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Eric wrote:
>
> >
> > 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.
NW: You sure you should be so hard on yourself? Who said I was referring
to you? But, I guess if the shoe fits..... As for derision, I was only
applying a highly accepted precept of human behavior to trading. I
believe according to Maslov management principles, money is far down the
list of human motivational factors. Most people are not primiarily
motivated by money, hence there are lots of traders who are trading for
reasons other than profits. If you don't believe it, just go the the
grocery and find an item that is on sale and watch people buy the
competitor's item for a much higher price. Don't bother saying anything
to them about saving money unless you want to get a very nasty stare.
Gee, I guess that's just like mentioning about daytrading on the RT and
then getting someone spewing hurt feelings?
> >
> > Thanks,
> >
> > Norman
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