Hi everyone, im new to MoneyAM so I just wanted to say hello and discuss a few aspects of daytrading with anyone who can be bothered. I've read some of the threads and picked up on a few things. Anyway, here goes >> I graduated with a business/finance degree in summer 02, itching to get into the stock market. I finally opened an ISA account just before the tax deadline in April'03 and havent looked back since. Im loving the thrill of buying and selling shares, though I dont day-trade. I have to say, the concept of daytrading has got me intrigued. I am however asking myself why people on this board say that ones first experiences of daytrading will inevitably be loss-making. Since starting to trade in mid-april Ive made 10 deals on a handful of FTSE100 companies i like, and feel pretty happy with my 26% profit. Sometimes I buy and sell on the same day, ranging to once holding a stock for three weeks. The average holding time is 7 days. So should I just take from this that daytrading is much more difficult than longer-term trading? Are the rewards that much greater? I have a few questions, if anyone can answer some it would be great.

How reliant is daytrading on technical analysis and how much is gut feeling? I use Reuters 3000 Xtra at work, do you guys get more / less information than i do?

Do you trade blue-chips or small-cap?

How much % change in share price do you typically need to break into profit?
With the typical size of my trades I need 1.35%.

Im assuming you need to identify a few volatile stocks, buy them near day-lo and sell near day-hi. Whats your success ratio and how close do you typically get to the actual day-los and his?

This one sounds silly, so forgive the ignorance, but do you always close a position on the same day you open it? Wouldnt be daytrading otherwise ;)

And finally, how successful are you at being 'detached' from your investments? The moment after i sell to make a profit, i need another 'hit'. It's getting a little better (i think) though i could just be deluding myself. I dont really have the time (at work) to daytrade but i think my 'need' to trade more regularly should be fed somehow.

thanks
elchicodor

Oh dear. It's deja vu all over again.

No offence intended e., but I was one of those who - at the end of the 1990s - found making gains so easy that I thought I must be getting good at it. Then the tide went out and most of us newcomers realised that our own skills were nothing to do with it. We had merely been riding the tide. When the tide went out our lack of skill became embarassingly apparent and we saw our gains evaporate faster than they had appeared.

Read Iain's thread entitled "If you're interested in starting trading, read this first" from start to finish. ( http://www.moneyam.com/InvestorsRoom/ShowPostList?fID=1&tID=993 ). (Epic ODDS)

Mmmm... to be perfectly honest the reason most day traders lose money, is not because of the lack of skill, it's to do with the lack of discipline, loss of control and the eventual loss of funds. If you day trade, I have learnt to forget everything I know about the stockmarket and investing and start anew. It is completely different. It requires you to be disciplined, aware and not overindulgent iykwim. Limit your losses (and stick to them) and cash in your gains. You get it right more than 50% of the time and your in profit. If your in a stock and it's turning bad ( or you dont like the look of it at the time) get out and take the loss. Not everyone has the discipline and not everyone enjoys it. But I don't agree with all the doom and gloom about it. If it didnt work for you that doesnt mean it wont work for someone else. Skill is not really a factor in the stockmarket - experience is far more important, and you only gain that by doing it yourself. Being detatched from your profits is essential, being attached to your losses is also essential. Have targets and stick to them, if you make your target in an hour then stop - you've done what you set out to do.

When you first start, trade in small volumes, and look to make small gains on the stock, dont go in thinking you know how to play it, you will lose. Once you have a feel for it and more importantly the discipline, bump up the volume a bit, but dont go overboard. You will make money from the small gains, just like the "regulars" that pop in to the shops, they keep it afloat and that, in your first months is your primary aim, to not lose anything. If you get into troubs or lose say 10% of your starting capital seek advice, but IMO it's better to formulate your own strategy as it's your money you will be trading with.

If you have the capital, go with IB, that will give you Direct Access Trading, which means you trade on the fly. Although you will need $25000 to have a pattern day trading account (unlimited buys/sells). Otherwise your restricted to 3 trades a week on a starting capital I think of 1500.

Also their charges are the cheapest around. As you work I would recommend trading the NAS, and lev2 info is a must for day trading.

Good Luck

thanks v much Kael, a few questions about some of the jargon...

what's "IB", "trading on the fly"?
and where can i find out how to understand the level 2 format?

also, i was wondering what is the typical background of daytraders? i.e. used to work in finance, related degree etc...


thanks again

IB is Interactive brokers (www.interactivebrokers.com), on the fly i mean minute by minute, second by second(not really jargon just me being lazy, its direct access trading and gives you gateway into the order books direct. Here you can "advertise" your buy and sell price and trade directly with other traders). You can buy instantly and sell seconds later if you want (as long as you can meet your margin requirements).

To understand level 2 you need to speak to someone who uses it, as I recall there is a guide posted on these boards, just search lev 2. But in reality the way you learn is by watching.

As for background your degree may add to but not enhance your understanding of the market. All you really need is to know the basics of supply/demand, psychology and human nature. With lev 2 you see some clever tricks played, but you only learn them from experience and seeing them done. I would reccommend just seeing lev 2 in action, it will change your investment strategy entirely(most importantly timing your trades).

Discipline, discipline and discipline are the most important things when trading, it's what keeps you afloat when the market moves against you and what keeps your head below cloud level when it carries you away.

thanks for the advice