Do we have any day traders in here?

Patman

Staff member
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21,985
Location
Oakville, Ontario
Call me crazy, but after being laid off for more than two months now, I've been trying to come up with unorthodox ideas for how to earn a living, and my latest cockamamie idea is that maybe I could try my hand at day trading? I've been playing around with my own fake portfolio for the past few weeks with pretty decent success so far, although in the real world I realize things probably wouldn't work out quite so easily. (it's always easier to play with fake money than your own real money!) I'd especially like to know what the rules are in Canada, as I know in the US you cannot day trade unless you've got an account with $25,000 in it. I've searched to see if such rules exist in Canada and haven't found anything so far. So if I did end up doing it, my plan would be to open an account with BMO Investorline (their rates are $29.95 per trade at first, but once you get to the frequent trader status it goes down to $9.95 per trade) and I would do all of my trades based on a $10,000 investment. I figure if I can average even $200 a day in profit I can make a living doing this, at least for a little while. I think one of the things I'd have going for me right now is that the stock markets are pretty much close to the bottom and in the next few years the trend will be upwards. So it'll be a lot easier to pick "winners" with this type of atmosphere. The trickiest thing is learning how to pick the right stocks! So far my pattern has been to look at the top performers of that day or the day before, as they tend to continue to go up slightly from what I've seen. I see a lot of the top performers that go up 20 to 30% in one day, there was one here on the Toronto Stock Exchange yesterday that almost doubled in value! (imagine if I had invested $10k in that, and made almost $10k in one day!) In my practice account I simply buy one stock at a time and hold onto it for a half hour or an hour, and once it goes up a few cents then I sell. I like to pick stuff that's priced in the $1 to $5 range as I find they move quicker than stuff that's priced much higher. I also haven't been sitting in front of the computer the entire day, I tend to just play around for a couple of hours in the morning and then once I've made a couple of hundred I stop for the day. That's how I would do it in real life too. The last thing I'd want is to be glued to a computer screen for an entire day (that's what I did for 17 years, doing color correction and retouching in Photoshop!) Am I completely nuts for thinking this might just be a new career for me? I like the idea of making my own hours, especially if I only have to work one or two hours a day from home! I don't even need to make as much money as I did in my previous job, as I save a lot of money right now by not having to pay for daycare for my son (he's in school a full day but we paid $300 a month for before/after school care) and also save a lot of money in gas by not having to drive to work as well. So I figured even if I made only $40 or $45k a year doing this, I could survive quite easily. Thoughts anyone?
 
Messages
9,568
Location
Ontario, Canada
Hmmm, If I was you, I'm pretty sure my wife would say, "sell the Vette, play day trader until you lose half the money and then go get a job, any job". I think the main risk is that you have to ready to lose alot of money some days but still have enough cash to make that money back the next day. But if you are doing well at it so far then maybe your plan will work fine. Just don't get in over your head and lose the roof over your head. Ian
 

Patman

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21,985
Location
Oakville, Ontario
If I did decide to do it, I would set myself a rule that my initial $10,000 is all the money I'm going to use, and I wouldn't do anything foolish like buying on margin or borrowing more money to make trades. A lot of people go into day trading because they want to try to make a million bucks in a year, and that makes them more risky and they probably do more foolish things. If I did get into it, I'd be a lot more cautious, and would be happy just making a few hundred bucks a day. I would also set aside some of my earnings into more stable investments as well, so eventually I'd have other cash to draw from to pay the bills if I went on a long losing streak. At this point I'd have to say it's highly unlikely I would end up choosing this as a career but it's very tempting and I'd at least like to research it for a while and see if it could possibly work. I'm definitely planning on playing around with my practice account for a little while to see what I can learn first. I'd never even dream of jumping into this without a lot more knowledge.
 
Messages
3,640
Location
Windsor, Ontario, Canada
My brother-in-law is a day trader. Although we live in Windsor, Ontario, he trades out of the States, so any information I can get from him may be only marginally useful. I know, though, that he has a bank of computers in front of him, and that he has set the software he uses to alert him when a stock has met some of his pre-set (and fairly conservative, low risk) criteria. When he is alerted, he decides on whether to execute a transaction, which involves purchasing some stock and ridding himself of it within a few minutes. He does much better, then, when the market is volatile rather than upwardly mobile. Sadly, I also know that he did much, much better several years ago than he does now. I will pass the URL for this thread to him and ask if he has anything to add.
 

Patman

Staff member
Thread starter
Messages
21,985
Location
Oakville, Ontario
That's one thing I wouldn't do, I wouldn't have a bank of computers in front of me and I wouldn't spend the entire day doing it either. The thought of that just makes me cringe. The main reason I like the idea of this is that if I can make $200 a day just doing a couple of hours of "work" every morning, and then can enjoy the rest of my day doing whatever I want, that's golden! I have no intention of becoming an instant millionaire, I'd just love to make a small comfortable living.
 
From my exerience day trading, you need to start with a large sum of money to be successful. $10K would be a bare minimum. Also, don't do it believing your going to make money at it. Treat it more like a hobby and if you make money in the process, that's all the better. There's no doubt it is a exhilerating process, but make sure your comfortable knowing your initial investment may completely evaporate....remember, like a hobby.
 
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4,622
Location
Western Washington
The very hardest aspect of day trading is without a doubt the psychology side of it. Get a copy of Dr Alexander Elder's book titled Trading for a Living and read it several times. Two other good books are Trading in the Zone and Market Wizards, can't remember the authors. Go to elitetrader.com and sign up. Read all you can before posting as they will tear you a new one if you sound like a newbie. Many people trade the e-minis rather than stocks simply because the day trading rules are less restrictive. For instance, you can trade the Russell or the S&P mini with a deposit of only $5k and $500 margins. Thousands of people have come to the trading desk and lost their shirts. And every one of them had the same idea you have about trading for two hours and then go golfing LOL Not trying to discourage you, but rather let you know that it's not easy at all. Good luck :)
 
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22,188
Location
Colorado Springs
http://www.traderfeed.blogspot.com/2008/01/do-individual-day-traders-make-money.html It's pretty much a universal known fact that around 80% of day traders don't make it. I've seen some other studies that show people who engage in long term investing on average have higher returns then people who constantly trade stocks. I'm not saying you can't do it - people make it day trading, but all it takes is one slip up and you could be up a creek without a paddle.
 
Messages
3,773
Location
Houston, Tex
I know two people who used to do it. Both are former engineers, so their personalities probably focus around data and timing, rather than underlying trends. One now owns an exterminating business, the other remodels houses.
 
Messages
7,077
Location
Ontario, Canada
It's a nice way to pass time and hone up on your life lessons. you can make money if: -you are better at it than the tens of millions of other people who are competing against you in real time -you have better inside information than the thousands of big money insiders who are competing against you in real time If you know you are that good, then go for it.
 
Messages
24,402
Location
Central Florida
Very risky if you have a bad day and lose a bunch of cash, but it takes money to make money. Some days you will make a little money, other days you will lose money and just have to cut your losses.
 
Messages
47,542
Location
Duvall WA - Pacific NW USA
My BIL is a day trader and he lives in Hawaii. He goes from high and banks it, to low near cashed out. He's been at it for 20 years or so with the bank roll he got when GE let him go. He doesn't exactly discuss the details with me, so he may be a big fat liar. Dude hasn't really worked for that long. Kind a of bum and a dreamer if you ask me. His kids are out of the house, so he is not risking their food. He does stick with the medical field and plays the new and not so new companies. He just made a pile of cash on DNDN again, so what do I know? Me? I don't have the time and patience and risk tolerance, but I get a good night's sleep, maybe take some mind numbing drugs and trade my retirement funds. Seriously - take a look at the long and short 2X and 3X ETF's.
 
Messages
47,542
Location
Duvall WA - Pacific NW USA
One small trade today, a couple hours elapsed time:
 Code:
04/30/2009  YOU SOLD  
  TZA  DIREXION DAILY SMALL CAP BEAR 3X SHARES  
Cash Shares: -200.000  Price: $28.9619  Amount: $5,784.23  
  Comm: $8.00  Fees: $0.15   
 Settlement Date: 05/05/2009 
04/30/2009  YOU BOUGHT  
  TZA  DIREXION DAILY SMALL CAP BEAR 3X SHARES  
Cash Shares: +200.000  Price: $27.3494  Amount: -$5,477.88  
  Comm: $8.00   
 Settlement Date: 05/05/2009 
 
 
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