The Daytrading & Swingtrading Thread

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Knowsitall
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The Daytrading & Swingtrading Thread

Post by Knowsitall »

Is there a good site on line where the methodology is used.

I have put aside my slush fund for playing it using Action Direct but I am a failure thus far :roll:
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eezee
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Post by eezee »

SIMPLE - buy low sell high
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Post by dakota »

eezee wrote:SIMPLE - buy low sell high
I'm sure that Bylo Selhi would be happy to give yuo some pointers. :wink:
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Post by Knowsitall »

I thank you for your help eezee.

Do you know of a site where daytrading is discussed or explained.


Bylo's site as well as others such as Gummys are gems for me and have helped me make money.


The information there is a great assistace to even the most skillful investor.

Other form posters have excellent web sites as well.
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Post by jacko »

Deleted.
Last edited by jacko on 25 Apr 2005 20:17, edited 1 time in total.
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Post by arthur »

Swifttrade in Toronto will give you a course and provide the setting where you can Day Trade, along with other Traders.

you have to deposit a certain amount of cash to start.
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Post by LurkyDismal »

I think SwiftTrade shut down their day-trading model and operate as a series of propietary liability traders now - specialists trading on one or two stocks, using SwiftTrade's capital.

ld
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Post by Brix »

Knowsitall wrote:Do you know of a site where daytrading is discussed or explained.
Among the less obviously self-promoting might be http://daytrading.about.com/, which includes a Day Trader's Resource Page.
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Post by martingale »

First, you should get off Action Direct. Daytrading with $29 commissions is simply insane. Try Interactive Brokers. Second, I am obliged to point out that day trading is a stupendously bad idea and will only serve to make your broker rich. But, so long as you view this as just a fun way to spend money, and you do not view it in any way as investing, knock yourself out. The race tracks and casino's also come highly recommended as fun ways to lose your money.
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Post by Knowsitall »

Many have made a good points about this daytrading and after the past 2 days I see you are correct and it is nothing but outright gambling.


I have quite as of today and invested the play money in bond iunits for a steady eddy return thus freeing my time for exercise ,summer walks a little scouting around the city etc.

A big thank you to those kind enough to reply with spercial grats to martingale who steered me to that frightful site.

I do remember Howard playing the options game but have not heard much from him on the subject lately.

Do have a pleasant evening and I hope the markets were not to unkind to all or any of you today.

My next door neighbor from INDIA has just invited the wife and me in for a light meal with his family.


People of all race color and creeds are what make Canada unique and such a wonderful place to live.

God bless you every one. :)
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Post by dakota »

You're on the right road son! Keep it dilligently, say your prayers daily and not be a know it all, and you'll go to heaven for surrrre


People of all race color and creeds are what make Canada unique and such a wonderful place to live
You're on the right road for surrre :wink:
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Post by Protest bore ring »

Don't keep us in suspense. What did you eat? Did those people make you eat with their hands or did you insist on a fork? Do they offer their wives after meals or is that just in the movies?
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GlobalFinancier's Thread on the Markets

Post by GlobalFinancier »

Ok, detailed explanation of deductions/prediction. Not liable for any consequences of use of the material in the posts :p .
I remain bearish on oil. $63 was a key support line for crude oil. This may provide some support for the general markets(they are at moving average support), but since the fundamentals are not so strong(yield curve almost inverted etc etc), and the Nasdaq recently broke below a symmetrical triangle on the daily charts, a more cautious approach is need. So I'm neutral for now.(Last time I went fully bearish was in October 2005, everyone knows how that turned out, so I'm not going to turn bearish easil)
BOT is bullish.
1)Earnings reported already, so that risk factor is out of the way.
2)Recent breakout of double bottom pattern.
3)Filled a former gap down.
4)Exchange stocks have done well. The hype has gone out of this one, which makes it even more attractive.
VLCCF is bullish.
1)In transportation sector, so projected lower oil prices will give a boost.
2)Ascending triangle breakout.
3)Break above 65 day MA, MACD/ADX confirming.
Feel free to comment.
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Post by jiHymas »

Have your charts ever shown the slightest shred of predictive power in the past? Have anybody's charts ever been of the slightest use? Can you prove it with actual data, as opposed to the usual anecdotes that chartists trot out when challenged?
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Post by GlobalFinancier »

Practise is the only way to make sure something works. I'll elaborate on that later on.
Right now, another prediction.
http://www.netdania.com/ChartApplet.asp
Click "Instruments" "Gold,spot"
I see an intraday bottom(MACD/RSI bullish divergence) and so on.
Gold and metals have also been heavily sold, I think we'll see a strong bounce today. This may continue on, as gold is still in a long term uptrend.
$546 now. Let's see if my charts work ;).(Potential double bottom, at support.)
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Post by GlobalFinancier »

jiHymas wrote:Have your charts ever shown the slightest shred of predictive power in the past? Have anybody's charts ever been of the slightest use? Can you prove it with actual data, as opposed to the usual anecdotes that chartists trot out when challenged?
Ok, a movie is on now. "Financial Webring: The Revenge of GlobalFinancier" :D
Let's go over to what technical analysis really is.
It is a study of previous patterns of human behaviour, which is reflected in price charts. Since human nature never changes, we assume that in future periods, these models of previous human nature under different circumstances(greed, fear, euphoria and so on) will display themself again.
Charts can also be used to estimate the supply and demand for a security in the market(i.e. support and resistance). Volume is also a good indicator.
Using charts(price patterns/volume etc) is actually a more accurate way of detecting supply and demand for a security. The theory of supply and demand would assume that as prices get higher, demand would weaken and supply would grow. However, as we see in the financial markets, this is only true in the very long term, it doesn't make sense in MANY cases, due to reflexivity(i.e. trend) Thus, equilibrium doesn't exist, so supply and demand is not quantifiable in the financial markets, and charts, albeit fuzzy, help you to see the supply and demand for a security.
Finance(as well as other social sciences) is a form of "alchemy". The most important thing is to be successful in practice(in this case, make money), rather than have a "correct" understanding of the market. Nothing in the market is written in stone. You could say Random Walk Theory is correct, or Efficient Market Hypothesis is the veritas(and I agree in most cases), but it doesn't lead you any closer to making real meaningful gains.(Although Wall St and academicians proudly point to a chart of the DJIA from 1982-2000, and proclaim that buying and holding long term is a correct method, they are making the same mistake of assuming future returns will be the same as past returns, based on what?)
However, I don't believe technical analysis is the only tool one should use. Fundamental analysis(looking for solid companies with growth) is useful as well. I like sentiment analysis, which could be explained by the Buffett quote "Buy when others are fearful, sell when others are greedy". I use these combined with technical analysis to get better odds.
Much of technical analysis is impractical, like Elliot Wave Theory or other "magical keys", like optimized software(which usually don't work, because though the returns look great when backtested against history, the market is always changing, there is no philosopher's stone in the market ;) )
Let's examine some of the other strategies.
A)Index investing
It's more of a "if you can't beat them, join them" approach.
I believe investing in index funds in the long term in countries with stable market economies like the US will yield a substantially better return than bonds and many other asset classes.
However, there have been periods where the stock market has substantially returned less than other asset classes. But of course, Wall St and the academicians with puffed up chests will proudly announce to you a 10.2% gain annually and how well 1982-2000 did.
Let's examine the fallacies and shortcomings of this strategy.
1) During 1966-1982, the DJIA lost 75% of its value, after accounting for inflation. And if you kept investing more paper, and hoping that someday the frog will be kissed into a prince(and it will, but it took 16 years of smooches), you would have lost more money, than if you used other methods and actually took steps to protect your capital.
2)Let's face it, how many of us have the guts to sit in 16 years of gloomy markets, high rates of inflation and hold our portfolios? It's easy to say, "Yes, I'm in for the long term", right now, but imagine yourself in a period, where there was no ending inflation, year after year after year, and the economy was doing terrible, Wall St was predicting the end of the world, analysts and academicians were telling you rates were going to go through the roof, the US economy is going to the dogs etc etc. CAN you hold in such an environment? I bet most people can't. And I probably won't either. The immense psychological pressure probably will take a decade off your life.(And what's riches without the enjoyment and life ;))
3)The US market has faced secular bulls and consolidation periods. We can see that clearly by looking at the centurial chart of the DJIA.
Why would someone expose himself to so much risk by buying and holding? He's basically receiving nothing but an assumption that the future will be like the past. And if the future is like the past, we are currently in a long term period of consolidation for the DJIA and major market indices. At least no more stellar gains like those during 1982-2000.
So we can see, index investing is a risky, potentially dangerous thing to do to your capital and your health. Unless you are devoid of emotions(most humans aren't), it isn't an optimal strategy.
B)Buy and hold
Buying and holding can be a good strategy, but it depends on *when* and *what* you buy and hold. If you buy and hold a basket of blue chips, or a mutual fund that owns a few hundred stocks during a big bull market(when most of the dumb money enters the market), it isn't a good strategy at all.
Buying and holding large caps can be a lucrative strategy, provided large positions are entered during a few years after a bear market, and you have really good stocks. But blue chip investing is a fallacy in itself, since the inneundo is that they will return as well as they did in the past. Lots of people give examples of Coca-cola and whatever and how long term investing makes sense because of that. Which is utterly BS, because Coca-Cola will never be able to return that much money in the next decade, or the next 2 decades, or 5 decades. Using a $1retained earnings=$1 translated-into-market-value-later-on assumption, KO needs to make about $100 billion to double the market cap. But it barely made $5 billion in 2004. Assuming a 10% growth rate, shall we count our fingers(OMG, 10 fingers aren't enough) to see when we'll accumulate $100 billion in earnings?(and these aren't retained earnings mind you) Probably much more than a decade. At a conservative estimate of 3%, using the rule of 72, inflation is 100% every 24 years.
Why am I listing all these calculations? My point is, most blue chips will not give good returns(unless you buy them very cheap on sale during a bear market, or unless it goes into bankruptcy and comes out without cancelling existing stock, i.e. Chrysler... other distressed blue chips might make a come back, like the utility responsible for Three mile island meltdown that yielded a great return in the 1980s, but they didn't become big winners after they recovered)
And most people will own these blue chips. The real winners are in the innovative, new, smaller companies, which will become the future Microsoft's, but most people will never find them before they become too big to be lucrative to invest in
C)Fundamental Investing
There are many ways to invest fundamentally. For growth or value etc etc. From how pensions/mutual funds do, we can arbitrarily say fundamental analysis doesn't work :D. J/k, but the returns made by big institutions using their fundamental analysis hasn't been the most impressive :p.
Fundamental investing has its merits. I'm a big fan of Peter Lynch. His investing methods are quite interesting and different from the crowd(and more lucrative as well). But to invest in a company because one thinks it is undervalued, doesn't seem to have worked too well.(Asset plays excluded) Think pensions/mutual funds, they've got a committee of "experts" telling them what they think is undervalued.
However, letting the market tell you what is really undervalued is better. Opinions are often wrong, the market is always right ;). And the market transfers its message through charts volume etc.
Which is why I think using a combination of methods in investing(theories that actually work) as well as having good risk and position management, will yield far better returns. Since the market is a dynamic thing, 6 sigma events do happen, and no matter how well you think you've done your due diligence, there's always the possibility of things going wrong(i.e. Bildner's Sandwiches). So you control the risk.
Ok, I'm done, I'm willing to hear your brilliant guaranteed winnings strategy.
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Post by kris »

Hi,

I was surprised to hear that someone was "bearish" about oil. I might agree with this sentiment over a short period of time (say, over a 1 year horizon), but over a longer term period (5-10+ years), can you really expect the price of oil to be decreasing?

The technical analysis gibberish asside, it seems to me that (a) the supply is decreasing, (b) the demand is increasing, and (c) the methods that we have for extracting or creating new oil (be it from bitumen or synthetic production) are far more expensive than traditional well-based methods. As world reserves are depleted, the price of this (and other) non-replaceable resources will go up ....
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Post by yielder »

jiHymas wrote:Have your charts ever shown the slightest shred of predictive power in the past? Have anybody's charts ever been of the slightest use? Can you prove it with actual data, as opposed to the usual anecdotes that chartists trot out when challenged?
OK so it doesn't work. What proof do you have that it doesn't work?

I suspect that it's hard if not impossible to find proof that it does work. Anyone using it successfully would be out of their minds so disclose anything. As a long term value/growth investor, I'm quite happy to disclose in detail what I do because I know that the vast majority of people won't be able to act on the knowledge because they have't the patience. Most look for quick results. That's why the Dogs of the Dow products of the mid-to-late 90s sucked in so much money. The failure of the Dogs at that time is the reason why any successful short term trading technique should not be disclosed.

Do I believe that it works? I'm not sure. The problems of short term trading are less about the systems used than they are about the execution or lack of. You have to be a true believer to hang tough through the periods of drawdown where you have to take every trade. You also have to have fairly deep pockets and not overtrade in order to ride out the drawdowns. I'm pretty sure that the vast majority of short term traders who fail do so for reasons of execution not for reasons of system. Most systems never get tested in production because the trader bails.
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Post by GlobalFinancier »

Gold was a bad timing on charts.
Printing new lows at $540 :-\.
I think I'll give in, turn neutral, and sell my gold stocks at open tomorrow.(live on the other side of the planet).
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Post by jiHymas »

GlobalFinancier wrote:
Or, to put it briefly, you do not, in fact, have any actual data that would show that technical analysis has the slightest shred of predictive power. Is that a fair summary of your lengthy post?
yielder wrote:OK so it doesn't work. What proof do you have that it doesn't work?
How do you prove a negative? I was not aware that the onus of proof has shifted onto the null hypothesis (except, of course, with respect to Canada's brave new Criminal Code).

I have tried, in the course of* testing, every single quantitative indicator in "The Encyclopedia of Technical Analysis", (R.W. Colby and T.A. Meyers; Irwin, 1988) and have never seen the slightest indication that anything worked.

Nor have I ever seen anybody else ever produce such evidence when challenged. I've heard a lot of bluster, though!
yielder wrote:I suspect that it's hard if not impossible to find proof that it does work. Anyone using it successfully would be out of their minds so disclose anything.
It's not just the slightest scrap of disclosure that's lacking ... there is absolutely nothing out there to hang your hat on. Not a single fund! Not a single firm! Not ones with significant track records, anyway.
Global Financier wrote:Right now, another prediction.
http://www.netdania.com/ChartApplet.asp
Click "Instruments" "Gold,spot"
I see an intraday bottom(MACD/RSI bullish divergence) and so on.
Gold and metals have also been heavily sold, I think we'll see a strong bounce today. This may continue on, as gold is still in a long term uptrend.
$546 now. Let's see if my charts work .(Potential double bottom, at support.)
Global Financier, 7 hours and 9 minutes later wrote:Gold was a bad timing on charts.
Printing new lows at $540 :-\.
I think I'll give in, turn neutral, and sell my gold stocks at open tomorrow.
Classic. Absolutely classic.




*edit
Last edited by jiHymas on 13 Feb 2006 23:52, edited 1 time in total.
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Post by yielder »

jiHymas wrote:I was not aware that the onus of proof has shifted onto the null hypothesis (except, of course, with respect to Canada's brave new Criminal Code).
Do you want to have a discussion or do you want to duel with loaded hyperboles at 10 paces?

My preference is discussion. I'm a lousy shot & have had bad experiences with misfires. :wink:
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Post by GlobalFinancier »

jiHymas wrote:
GlobalFinancier wrote:
Global Financier wrote:Right now, another prediction.
http://www.netdania.com/ChartApplet.asp
Click "Instruments" "Gold,spot"
I see an intraday bottom(MACD/RSI bullish divergence) and so on.
Gold and metals have also been heavily sold, I think we'll see a strong bounce today. This may continue on, as gold is still in a long term uptrend.
$546 now. Let's see if my charts work .(Potential double bottom, at support.)
Global Financier, 7 hours and 9 minutes later wrote:Gold was a bad timing on charts.
Printing new lows at $540 :-\.
I think I'll give in, turn neutral, and sell my gold stocks at open tomorrow.
Classic. Absolutely classic.
*edit
It is classic, it's a classic example of jumping to conclusions.(Kids, don't try this at home.)
Peter Lynch stated in his book "One up on Wall St" that if a person can have an accuracy of 60%, he would have done very well in stocks.
However, there is no actual evidence that most institutions and academicians can do better than 60%(maybe even 50% :D)
Technical analysis makes *sense* inherently. A move to a new high on strong volume after a long period of consolidation would signal strong demand for a security. When a stock tests an old high, people who bought the stock then would sell(most people don't cut losses), and thus a resistance level forms.
Since technical analysis is a very subjective thing(so is fundamental analysis, in some cases, like the discounted cash flow model, nothing but guesses), you can't prove it works. Nor can you prove something else works in the markets(and more importantly, will continue to work). Like Buffett said, "History does not tell you the probabilities of future financial events."
But coupling technical analysis(the tools that make sense, i.e. breakouts), fundamental analysis, and sentiment analysis(contrarian), with rigid risk and position management, good odds with limited risk can be obtained.
You might think,"Well the chart can be manipulated". Yes, it CAN be manipulated. In the second Market Wizards book, one of the forex traders said that size was a huge advantage, since running up a currency a few hundred pips can greatly change the sentiment. Another big trader said sometimes he helps the market close at a high. A big player can buy up some shares, make sentiment and demand high, then sell down from the top. I agree that it can happen. That's why you have risk management(i.e. not risking more than 2% of your assets on a single trade. Risk here= Position X predetermined entry point). If you think there's a risk of a gap down, there is. But that's usually 10-20% and not very common.(Except in earning season, where you cut down on your trades then, thus decreasing your odds of a huge gap down)
Now, your turn to explain, WHY some of the assumptions of technical analysis are incorrect.
EDIT: BOT breaks out of a flag, uptrend will continue. Will this be the Amgen of 2006?
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Post by dakota »

Gold and metals have also been heavily sold, I think we'll see a strong bounce today
...and I believed in you! DAMN :x
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Post by Chuck »

As they say the proof is in the pudding. To help us examine the accuracy of GF's calls here are some reference points.

CBOT - open Feb 13/2006 - $109.90
VLCCF - open Feb 13/2006 - $28.00

We shall see. Don't forget to tell us when you turn bearish (not after the fact please, we all know hindsight is 20/20).
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Post by Norbert Schlenker »

GlobalFinancier wrote:In the second Market Wizards book .... [much elided] .... Now, your turn to explain, WHY some of the assumptions of technical analysis are incorrect.
Schwager's two Market Wizards books make an excellent read. They're an even better read if you examine them with a view to figuring out, as GF has suggested "WHY some of the assumptions of technical analysis are incorrect." It's not really that hard, because the books profile about 30 of the most successful traders the world has ever seen, and their approaches contradict one another all over the place.

Ask yourself how it can be that 30 people, most of whom are technicians, who cannot agree on whether a particular chart configuration means something is going up or down over the next few days or weeks or months, could all have been spectacularly successful. The null hypothesis is that, because Schwager was choosing and writing in hindsight, he picked the lucky ones to write about.

Indeed, some of the spectacular success stories in the books have since flamed out. But I'm sure it wasn't because technical analysis is faulty. :roll:
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