Replies to post #226862 on Zeev's Turnips Patch-No Politics (ZEEV)

[choad]

gf, There are no sure things. I think the fine print on the package says daytrading may be harmful to your financial health. Most of the people on this thread I think have paid their dues. FWIW Oh, I don't daytrade so you may take this with a grain of salt.

[punkle]

Don't do it GF. Unless you want to see that 200K disappear real quick. It's too risky. Get another job and do some paper trading in your spare time to measure your actual results as compared to the market. Paper trading is not using your actual money but pretending you are trading. Do this for 6 months and be accurate with your recording of data. If you outperform the market maybe you can consider daytrading. If you don't, just enjoy your new job and make extra income and put a percent (70??) of your $200K in some index related mutual funds.

[osprey]

GF, better think very hard. I know of two neophytes in your position exactly.
One blew up his brokerage account despite my incessant cajoling that he was in over his head, didn't know enough, and was doing stupid stuff and was going to........blow up his account. He now has a new job which is OK.
The other was his friend and I did not know him personally. But he blew up his brokerage account and hung himself.

The usual statistics are that 8/10 traders go broke, 1/10 break even, 1 makes money. Sounds about right to me. If you are determined, maybe you should take 20-40K and see how you do with real money after taking a few courses or reading a dozen books or so and paper trading a while. And if you blow it up, at least at McDonalds you don't have to travel far for lunch.

I am myself an amateur part time nondaytrader but at least I run positive every year. I used to flounder around making some, losing some, but did OK until the bubble broke. 2000 was a real learning experience, never again.

[Public Heel]

Look at it this way... daytrading is a competition between daytraders. It isn't you against the Market, it's you against the other daytraders. When you start, you will be the least experienced person in the competition. Furthermore, you will be up against survivors, the guys who are so good that they have beaten heavy odds to remain in the game.

Take the advice to paper-trade. Do it faithfully for three months. Write down everything. Consider commissions. Give yourself realistic in-and-out prices, not what you think you should have gotten. Just because you see an Ask for $10.00 does not mean you would have gotten the stock for $10.00.

[Newly2b]

Forget equipment, what you need is knowledge and experience! You make no mention of whether/how long you've been in the markets as investor or trader. I think most here (certainly the best traders) have been in the markets for many, many years (some as career professionals before going out on their own) and are still learning.

When someone does a thing well, they always make it look easy, which is rarely the case. That ease of execution is their reward for many years of hard work and pain acquiring the skills necessary to succeed. Nothing is a "sure thing", and no one can trade successfully by riding on someone else's coattails. If you have no daytrading experience, be prepared to lose half your savings, most of your sanity, and all your patience before you even begin to consistently take profits from the markets.

I wouldn't discourage anyone from pursuing their dream of becoming a daytrader, if it is their passion. That said, it is very different trading because one enjoys it and trading because one has bills that must be paid. Think carefully before putting your capital at risk, especially if you will need that money for living expenses in the next year or two. Good luck with your decision.

Newly

[conelda]

as good as the Turnips are (right now) they are not always right and can turn on a dime leaving you in the red- you can not copy Zeev's trading- you will loose $-- period-
keep the day job- find another if you loose it--

-- you will loose a bunch day trading- maybe ALL of it!

[Zeev Hed]

I would not start by days trading at all, start swing position trading so you get the "feel" of the market and that you develop some discipline. When you swing trade, you don't spend all day looking at the stock, you use entry points under the market and sell points above (GTC) and leave them in until executed. In the rest of the time, send out resumes, or try your hand at consulting, or try and find some part time work you can do from home. I have not started day trading after a solid five years of active swing trading and many more years of LTBH....(when LTBH was still a wise policy).

As for tools, find a broker that will supply you with good streaming data (you may even want to pay a premium for real good data since some brokers streamers "stink"), get yourself a fast (cable) I-net connection (and use a linksys if you want different data to different processors simultaneously), I think you can get "fully equipped" for less than $1000 and a monthly cost of less than $100. Is all that $200K money you can afford to lose? If not play only with what you think you can afford to lose, the rest invest in at least five (preferably more) core like issues with disciplined stops and watch them grow over the next three to six months....Once you decide you have "matured" to day trading, slowly increase the number of issues from "swing" status to "daily trader status". Don't hold more "balls in the air" than you are comfortable with fully memorizing their behavior and critical points. It is a pain during a hectic day, to suddenly having to pull the chart of more than one issue (even with multiple screens) that behaves strangely while you are watching five other issues dancing all over you. In time, you'll find pairs or more of stocks that move in tandem, the one being a canary to the other, play the second from the behavior of the first... Remember, no technique that I know works all the time, so don't blame the market for misbehaving, just get out of the way and come back and play another day.

Last thing, a stock that you decide to day trade, try and see if it has strong island activity before you chose it, and before you start playing it, see if you an "eyeball" the island change in directions from the tension (it takes to much time to calculate, I have seen island tension going from 4:1 to 1:4 in less than 15 seconds and you cannot stand watching you act at once or you lost the opportunity. Once you learn to observe one stock on island, you can get up to four, maybe five island screens on a single computer screen (it is really depending on the type of vision you have). You got to use Island if you want to play the like of TASR. One of NVEC's main shortcoming is paucity of island trading on it and thus often false Island based reversal signals. BRCM, QLGC and MERQ have all good Island activity, it used to be that JCOM and IACI also did, but in the last two months, island is not much help in deciphering their "next move".

Good luck, you will need a lot of it, and don't take "beginner's luck" as "knowledge", it will bring you down hard.

[Fred Langford]

As one of the survivors, I can tell you to USE STOPS!

Fred

[Dances-W-waves]

all the above +

:o)

[oimatey]

GF - Trading is part observation and part intuition wrapped in a blanket of discipline. Pick several stocks that you "know" (their business, fundamentals, leadership), watch how they trade during the day, observe their price levels and how they react to areas of resistance and support as well as option exercise price levels. Read as many charts on your selected stocks as you can while varying the time periods and technical indicators so that you gain a "big picture" perspective of the stock as well as become familiar with the shorter intraday timeframes. I have found the more observation that is done, the stronger the intuition becomes. Initially you should rely almost entirely on your powers of observation and discipline through price levels and stops and allow your intuition to develop. As time goes by that intuition will gain confidence and allow you to make better trades, but only because you practiced discipline early on. Your hardest and most important lesson will be learning how to set stops and take losses - you have to check your pride at the door and be able to quickly admit when you have made a bad trade and get out. Never let a trade become an investment. You will lose money when you begin - it's a fact. Not if, but how much. If you are not "seeing" the trade - walk away and come back the next day. This is all stuff I have had to learn the hard way, even though I was "taught" this before I started. You may have to learn the same way unless you are smart enough to heed the advice that has been given to you by this board. Good luck and happy trading.

BTW - Interactive Brokers is 1 cent a share for under 500 share lots and half a cent for over 500 share lots. No frills, but will save a bundle over time compared to $10 trips.

[Iblayz]

gf

You are flirting with disaster on the one hand and getting a taste of success on the other. Can you do it and be successful? Yes. Is it easy? No matter what you've heard or believe IT IS NOT! Perhaps you've been enchanted by stuff that looks so simple. Trust me.....you can lose money so fast in the market that you literally will not believe what happened. Most who read and/or contribute to this thread know exactly what I'm writing about. I've made thousands in minutes and lost thousands in minutes. The former is quite intoxicating....feelings of invincibility overwhelm you and just when you think you have it all figured out....well then there is the latter and let's don't go there....it's enough to say that IT IS PAINFUL.

The best advice I can give you based on experience? Don't even think of risking all of your money in the market.....especially daytrading. Get yourself a good data feed and start watching multiple Level II/multi-quote screens at one time to get a feel of how the market trades. Start learning support and resistance levels, fib retrace levels.....the tendencies of the market to do certain things in certain ways most of the time. Spend hours and hours watching and learning and if you must trade during this time be a small fry. Start watching a large fluid issue like the QQQ trade. Practice predicting entry and exit points by using support and resistance, pivots, fib re-traces....On the one hand you will be surprised how reliable certain patterns are. On the other you will get crushed if you do not learn and watch because the patterns are often masked by seemingly overwhelming contrary evidence....indeed one of the toughest things to learn is to buy when things look positively awful and to sell when things look spectacularly good but this is one of the secrets of taking the little guys money.

You've been blessed by having exposure to a great site if the only one you know is the turnip patch. These are not Wall Street shills here singing a refrain of buy, buy, buy...they are experienced traders who have known the highs and have been crushed by the lows and have lived to trade on. Listen and learn well and some day you may have your own I-hub thread.

In Edit....Note how many responses you are getting here. Note the over-riding theme. Every poster has warned you. If you remember anything...remember that. We are all trying to help you get up the mountain while warning that you are standing at the edge of a steep and dangerous precipice.

[webster groves]

I am not as pessimistic as many others on this thread. I think it is possible that you can eventually make a living day trading. You will, however, have to learn the ropes, and nothing beats hard experience. I guarantee you will lose half of your capital before it all clicks. Are you prepared for that ? Without another source of income (you say you will be laid off), how are you going to support yourself while you are losing half your money. How will you explain this to your family ? Will they understand ? Is it worth it ?

Paper trade with realistic buy and sells for at least 3 months before putting down real money. If you have $200 K in capital, start only with $50 K and put the rest in something "safe". If you are succesful with $50 K after 1 year, increase your capital to 75K. Under no circumstance commit more than 1/2 your total capital until you know what you are doing. That means making money in a down market as well as up. Heed the advice you are getting here, or regret it later.

wg

[DlphcOracl]

gf: Some VERY sincere advice.

If you are about to lose your job and have a $200K nest egg, here is some very sincere advice:

1. Make certain that you have paid off all credit card debt and all other debt aside from mortgage and car payments.

2. Instead of spending your time learning how to day-trade, spend the time looking for another job --- ANY job --- that will enable you to subsist without eating into your nest egg.

3. Do NOT day-trade or buy individual stocks with your nest egg. This board is fine for nibbling here and there on a stock or two with DISCRETIONARY money --- money that you can afford to lose without pain or hardship. That is most certainly not applicable to your situation.

4. Invest you nest egg in a basket of diversified, defensive mutual funds --- funds that will maintain their value and/or prosper in a bear market for equity funds. Remember --- in a bear market, all the rats drown with the sinking ship. It will not matter how skillful you or anyone else is at daytrading. And, oh yes --- shorting stocks profitably is MUCH more difficult than you think it is. It is a quick way to lose your savings.

What funds should you invest in? My recommendations are:

1. Hussman Strategic Growth Fund (HSGFX): this fund hedges market risk and has already proven that it can make money in both bull and bear markets. This guy Hussman is much smarter than you or I --- let him do the market timing for you. I would make this the anchor of your portfolio and put 25%-30% of your savings in it.

2. Aegis Value fund (AVALX): this is a small cap, deep value fund that will lose some money in a bear market, but MUCH less than the indices or 99% of other funds. Over the last 5 years, including the 2000-2002 bear market, this fund has AVERAGED a 23% return each year. Additionally, in overvalued markets, AVALX will raise and hold up to 40-50% cash rather than dump it into a bubble market. I guarantee that you will not do this with you neophyte day-trading. Put 10%-15% in this fund.

3. Third Avenue Real Estate Value Fund (TAREX): this is NOT a fund that invests in interest-rate-sensitive
REITS. Rather, it invests in deep value and distressed real estate holdings which they gobble up at vulture prices. This is another great fund to hedge bear market risk while still participating in the market during upturns. Since it began 5 years ago, it has NEVER had a losing year while averaging a 20% per year return over the past 5 years. Put 5% here.

4. Third Avenue International Value (TAVIX): a deep-value small cap fund that invest abroad. It is only two years old, but only lost 3% during the 2002 bear market carnage. Last year it gained 55%. When we return to a bear market in the U.S., there will be better investment opportunities abroad which this fund will participate in. 5%-10%.

5. Fairholme Fund (FAIRX): this fund invests in "great businesses run by great people who have a significant long paper trail of making money". In short (no pun intended), it invests in the best money-makers and managers in the world. It has only 15 holdings but has 15% of its portfolio in Warren Buffett's Berkshire Hathaway and another 15% in Leucadia National, a vulture holding company which buys distressed companies and restores them to health while making a nice profit. It is a smaller version of Buffett's Berkshire Hathaway. 5%-10%.

6. Tocqueville Gold fund (TGLDX): gold is in a secular bull market which will probably last most of this decade. You do not have the money (nor can you assume the risk) of buying boom-or-bust junior gold stocks. This fund will smooth out the volatility of investing in gold. It has averaged 28% return per year over the past 5 years. Invest 10% while we are still in a gold bull market.

7. RS Global Natural Resources Fund (RSNRX): energy (oil, natural gas) and commodities are both in secular bull markets and are likely to remain so. This fund invests both in the U.S. and abroad and is quite nimble and eclectic, a great way to add energy exposure to your portfolio. 5%

8. PIMCO Commodity Real Return Strategy "D" (PCRDX): this fund is run by the other genius at PIMCO, John Brynjolfsson. It invests in commodities (PMs, wheat, sugar, cattle, etc.) by investing in commodity-linked derivative instruments and using the "excess" cash to back the commodities portfolio with TIPS and other income instruments, taking advantage of inflation. 5%

9. ProFunds Rising Rate Opportunity Fund (RRPIX): this fund acts inversely (with leverage -- 125%) to the interest rate on the 30-year bond. If there is one thing you can be certain of, interest rates on the long bond(s) will rise over the next 5 year. This fund will take advantage of that. 5%

10. cash: hold 10% cash (minimum) for life's emergencies.

If you are ROTFLYAO at this post and are dead set about trying to earn a living by day-trading, please consider the following:

(1) print out this post and store it for future reference. Trust me, you will need it.

(2) take NO MORE than 5% ($10,000) of your next egg and, after training yourself in the art of technical analysis and day-trading, see how you do versus the basket of mutual funds I have given you above. After you have lost your $10,000, consider it the price of your investing education and DO NOT day trade with any more of your savings.

(3) pull out the advice I have given you above, re-read it without smirking or laughing, and begin investing over again.

One final comment: the investors on this board, with rare exceptions, do NOT day trade with the bulk of their portfolio or savings. Zeev has repeatedly made a point of mentioning this. Heed the good advice many others on this board have given you.

DlphcOracl

[longdong_63]

gf..I am no where near Zeev's caliber but from personal experience over the years there are 2 things I would suggest if I may. Learn technical analysis first and always paper trade before deploying real money. If you use real money first, it can be a very expensive lesson.

[zztops]

GF, after reading this board's wonderful responses to your question, I had to weigh in. This place never ceases to amaze me: the generosity of spirit here is only exceeded by the knowledge of some of the participants.

I was homeless as a young man, so I guard my money closely, which is why I am still alive as a trader, not because of my skill as a daytrader. Nature has a way of balancing things, however, and I was blessed with an ability see "angles", understand "english" gauge "speed" and relieve people of their coin purses--hehe--in other words, I was a professional pool player in my younger years. I was not world class, but I could run off 3 or 4 racks of nine-ball and my opponent wouldn't even get out of his chair. My backer, my bodyguard and I had a very profitable time for quite a while.

If you start trading, consider that it is very much like pool, ie: it is NOT gambling, it is controlled by those with skill; you have no more chance right now of winning in trading than you would have in beating me in a night of fun and games at a local pool hall--that is, you have NO chance (unless you are a world class pool player?...and if you are, I won't play you anyway). By the way, consider the atmosphere in trading very much like that of a large pool room, smokey, smelly, dingy and populated by some very dangerous characters as well as the likes of "champaigne" Eddy Kelly, Richard "the Mace" Mace, the "dynamite" kid and so on--hehe, they're gonna' get ya.

Remember this, the guys that just answered your post will be on the other side of your trade--if that isn't scary I don't know what is, LOL. Along that vein, go back and read a few of ZEEV's post that are more technical concerning what some companies are doing, making, coming up with. You will quickly find out that he and others are way ahead of the rest of us.

The are using tools like neuro-muscular, double clutching, e-flat semi-tractor-trailor leading indicators, with a twist of Elliott waves which overlay the underlying principles of Leornardo Fibonacchi in his finest hour.

GF, read the posts that responded to your question VERY closely.

[Dances-W-waves]

Wow, you got your moneys worth outta that question, didn't you? Way to go folks! I'm gonna collect up all those responses and put them in my goodie bag. <g>

[shoreco]

gt, 16 replies already so 1 more wouldn't hurt...

>> I think i am going to get laid off in near future and thinking about trading as a job <<

I thought this is what Alan Geenspan and company have been telegraphing for over a year now...

Last March you could have bought almost anything and doubled your money. Who needs equipment or knowledge...

Let our companies outsource "all the jobs over-seas" and let's do nothing as a Country, let's all sit in front of PC's and hope that forign investers continue to buy our stocks and bonds...

We'll all be rich and over-seas Contries will grow due to the new "Job expansion" of manufacturing (of our stuff) and 50 years from now they'll be looking to do the same thing as we did only they'll be looking to out-source to a 3rd World nation...


I think they call this a pyramid scheme...

EOM
Shoreco

PS
The information in this post was meant to be humorous and by no means am I encourging you to daytrade...

If you do, only use 25k and if you lose that, go get another job...

[postman]

If you do put your money on the line, just be sure to stay away from any plan that uses margin, or it's just a matter of time until you will get burned.