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> Russ,
> Your excellent research confirms my own anecdotal observations.
Well Norm, I don't know how excellent and thorough this research really
was, but I have to take exception to a few things you say.
Those
> who confine themselves to day trading put an aritificial limit on
> themselves that only serves to limit winning trades. You should
> be a daytrader for your losing trades and let your winners ride as long
> as necessary.
I think your trading style should fit your personality and risk
tolerance. Not all of us can be home run hitters. Some are very
comfortable hitting singles on a more consistent basis, even though we
might not get the headlines.
Also, it is my observation that the more you trade the
> less likely you are to make money. This is true for two reasons. 1)
> Transaction cost will significantly erode any profits. 2) Trading
> represents risk, the more you trade the more risk you are taking.
Is this really true. I think the longer you have market exposure , the
more risk. That means a daytrader will have less risk than a buy and
hold. That would also be borne out by the normal rule of more risk more
reward. I don't think you can have your cake and eat it too by saying
buy and hold is always more profitable AND less risky. If so, more of
us would be in the group REALBUYANDHOLDERS instead of REALTRADERS.
True, daytrading may not maximize profits in a strong trending market,
but how about a market like stocks in 1994. Buy and hold makes nothing,
daytrading makes money (maybe).
> With an increase rate of trading your risk reward drops and your
> transaction cost go up.
Absolutely, transaction costs go up, that is one of the trade offs for
less market exposure.
But, don't try to tell any of this to the
> daytrading junkies who are seeking the latest holly grail trading system
> so they can get their daily fix of excitement in S&Ps. Afterall, 95% of
> those trading are not in it for the profits, but rather for excitement,
> the lifestyle (talk markets with my buddies), or to vent some
> reoccurring neurosis, or some combination of the above.
Come on, why so much derision in these statements? Isn't this a little
overboard? After all we short term guys provide liquidity when you need
it.
>
> Thanks,
>
> Norman
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