Isnt that always the way though, looks good on paper. I have a few friends who are day traders, none of them are rich. As you say there are certainly many stocks who you could apply this practice to. I dont even see having the cash up front as being a problem, its more just the guts.
I dont see pwtc as having a consistent enough volume to do this on a regular basis, at least not at this point in its life. You really would have to trade 50000 share minimum to make a go of it and the trades would have to be at the bid and ask. large volume is great but if most trades are in the middle, youre screwed. In the last month there were 9 days with volume below 100000, unlikely you would be able to buy or sell 50-100 thousand shares all yourself. And if you get caught selling/buying on more that one day, you get dinged by multiple commissions (at least I do). If hasher's outlook is correct, this thing will die off soon and you risk getting stuck with a load. @ $1200 profit a month (based on 100000 share trades), one would have to trade sucessfully 2 1/2 times first off to ensure that your 'play' money is covered in event of the company going bust (5 times if you go 50000 share at a time). There appear to be opprotunities to do it more than once a month but the volume is not consistent. One thing LB must do is be creative with his selling points so that it keeps the rest of the market off track.
I also have to keep in mind that if my trading pattern is too often, the government will brand me a 'trader' instead of an investor and I will lose all my tax breaks. I may decide to go that way one day but not right now.
Glad to see you actually did an exercise at one point. Many friends have asked me to teach them about the markets. The first thing I do is give them some 'homework' in the form of stocks to watch, and then report back to me. No one can be bothered to do the work. You really have to understand the way things work before you go out and blow a bundle on the latest hot tip. Ive been in the markets for 10 years now, have made lots and lost lots, but mostly just learned lessons.
He who smiles at lofty schemes, stems the tide of broken dreams.
R.Hodgson
