Day trading

schiff

Thanks for that Matt.

Can now see something of how you operate - without really knowing exactly how it works (but that's my problem). I didn't even know this info was available. Two questions:

I see it's on msn.money. Is it free? I assume you have to register.

Is there an equivalent for the UK stockmarket (where I feel rather more comfortable, though I know that's not a very imaginative stance to adopt)?

schiff

GameOver_2

Very good question, and im going to be honest with you, i have no idea.

I only buy US stocks, just because my tutor buys them, as he lives in CA, actually to be honest with you, i dont think i have ever looked at a UK stock chart.

Ive seen charts from other countries though, the charts all work the same which is good.

Basically, if someone or a group is buying huge amounts of stock, the public can see it

So what i do is, look at the chart first, monthly chart, and that tells me all i need to do, then you just dig and dig and do your homework with who's buying/accumulating the stock, we call them smart money, because they know what there doing, and why there doing it, which makes our money safe, smart money always knows the insides and outs of the company they accumulate, with various meetings etc.

Smart money would not accumulate a company that is about to go bankrupt, or is going downhill fast.

When someone/group can control the stock price with the market maker, a crash does not concern them.

Whats your method? I think we all have our own methods, and thats what makes this great.

Tim_L

So the trading "strategy" is basically to follow the herd up a ramp and hoping they don't fall off the end?

Which bearing in mind that the 'tutor' peddling this nonsense is presumably telling the same thing to a large number of other people in the herd. The 'smart money' bit sounds like the classic 'secrets the rich don't want you to know' hook.

Great stuff though, haven't laughed so much for ages.

Let's cut to the chase: as Deemy has pointed out, day-trading for profit is hard, not easy, unless the underlying market is ramping in which a chimpanzee can get rich short term - this has been the position for the past couple of years at least so anyone trading over that period cannot be trusted. I well remember the bullish bragging around 2000 turning to whimpering expressions of the pain of loss within about 2 months. Trading in a market on a strategy that simply tries to follow other people in is a recipe for utter disaster long term.

If you're going to do day trading then spreadbetting is the way to go as it eradicates the charges and allows some degree of stop lossing. But there are a lot of factors to get past first, including the eradication of emotional attachments to positions - when a position moves against you it can be very difficult to take a loss and move on.

schiff

Hey Tim, that's a bit rough. Remember the lad's only 23 and fairly new to MSE. That sort of treatment might make him think he's not welcome here.

I have no particular attitude about what he is doing as I don't really follow the technique and obviously have no experience of actually doing it. But I don't think he is following the herd, as you put it. Surely the point is that he is following what he describes as the insiders - and this isn't the herd.

I don't think we have any means of judging him and his systems other than by sitting next to him and watching him talking us through a trade or two in front of the screen - ie. not possible. You have to be cynical at this game as it saves you many a clanger but you never know he might have something?!

Incidentally I really liked this:

I well remember the bullish bragging around 2000 turning to whimpering expressions of the pain of loss within about 2 months.

It's certainly literary and almost Shakespearean!

schiff

Matt

My method is suicidal and I wouldn't recommend it to anyone. I have been very, very lucky (so far!).
Had a modest enough windfall which I decided to 'play' with - whatever happened it wouldn't be a disaster to my savings.
Starting In November 2005 I bought highly risky, speculative stocks (mainly AIM) which I chose (and here's the suicidal bit) from Bulletin Boards. Not just from what people were saying of course but there are some very well informed people on these boards, and the links and details thay provide are quite fascinating and very useful. Obviously reading company websites, RNSs and any other comments available has been all part of it. Establishing the rampers comes with experience and time and that too is important.

The lucky bit comes with the period over which I've been involved - a rosy period as I mentioned to you before. So I don't regard myself as any form of genius. And I suppose I've also been lucky with my picks, though there are some mini-dogs amongst them. I'm up about 40% overall (15% taken and 25% on paper) in the six months so I'm quite a happy bunny and I've had some fun too. Owning 500,000 shares in a company that I bought for less than a halfpenny each and knowing that each one-hundredth of a penny tick up means £50 gives quite a buzz. Not forgetting the downside of course when the same tick down gives quite a different buzz!

Right Tim you can have another laugh if you wish - at my expense. Doesn't matter much. But I'm not claiming much credit from my success and it's not to be copied, as I warned. Not that you would ever!! :beer:

Chrismaths

Just from looking at Matt's criteria, the 'low volume' send shudders down my spine. One of the stocks he quoted had a market cap of $60m - coupled with low volume implies a candidate for ramping. In a market for shares that small, even a $5000 trade can move the market. If you add even 50 people doing the same thing, supply and demand dictates a large price move. Other people see the stock going up - and assume it is 'smart money', and the herd instinct kicks in - classic irrational negative price elasticity! (in other words, the more expensive something becomes, the more people want to buy it). It creates a self-fulfilling prophecy.

I'm not here to say what is going to happen in the market in future, my job is to make money whilst controlling risk. When you buy an investment, you are buying a set of risks. If you are buying a bond, you are buying a) interest rate risk and b) credit risk. You hope that the rewards outweigh the risk. With a stock, you are buying a large set of different risks. What most concerns me about Matt's attitude is that a) he doesn't seem to know what risks he is taking b) He's convinced himself that he can only make money. Phrases like 'Would like to maybe be an independant[sic] stock broker[sic], if i could get people to listen at some point.' - seem to imply that his attitude is 'I'm right, why won't the world listen to me?' - to which the obvious answer is 'because we've heard it all before fella'. Especially the 'All the stocks i buy go up 100% or 200%, its[sic] almost guaranteed' - Pride comes before a fall.

As I've said before, if Matt is so convinced of his system being flawless, he should borrow some capital and invest it - after all, he's taking no risk - give up the day job and put his money where his mouth is. Once he's made his millions, perhaps he could run a US fund, you know, just for 'fun'.

Regards, Chris

Tim_L

How the hell does he know he's following insiders? The number of insiders in any market is tiny, so the only actual indication comes when the herd moves. Once this happens, any value gets priced in almost immediately.

What is happening here is that he has bought into a plausible argument, but which has no foundation in reality. If it were possible to 'follow smart money' then frankly everyone would be rich. Incidentally, just the use of the terms 'tutor' and 'smart money' sets off every snake oil detector in the building.

And it's interesting that having earlier castigated the use of "assumptions", the poster is making a massive and fallacious assumption in the underlying idea that people buying into a company proves that the company is sound: all it proves is that the herd thinks it's sound, and the herd will follow until it is proved wrong, at which time the value is likely to collapse very rapidly.

Maybe it was harsh to point this out as bluntly as I have, but it is lethally dangerous to try to persuade people that without anything other than a herd-following strategy, and especially without any expertise, that you will not lose money long term. In a ramping market you will probably do OK, but when it turns you have no viable strategy apart from to fall off the cliff with the rest of the herd. You certainly cannot extrapolate short term sample size one gains over a period where the underlying market has ramped by 50% to a general statement that gains are inevitable.

There are some viable trading methods that look at short term market patterns - weight of money, that sort of thing - and attempt to trade in and out of positions rapidly to profit from them. But even these need considerable experience to read properly.

There's a well known aspect of gambling that winners tend to shout louder than losers, and usually believe they have an infallible system when they are winning. A good run can make these notions of infallibility impossible to shift, and they can survive bad runs and overall losses. In a thread which addresses the question of whether it is possible to make money by day trading without any experience, such assertions do have to be aggressively knocked back. People can lose a lot of money doing this, and if this is redundancy money as was the case with the OP, it is irresponsible to make such claims. It's gambling, pure and simple: nothing wrong with that in itself (I personally make more than my salary from part-time betting on horses) but it is necessary to be absolutely clear about it.

schiff

Tim & Chrismaths

In spite of the tough talking you clearly have Matt's interests at heart, based on longer experience. I'm sure he will appreciate that. I do too, as can be seen from some of the cautionary things I have said to him.

I think now we must let him weigh up what's been said and take notice, or not. I suspect not actually! Could be interesting to have him report back - honestly of course - in 12 months time!

schiff

Deemy

The secret to winning at gambling (be it stocks or poker) is money management

maxi_isa

I wonder what Mr_Frugal, who posted the original question, makes of all this. Looks as if he may have taken fright at the answers he generated!