniques into oblivion.
Penalty Box
Dec 27, 2013
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so, was it just dumb luck?
Sr. Member
May 29, 2008
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Lol ur just another Tom Vu wannabe. This graph like only 3 yrs
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lol @ these "look how much money i made after 2008" threads

if you can repeat the same performance in the next 3 years i'm all ears, but i don't think you'll be back

and yes, everyone is hating out of pure jealousy.. yup
[OP]
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Nov 22, 2004
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masterhapposai wrote: so, from this post I can guess that you are a gap trader ?

if not, what style?

many people get shot down on RFD too over this because robotraders ruined most day trading techniques into oblivion.
What is a gap trader? I don't have a name for my style yet so I just call it casual trading because I don't sit in front of the computer obsessing over tiny movements. Some positions I'll keep for a few days, for others it would be weeks or months. What I like is the more passive nature of this. I can check in from time to time, otherwise let things be. If I'm not comfortable with where market or stocks are, then I'll stay in cash till I feel better.
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I've traded different styles and my biggest challenge was temperament and lack of consistency to the plan criteria. Was my plan a good one and the stock is just out-of-favor temporarily or was I wrong on my plan and therefore I should cut the losses and move on? Trading imply in losing trades too, and it's tough to stick to the plan when you have a sequence of losers - too easy to conclude that the plan is not working anymore. Also, it's hard to find someone that is trading the same style consistently and profiting from it. Like, 5 or 10 years, same plan.

Also, not having the ability to backtest a given plan fuels lack of confidence to stick to the plan.

I got these issues addressed by relying my plan and trading signal to a platform that can execute the same rules consistently (I use portfolio123) and that can backtest a plan within a reasonable time frame (16 years and non-biased survivalship data). I've been using it for only 2 years, but it's helped me to consistently stick to the plan and ignore losses. I plan to keep it for many years - hence the ports that I created on RFD, which update results daily, automatically.

I believe that the key for successful trading is having a method to ensure consistency and patience (temperament). Easier said than done - that's how an automated platform helped me.

Rod
[OP]
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Nov 22, 2004
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medalgo wrote: lol @ these "look how much money i made after 2008" threads

if you can repeat the same performance in the next 3 years i'm all ears, but i don't think you'll be back

and yes, everyone is hating out of pure jealousy.. yup
I've been here since 2004 so whether it's a hit or a miss, I'll be here. I've been trading for 10 years now and went through the recession with money on the table so I have the experience there. The point isn't to brag about how much money I've made, but to show that it is possible. If I make 50% return in a temporary good market and lose 25% because of something correction or downturn, I'm fine with that.

But sure, let's see how things play out.
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Clueless Fox wrote: What is a gap trader? I don't have a name for my style yet so I just call it casual trading because I don't sit in front of the computer obsessing over tiny movements. Some positions I'll keep for a few days, for others it would be weeks or months. What I like is the more passive nature of this. I can check in from time to time, otherwise let things be. If I'm not comfortable with where market or stocks are, then I'll stay in cash till I feel better.
ok definitely not a gap trader. they would check every morning and make biig moves.

what signals or hints give away that you must make a move? or is it all intuition?

Im working on using Options strictly with Implied Volatility. But, Im always up to learn other ways.
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Clueless Fox wrote: I've been here since 2004 so whether it's a hit or a miss, I'll be here. I've been trading for 10 years now and went through the recession with money on the table so I have the experience there. The point isn't to brag about how much money I've made, but to show that it is possible. If I make 50% return in a temporary good market and lose 25% because of something correction or downturn, I'm fine with that.

But sure, let's see how things play out.
i'm honestly not seeing how anything you have proposed is earth shattering or innovative either, i mean...it's common sense that casual trading possibly can make money and possibly can be viable, and needs a high learning curve, discipline, and has a high failure rate

without divulging anything beyond common sense and posting a graph of the most recent two years, it really is just about bragging
[OP]
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Nov 22, 2004
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rodbarc wrote: I've traded different styles and my biggest challenge was temperament and lack of consistency to the plan criteria. Was my plan a good one and the stock is just out-of-favor temporarily or was I wrong on my plan and therefore I should cut the losses and move on? Trading imply in losing trades too, and it's tough to stick to the plan when you have a sequence of losers - too easy to conclude that the plan is not working anymore. Also, it's hard to find someone that is trading the same style consistently and profiting from it. Like, 5 or 10 years, same plan.

Also, not having the ability to backtest a given plan fuels lack of confidence to stick to the plan.

I got these issues addressed by relying my plan and trading signal to a platform that can execute the same rules consistently (I use portfolio123) and that can backtest a plan within a reasonable time frame (16 years and non-biased survivalship data). I've been using it for only 2 years, but it's helped me to consistently stick to the plan and ignore losses. I plan to keep it for many years - hence the ports that I created on RFD, which update results daily, automatically.

I believe that the key for successful trading is having a method to ensure consistency and patience (temperament). Easier said than done - that's how an automated platform helped me.

Rod
Thanks for chiming in. You're one of the few investment posters whose posts I follow more carefully.

I have not used any automatic trading platforms yet, mostly because I pick a select few companies and spend a good time figuring out the fundamentals before going any further. Even if a company passes all my trading rules, but is something I know little about, I wouldn't put my money on it (maybe 0.01% just as an experiment). I completely agree with you on consistency and patience (more so with the latter). I'm able to ignore the losses because I'm comfortable with the company fundamentals and in most cases I would see a recovery eventually.

I wouldn't mind experimenting with an automated platform though, just to get a feel of what is possible. Thanks for this.
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[OP]
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medalgo wrote: i'm honestly not seeing how anything you have proposed is earth shattering or innovative either, i mean...it's common sense that casual trading possibly can make money and possibly can be viable, and needs a high learning curve, discipline, and has a high failure rate
Good point. It is to encourage people that can afford to risk a small amount ($1k~$10k) to actually delve into the stock market themselves and learn the basics to do more. Yes, odds are that there will be losses, but the potential to make a significant return is also there. Sure, it isn't for everyone, and if people are happy contributing to ETFs and forgetting about the money till years down the road, by all means do it. But dealing with equities/options can open more possibilities for those who are willing and can afford to take a little more risk. It's worth it.
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Penalty Box
Dec 27, 2013
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im still waiting on your methods because right now it just sounds like you went to the casino, got lucky on red 10x in a row, and now have started a thread to tell us about it.
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Clueless Fox wrote: Thanks for chiming in. You're one of the few investment posters whose posts I follow more carefully.

I have not used any automatic trading platforms yet, mostly because I pick a select few companies and spend a good time figuring out the fundamentals before going any further. Even if a company passes all my trading rules, but is something I know little about, I wouldn't put my money on it (maybe 0.01% just as an experiment). I completely agree with you on consistency and patience (more so with the latter). I'm able to ignore the losses because I'm comfortable with the company fundamentals and in most cases I would see a recovery eventually.

I wouldn't mind experimenting with an automated platform though, just to get a feel of what is possible. Thanks for this.
if you work this out:
" I have developed my investment ground-rules/philosophy/style that I use to invest and trade, and if you guys are interested then I can elaborate further."

in a blog with feedback, then you might find out that it could be automated.

what are your ground rules on deciding to buy?

do you just find under valued stocks and hope the market realizes there's value within months?
[OP]
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Nov 22, 2004
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masterhapposai wrote: ok definitely not a gap trader. they would check every morning and make biig moves.

what signals or hints give away that you must make a move? or is it all intuition?

Im working on using Options strictly with Implied Volatility. But, Im always up to learn other ways.
At this point, intuition probably plays a role in there too, but I base my decisions on 3 bases - company fundamentals (history/current and future potential), overall market/economic data, and some basic technical analysis. I believe that at the end of the day, it boils down to a judgment call that can go against me regardless of my analysis, so if the fundamentals are sound and I'm losing money, I don't lose sleep over it.

In terms of selling, I usually estimate a fair value for the company (which changes with time) and if the stock hits that too quickly, I begin setting up stop losses. With options (almost always at-the-money leaps), if I'm either getting close to expiry or if I've made substantial gains then I'll sell. Either way, I leave myself enough room that I can trudge through short-term downturns.

I'm always willing to learn other ways as well.
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[OP]
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Nov 22, 2004
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masterhapposai wrote: if you work this out:
" I have developed my investment ground-rules/philosophy/style that I use to invest and trade, and if you guys are interested then I can elaborate further."

in a blog with feedback, then you might find out that it could be automated.

what are your ground rules on deciding to buy?

do you just find under valued stocks and hope the market realizes there's value within months?
Not a bad idea, I can work on setting up a blog. Thanks!

I responded to your older message above. Let me know if that answers the questions? PM me otherwise, and we can talk in more detail.
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[OP]
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daivey wrote: im still waiting on your methods because right now it just sounds like you went to the casino, got lucky on red 10x in a row, and now have started a thread to tell us about it.

"so it was all just dumb luck?" wasn't exactly the cue I was going to take to write an essay on my methods. If you want to start with the preconceived notions, by all means go for it, but don't expect a sincere reply in return either.
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Clueless Fox wrote: "so it was all just dumb luck?" wasn't exactly the cue I was going to take to write an essay on my methods. If you want to start with the preconceived notions, by all means go for it, but don't expect a sincere reply in return either.
he's probably just skeptical because a lot of guys reveal later that they are selling a service.

thanks for answering my question earlier.

what does your system believe about the recent stock drops. for example twitter, linkedin, apple, etc

i know with apple and Netflix there was a ton of money to be made but i think it's all hype inflating their value.

does your fundamental analysis say these stocks are going to go back up ?

another question : what leads you to your chosen stocks? there are so many to pick from.

i suspect within your trades there is a well defined system but you must really think about and meditate on how to make it a system. most people lose their system and forget "how to trade well" then chalk it up to luck later.

i think that's why rodbarc documents his system, to remember it and for others to help him see if there's issues or ways to improve it.
Penalty Box
Dec 27, 2013
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Clueless Fox wrote: "so it was all just dumb luck?" wasn't exactly the cue I was going to take to write an essay on my methods. If you want to start with the preconceived notions, by all means go for it, but don't expect a sincere reply in return either.
you made the forum post.. so are you going to follow through? i didn't come here with anything to prove.
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Nov 22, 2004
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masterhapposai wrote: he's probably just skeptical because a lot of guys reveal later that they are selling a service.

thanks for answering my question earlier.

what does your system believe about the recent stock drops. for example twitter, linkedin, apple, etc

i know with apple and Netflix there was a ton of money to be made but i think it's all hype inflating their value.

does your fundamental analysis say these stocks are going to go back up ?

another question : what leads you to your chosen stocks? there are so many to pick from.

i suspect within your trades there is a well defined system but you must really think about and meditate on how to make it a system. most people lose their system and forget "how to trade well" then chalk it up to luck later.

i think that's why rodbarc documents his system, to remember it and for others to help him see if there's issues or ways to improve it.
I need to learn to properly document it as well. I haven't backtested any strategy/style in a comprehensive way that Rod does and he's far more systematic than me for sure.

Other than Facebook I stay away from social media companies because their valuations make no sense to me. It's far more hype based on future potential than actual substance. I like Facebook because it's the only social media company where I see the potential being substantiated.

I'm biased towards Apple for more than investment reasons. I've followed the company and its activities since 2004 and really believe in what they do so I'm pretty heavily invested in it. I don't trade the stock much because my cost base is fairly low and keep it during corrections as well.

Netflix is a bit of a question mark but I do like the company and agree that there is money to be made.

I can't speak for other social media companies but I do believe Facebook, Apple and Netflix are going higher down the road; however, in the short term I am expecting them to go further down with rest of the market. Other than my core holdings, I'm mostly sitting in cash right now (My TFSA is 100% in cash at the moment). If I'm wrong then so be it, but I'd rather miss an opportunity than destroy capital based on blind speculation and hope.

I sort of follow the Buffet philosophy as my starting point - Looking at companies I see/use in my daily life as I can relate to them better then dig deeper into them to see if they are sustainable or fleeting fads. It helps me understand the business and gauge its future potential better. If something becomes a runaway stock (GPRO) then I'll stay out of it, or invest insignificant amount as an experiment.
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