Day trading

csgohan4

Do you feel lucky?

Apodemus

Personally I am more of a buy-and-forget investor and Day-trading is too rich for my blood.  However, a safer option, if you are a long-term holder of one of these yo-yo stocks, is to short a portion of your holdings - ie you sell at a peak, with the hope of buying back in at a later, lower level, perhaps even the same day.  Worst case is you are left holding cash and miss out on a rise, rather than holding a falling stock.

Herbalus

I have been mentally day trading several shares over the past few months. Some weeks I do quite well and the shares stay within the recent range and I think I should have put some money in. Other weeks I am reminded very strongly that I have no idea what makes these shares tick particularly well and I was miles away from judging the market sentiment correctly.

I’m happy just to play along in my head for interest as to which way the stocks will go!

jonowag

If your going to invest. go on invest 212 app. you can practice the art of trading. i've dipped in and out of the years and keep a keen eye on  certain stocks and shares. you cant make money on the bigger companies but it's long term and don't put your money in just 1 company. Day trading is like going to the bookies. 

BriNylon

Ray_Singh-Blue said:

I don't day trade with individual shares, but a few times I have dipped in an out of an index fund. This feels a little safer, as it avoids the Bradford and Bingley trap described so nicely by Bowlhead99.

Which index fund do you use?
I was considering doing this as it is safer than what I am doing.
I started about 2 years ago and it feels like quite hard work, so I limit the amount of time so I only make around £200 pw.  I would not mind putting more money to make this if it was significantly safer.
Lloyds are very good, and if the price of any runs away I just move to the next.  I only do FTSE 100 companies so this is why I am not making huge amounts.

bowlhead99

Apodemus said:

However, a safer option, if you are a long-term holder of one of these yo-yo stocks, is to short a portion of your holdings - ie you sell at a peak, with the hope of buying back in at a later, lower level, perhaps even the same day.  Worst case is you are left holding cash and miss out on a rise, rather than holding a falling stock.

That doesn't sound like 'shorting', because having placed the sale order and needing to settle it you are not 'short' of stock - you already had the stock, so when you sell it you simply have cash and no stock, for that portion of your holdings?  You're simply disposing of stock and thinking you might buy it back later for cheaper if you can.

Whereas to sell 'short' your holding of stock is to sell stock you don't own, fulfilling the settlement of your sale transaction with stock you have borrowed, so that you effectively end up with negative stock and would need to buy more stock in the market to normalise your position back to holding zero or positive stock. Which can be costly if the stock shoots up in price before you buy it back.

Maybe you mean you have shares in one place as part of your core investment in that stock, but just hedge out any positive or negative performance by creating a short position on a different account whose gains or losses would offset some of the performance of the real stock you own? So if you called it right, you would be able to close and take profit on the short position after a day which would cover the unrealised loss on a part of your main holding during that timeframe, while if you called it wrong your losses on the short are no worse than the gain you have made on the real stock, and you've simply given up the gains that would have been made in the absence of the offsetting side transaction.

However if you're doing that (i.e. advocating running a short position alongside your regular 'long' position for a period of time to hedge your bets rather than actually sell out of the long position), if the price goes up you wouldn't be "left holding cash", because you would have an obligation to close the short position and clearing it at a loss would consume any potential cash that the short sale generated. You would only be left holding cash if you sold out of the original shareholding; but selling the original shareholding is not something that creates a 'short' position as it is just a sale of an asset you own.

Perhaps a terminology thing.

Apodemus

bowlhead99 said:

That doesn't sound like 'shorting' ... Perhaps a terminology thing.

Yes, just a terminology thing. I simply mean selling down a portion of the long-term holding in the hopes of buying it back at a lower price (or increasing the holding buying back more of the stock for the same total sum).

Malthusian

BriNylon said:

I have been day trading recently as the market is so volatile.  I have been having really good success with Lloyds shares.  Does anyone on here day trade, or have recommendations for any particular shares?

Yes, I do. Bash the wine gums on VWRL. Then leave it there.

There is only one successful strategy in day trading and that is to quit while you are ahead.

MaxiRobriguez

Ray_Singh-Blue said:

I don't day trade with individual shares, but a few times I have dipped in an out of an index fund. This feels a little safer, as it avoids the Bradford and Bingley trap described so nicely by Bowlhead99.

I was not sure whether this has netted any £ at all, allowing for missed dividends while in cash, the buy/sell spread, dealing fees, and one occasion where the market ran away and I had to buy back in at a higher price.

So I crunched some numbers and to my surprise am about £16K up from doing this over several years. On a portfolio of £320K.

However I suspect I could just as easily be £16 K down. Or maybe £20K down to be fair, for the reasons listed above.

Have you accounted for lost opportunity? ie, If you buy an investment at £1k, sell at £2k, buy again at £2.5k, then sell that at £3k. then you've made £1.5k but lost opportunity of £500? Also, what about dividends missed when out of the investment?

Overall, I've never been convinced day trading is worth it. The costs of trading rack up quite quickly and if I've identified a stock which is underpriced and recovers then I'm likely to hold it for a long time as it typically takes a while for such stocks to become fair priced.

Much easier to buy and hold, use your time working out how you can limit tax liability instead so you can funnel more into investments.

HansOndabush

Swing trading is more likely to bear fruit. Basically day trading but stretched to a longer period of weeks or a couple of months.