Reply to: Day Trading

[BrilloPad]

Seems like it's not actually a problem with the financial health of the company,more an issue insufficiently robust compliance checks on new customers. If the checks are completed quickly and normal business resumes, the shares should bounce back. However if as a result of the checks serious irregularities come to light then that could lead to all kinds of issues, and further share prices drops.

The reason they got so many customers was no checks. Those money launderers will now vanish.

[DaveB]

Inversely the financial health of the company could have been proper up with slack governance meaning they lose their main income stream as things get tougher, look at Wonga

Will all depend on whether their customers desert them once they are able to get their funds back, or not.

If you dont think they will, could be worth getting in now in expectation of the price recovering once the issues are resolved.

[SimonMac]

Seems like it's not actually a problem with the financial health of the company,more an issue insufficiently robust compliance checks on new customers. If the checks are completed quickly and normal business resumes, the shares should bounce back. However if as a result of the checks serious irregularities come to light then that could lead to all kinds of issues, and further share prices drops.

Inversely the financial health of the company could have been proper up with slack governance meaning they lose their main income stream as things get tougher, look at Wonga

[sirja]

Israeli spreadbetting firm Plus500's stock is bombing after freezing accounts - Business Insider

Not a user of the site, but a shareholder, relatively small position overall but still a four figure loss on the day

Seems like it's not actually a problem with the financial health of the company,more an issue insufficiently robust compliance checks on new customers. If the checks are completed quickly and normal business resumes, the shares should bounce back. However if as a result of the checks serious irregularities come to light then that could lead to all kinds of issues, and further share prices drops.

[SimonMac]

Israeli spreadbetting firm Plus500's stock is bombing after freezing accounts - Business Insider

Not a user of the site, but a shareholder, relatively small position overall but still a four figure loss on the day

[BrilloPad]

Watched "Margin Call" last night as it was on BBC1 and I couldn't sleep. Not a good movie by any means but again shows how the public are always last to know about anything in the financial world and how the larger organisations can save themselves by screwing the individual investor.

There is always a fool in the market. If you don't know that, you are the fool.

[sirja]

2 very different things we are discussing here. One is a hedge funds, stuffed with the nearly brightest brains one could buy, managing billions of USD or EUR, using computers, algorithms etc we have zero chance to understand, trying to beat the market and other hedge funds. On the other hand we have us, situated leisurely at home in front of our dear laptop, managing our demo and small live accounts like pros that we are. Any strategy, any combination of indicators has been studied and analysed to death by those smart guys. If there is a way to predict market movements, those guys will find it, not us. We simply are too small and too stupid for that.

Still, even hedge funds struggle in the long term, this means market is so unpredictable and chaotic even the big guys have a little chance. This actually helps us, because it's a clear evidence success in this game lies not within indicators and patterns, but something else. We don't know what that is for sure, but we know discipline, patience, sound mind are parts of it. I suggest to everyone interested in trading to work on this "something else", there is our chance "to make it".

The most important aspect is longevity of our trading project. We see it is extremely difficult, even for professionals, to keep a steady income over time. Mistake many do is they look at a month's worth of demoing and say "geez, look at this sweet return I have achieved! I must be a pro!". No, you are not a pro, you are just lucky for now. It's a bit liek casino - if one puts some money on roulette and wins, he didn't find a way to beat the system, he just got lucky.

I realize my comments might be received as quite negative and discouraging by some, and I do apologise for it. I have seen (and have been one in my time) many people with bright eyes thinking they have found their way to the yachts and champagne, only to be bitterly dissapointed a few months later. Here I'm trying to warn you it's not all roses, reality is nowhere near as bright as they paint it in trading seminars.

As someone who has been trading/investing for a long time, i can only attest to the truth of your write up. The failure rate of Day traders is sufficiently high,to conclude that your better off just playing 'Black or Red' on a roulette table.

Ultimately there are a few ways to start to shift the balance back into our favor a bit. Trading Options is one such way, although this also comes with it's own risks, I've found it a lot more profitable than other forms of leveraged trading.

Then there's also investing in good old profitable companies for the long term. That approach hasn't been too bad for Mr Buffet and many others.

[ChimpMaster]

Watched "Margin Call" last night as it was on BBC1 and I couldn't sleep. Not a good movie by any means but again shows how the public are always last to know about anything in the financial world and how the larger organisations can save themselves by screwing the individual investor.

[DaveB]

Another thing - Many hedge funds operate on a 2 and 20 basis. That's 2 percent of your overall fund + 20% of any gains, they are coining it no matter which way it bounces !!!

Brokers are the only ones who ever make money consistantly in this business. Wolf of Wall Street was an extreme example, but fundamnentally true.

[lukemg]

Another thing - Many hedge funds operate on a 2 and 20 basis. That's 2 percent of your overall fund + 20% of any gains, they are coining it no matter which way it bounces !!!

[lukemg]

2 very different things we are discussing here. One is a hedge funds, stuffed with the nearly brightest brains one could buy, managing billions of USD or EUR, using computers, algorithms etc we have zero chance to understand, trying to beat the market and other hedge funds. On the other hand we have us, situated leisurely at home in front of our dear laptop, managing our demo and small live accounts like pros that we are. Any strategy, any combination of indicators has been studied and analysed to death by those smart guys. If there is a way to predict market movements, those guys will find it, not us. We simply are too small and too stupid for that.

Still, even hedge funds struggle in the long term, this means market is so unpredictable and chaotic even the big guys have a little chance. This actually helps us, because it's a clear evidence success in this game lies not within indicators and patterns, but something else. We don't know what that is for sure, but we know discipline, patience, sound mind are parts of it. I suggest to everyone interested in trading to work on this "something else", there is our chance "to make it".

The most important aspect is longevity of our trading project. We see it is extremely difficult, even for professionals, to keep a steady income over time. Mistake many do is they look at a month's worth of demoing and say "geez, look at this sweet return I have achieved! I must be a pro!". No, you are not a pro, you are just lucky for now. It's a bit liek casino - if one puts some money on roulette and wins, he didn't find a way to beat the system, he just got lucky.

I realize my comments might be received as quite negative and discouraging by some, and I do apologise for it. I have seen (and have been one in my time) many people with bright eyes thinking they have found their way to the yachts and champagne, only to be bitterly dissapointed a few months later. Here I'm trying to warn you it's not all roses, reality is nowhere near as bright as they paint it in trading seminars.

Could not agree more. Look I get it, virtually everyone looking at investing sees the possibilities and thinks yes, I can coin it here and starts chasing the magic (I bought options on 100,000 barrels of oil during a gulf war one time, US released massive reserves a week later and stuffed the price, cost me 5 grand)

Lots of people get shaken out by this or by their first bear market BUT if you can persist the snowball starts to build up momentum and eventually is feeding itself with dividends etc and you find yourself work optional, this feels fantastic.

If you just cant see it, then chase the rainbow with a small proportion, ALWAYS compare to a world tracker total return (FE trustnet has charts) to see if you beat a tracker and dont get carried away extrapolating from a short term lucky bounce up (OR down..)
Read everything on Monevator - It wont make sense to start with but eventually will.

[mrv]

2 very different things we are discussing here. One is a hedge funds, stuffed with the nearly brightest brains one could buy, managing billions of USD or EUR, using computers, algorithms etc we have zero chance to understand, trying to beat the market and other hedge funds. On the other hand we have us, situated leisurely at home in front of our dear laptop, managing our demo and small live accounts like pros that we are. Any strategy, any combination of indicators has been studied and analysed to death by those smart guys. If there is a way to predict market movements, those guys will find it, not us. We simply are too small and too stupid for that.

Still, even hedge funds struggle in the long term, this means market is so unpredictable and chaotic even the big guys have a little chance. This actually helps us, because it's a clear evidence success in this game lies not within indicators and patterns, but something else. We don't know what that is for sure, but we know discipline, patience, sound mind are parts of it. I suggest to everyone interested in trading to work on this "something else", there is our chance "to make it".

The most important aspect is longevity of our trading project. We see it is extremely difficult, even for professionals, to keep a steady income over time. Mistake many do is they look at a month's worth of demoing and say "geez, look at this sweet return I have achieved! I must be a pro!". No, you are not a pro, you are just lucky for now. It's a bit liek casino - if one puts some money on roulette and wins, he didn't find a way to beat the system, he just got lucky.

I realize my comments might be received as quite negative and discouraging by some, and I do apologise for it. I have seen (and have been one in my time) many people with bright eyes thinking they have found their way to the yachts and champagne, only to be bitterly dissapointed a few months later. Here I'm trying to warn you it's not all roses, reality is nowhere near as bright as they paint it in trading seminars.

[uk contractor]

Not so sure about Eliot Waves. I know some people swear by them, but seems to subjective to be consistently accurate.

For day trading they are essential but all these trading tools are only at best on average 60-70% accurate which is the big problem.


The professionals have massive leverage so take low risks & only need to make a few % a day consistently. Day trading is all about high risk as you will never have enough leverage or funds at your disposal hence why its often compared to throwing money away in a casino because unless your exceptionally skilled & are prepared to dedicate a lot of time to this you will eventually suffer massive losses.

[BrilloPad]

yeah course they do, which is why Warren Buffett bet one hedge fund that they couldn't beat the SP500 index in the US over 5 years after charges, they paid up early due to being so far behind...

The SP500 is not quite a do nothing. The components vary. Of course you can get an ETF or use some other mechanism.

[lukemg]

Actually if you check out the hedge funds who are professional day traders and running their high frequency algorithms they make between 10-20%.

My "dead" portolio makes as much as they do from what I can see.

What they do achieve though is they're more consistent, they make a steady 10-20% whereas a "do nothing" portfolio goes up and down like a yo yo.

yeah course they do, which is why Warren Buffett bet one hedge fund that they couldn't beat the SP500 index in the US over 5 years after charges, they paid up early due to being so far behind...