Can day trading be "advantage play"
Sometimes we joke about day trading stocks, whenever an E-Trade baby commercial pops up. In the long run, the markets have tended upwards. Would day trading have a higher expected return than VP?
I suppose "would it be less volatile" isn't a valid question. That would depend on what you are doing.
I guess every 2 weeks, when that portion of my paycheck goes into my 401K, I'm gambling it and assuming I've got an edge on the house.
Quote: dudestupidI guess every 2 weeks, when that portion of my paycheck goes into my 401K, I'm gambling it and assuming I've got an edge on the house.
essentially, yes. One old assertion is that the market, invested broadly and with dollar cost averaging , properly managed so that becoming-worthless or hopelessly flat stocks are sold, etc, will lose money often over 5 years, rarely over 10 years, has never lost money over 15 years [even during the great depression with these parameters], and has been a better investment than any and all others over all 20 year periods.
Sometimes this is disputed, especially if constant dollars are used.
As far as the Great Depression goes, or the last bust goes for that matter, note that it is not going to hold up if you pick a date like october 1929 and just see what happened to investing all your money in one day then. Dollar cost averaging by definition is employed over time, precluding that.
Honestly, the real deal, indisputable, is what happens with time periods like 40 years. Sort of like the Casino's perspective on the long run with its HA.
edited
PS: this does not address Day Trading. I am not sure about all that and what the theory is.
Quote: dudestupidMy wife is unemployed and we often discuss profitable ways for her to fill her time. We half-jokingly discussed video poker, but a quick search turned up no good machines at nearby Indian casinos.
Sometimes we joke about day trading stocks, whenever an E-Trade baby commercial pops up. In the long run, the markets have tended upwards. Would day trading have a higher expected return than VP?
I suppose "would it be less volatile" isn't a valid question. That would depend on what you are doing.
Day trading is not long term investment. Very different, and the latter I'd be pretty certain you'd do alright with some simple and sound practices (dollar cost averaging, avoiding high-cost managed funds etc) whereas the former is very choppy, volatile and has the trade commission fees that can eat up any small edges you can find.
You'd be better working out how to bet on sports or learning to play online poker.
[p]I guess every 2 weeks, when that portion of my paycheck goes into my 401K, I'm gambling it and assuming I've got an edge on the house.
Kind of. It's a much better gamble than shoving a large amount in at random times as well, and past performance suggests you should have a house edge, as long as the house doesn't charge too much on each dollar in the plan.
Quote: dudestupidMy wife is unemployed and we often discuss profitable ways for her to fill her time. We half-jokingly discussed video poker, but a quick search turned up no good machines at nearby Indian casinos.
Sometimes we joke about day trading stocks, whenever an E-Trade baby commercial pops up. In the long run, the markets have tended upwards. Would day trading have a higher expected return than VP?
I suppose "would it be less volatile" isn't a valid question. That would depend on what you are doing.
I guess every 2 weeks, when that portion of my paycheck goes into my 401K, I'm gambling it and assuming I've got an edge on the house.
What can kill day traders is commissions, which amount to a small -EV on every bet/trade. A winning VP player COLLECTS a commission on every bet--his (often tiny) positive EV. The oft-quoted long-term results of the market are irrelevant, because a day trader's time horizon is far shorter than that.
Your 401k contribution is also slightly -EV due to the commissions that your plan pays every time it buys or sells, but those commissions are much lower on a dollar-for-dollar basis than what the individual trader pays.
Positive EV video poker returns about 101% over the long haul. The stock market is purported to yield an annualized return of about 9%. So if Person A bought $X worth of stocks, and Person B ran the same money through a VP machine nine times in a year, they should achieve similar results. However, it's quite easy to bet several thousand dollars at VP even in a single session, so the value of positive EV play is the ability to get a lot of money in action in a short period of time--which in turn, makes a rate of return of +1% acceptable.
Quote: mkl654321What can kill day traders is commissions, which amount to a small -EV on every bet/trade. A winning VP player COLLECTS a commission on every bet--his (often tiny) positive EV. The oft-quoted long-term results of the market are irrelevant, because a day trader's time horizon is far shorter than that.
Your 401k contribution is also slightly -EV due to the commissions that your plan pays every time it buys or sells, but those commissions are much lower on a dollar-for-dollar basis than what the individual trader pays.
Positive EV video poker returns about 101% over the long haul. The stock market is purported to yield an annualized return of about 9%. So if Person A bought $X worth of stocks, and Person B ran the same money through a VP machine nine times in a year, they should achieve similar results. However, it's quite easy to bet several thousand dollars at VP even in a single session, so the value of positive EV play is the ability to get a lot of money in action in a short period of time--which in turn, makes a rate of return of +1% acceptable.
More nonsense by the village idiot. Saying that a vp player collects a commission on every bet because he's at one of those +EV machines is total BS. When I play I want to see cash, not some stupid theoretical amount of make believe money.
A 401k has been the backbone of savings in this country for years. Yes it's taken a hit, but I watched mine rise to unimagineable heights from when I started it until today. A clown like mkl wouldn't understand that of course, since he blew all his money on the poker machines playing at an "advantage".
Quote: mkl654321What can kill day traders is commissions, which amount to a small -EV on every bet/trade. A winning VP player COLLECTS a commission on every bet--his (often tiny) positive EV. The oft-quoted long-term results of the market are irrelevant, because a day trader's time horizon is far shorter than that.
Your 401k contribution is also slightly -EV due to the commissions that your plan pays every time it buys or sells, but those commissions are much lower on a dollar-for-dollar basis than what the individual trader pays.
Positive EV video poker returns about 101% over the long haul. The stock market is purported to yield an annualized return of about 9%. So if Person A bought $X worth of stocks, and Person B ran the same money through a VP machine nine times in a year, they should achieve similar results. However, it's quite easy to bet several thousand dollars at VP even in a single session, so the value of positive EV play is the ability to get a lot of money in action in a short period of time--which in turn, makes a rate of return of +1% acceptable.
In that case I suggest mutual funds should then hedge some of their investments by betting perfect strategy, 101% VP machines. You know, as a way to diversify ;-)
Quote: mkl654321
Positive EV video poker returns about 101% over the long haul. The stock market is purported to yield an annualized return of about 9%.
Not day trading though.
A (skilled) day trader used to easily make 25-50% a year before the crash, but had to be ready for long periods of being in the red. Many day traders who were not quite ready are now doing software QA or driving taxi cabs. Some of those who were, are still doing good though.
In short, day trading with "optimal strategy" has definitely way higher EV then visual poker, but it requires way more skill, much larger bankroll, and poses an awful lot more risk and volatility.
Quote: thecesspitDay trading is not long term investment. Very different, and the latter I'd be pretty certain you'd do alright with some simple and sound practices (dollar cost averaging, avoiding high-cost managed funds etc) whereas the former is very choppy, volatile and has the trade commission fees that can eat up any small edges you can find.
Most of the day traders I know are trying to capitalize on market inefficiencies.
Quote: JerryLoganMore nonsense by the village idiot. Saying that a vp player collects a commission on every bet because he's at one of those +EV machines is total BS. When I play I want to see cash, not some stupid theoretical amount of make believe money.
A 401k has been the backbone of savings in this country for years. Yes it's taken a hit, but I watched mine rise to unimagineable heights from when I started it until today. A clown like mkl wouldn't understand that of course, since he blew all his money on the poker machines playing at an "advantage".
If you want to know who the true idiot is, keep in mind that Jerry plays Double Double Bonus, a game that returns 98.9% with PERFECT play, and I play FPDW and FPJW, which return about 100.7%. Which one of us is the idiot?
And I'm sure he thinks that it's impossible to win at video poker, because he plays only losing games! I'm sure he really does think that a player edge is "some stupid theoretical...blah blah", but I'm also sure that his losses at DDB are real. Don't be like JerryLogan, a bitter old curmudgeon who has lost thousands playing bad video poker games and then sneers at anyone else who was smart enough to play the good games instead!
The value of VP as a moneymaker is that you can cycle a goodly amount of money through the machine in a short period of time. And you WILL see that cumulative 1% (inherent advantage+slot club benefits) over time. And I would ask anyone who is inclined to believe JL rather than me, to look at his and my posts on various threads, and see who makes more sense.
Quote: weaselmanNot day trading though.
A (skilled) day trader used to easily make 25-50% a year before the crash, but had to be ready for long periods of being in the red. Many day traders who were not quite ready are now doing software QA or driving taxi cabs. Some of those who were, are still doing good though.
In short, day trading with "optimal strategy" has definitely way higher EV then visual poker, but it requires way more skill, much larger bankroll, and poses an awful lot more risk and volatility.
Actually, day trading will "regress to the mean". Anyone day trading over the last several years would have had to endure several bloodbaths, no matter which direction they played. For every trader who made 25%, there's someone who made -25%. It is, after all, a zero-sum game.
Quote: mkl654321Actually, day trading will "regress to the mean". Anyone day trading over the last several years would have had to endure several bloodbaths, no matter which direction they played. For every trader who made 25%, there's someone who made -25%. It is, after all, a zero-sum game.
Yes, but that's where skill comes into the picture.
It is a zero-sum game, but it's not pure chance (not even mostly chance). Those with better skill level play +EV at the expense of those losing because of their lack of skill.
Quote: mkl654321If you want to know who the true idiot is, keep in mind that Jerry plays Double Double Bonus, a game that returns 98.9% with PERFECT play, and I play FPDW and FPJW, which return about 100.7%. Which one of us is the idiot?
And I'm sure he thinks that it's impossible to win at video poker, because he plays only losing games! I'm sure he really does think that a player edge is "some stupid theoretical...blah blah", but I'm also sure that his losses at DDB are real. Don't be like JerryLogan, a bitter old curmudgeon who has lost thousands playing bad video poker games and then sneers at anyone else who was smart enough to play the good games instead!
The value of VP as a moneymaker is that you can cycle a goodly amount of money through the machine in a short period of time. And you WILL see that cumulative 1% (inherent advantage+slot club benefits) over time. And I would ask anyone who is inclined to believe JL rather than me, to look at his and my posts on various threads, and see who makes more sense.
98.9%? In who's lifetime? I'm probably at 90% at best. You see mkl, it's all about what's real and what's not. You live in the past, you pretend and make up things about the present, and you have very little future. I OTOH lose just about every year, but I make a salary including bonuses well over a quarter million. So losing to me is nothing but entertainment and I couldn't care less about anything but the Vegas experience when I get to go. Why? Because I'm not an grumpy old fart like you who lives on the Internet looking up and making things up as you go, just to feel like you're impressing others.
In 2002 - 2007 it was nothing like the glory days of the internet bubble, and today, with high-frequency bots accounting for upwards of 70% of the volume, it's even more difficult.
Only a tiny, tiny percentage of people who go into it can make a living. The rest burn through their bankroll and/or go into debt.
Like with gambling schemes, all the money in day trading is in positing yourself as an expert and then getting people to pay you.
Quote: dudestupidSometimes we joke about day trading stocks, whenever an E-Trade baby commercial pops up. In the long run, the markets have tended upwards. Would day trading have a higher expected return than VP?
I suppose "would it be less volatile" isn't a valid question. That would depend on what you are doing.
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Markets trend upwards but it is not a stock market, it is a market of stocks. DJIA goes up over time because over time they take out bad companies (GM) and put in growing ones (WMT.)
If you want to make money at day-trading you need to find 3-5 stocks to follow on a very serious basis. You need an oil and gold, you need things that move. You need to be at a trading floor (eTrade is not remotely fast enough) with level 2 quotes. You need to move fast. You need the guts to buy big then sell big an hour later.
It is not at all like VP since in VP you know it is one deck and probability is limited. Anything can happen in the markets.
Quote: ChuckLike with gambling schemes, all the money in day trading is in positing yourself as an expert and then getting people to pay you.
It reminds of what Scott Adams (creator of Dilbert) once said. (not the exact words) "Never trust advice from someone at the top. They don't like company."
Quote: SOOPOOMKL- you are incorrect about it being a zero sum game for DAY TRADERS. It is a zero sum game for all investors, but a skilled day trader will, say, buy at 100 while a casual investor will get in at 100.1. Certain prices vacillate between 2 such numbers, and unless your computer is ready to let you know exactly when a 100 offer is available you are likely to get it for 100.1
Of course. But that doesn't mean that getting in at 100 is necessarily a superior outcome. The casual investor could just as easily get in at 99.9. No day trader has ever been able to accurately project what the market will do in the next two minutes. Perhaps I should restate that the sum of all day traders' positions is a net of zero. Of course, many day traders have convinced themselves that their trading is +EV, because they are somehow better able to read the electronic tea leaves than others who are trying to do the exact same thing.
Like horse race bettors, day traders tell themselves that they can overcome the vig (commissions from constant trading) because of the presence of all those "unsophisticated" bettors in the market. Given the irrational and volatile behavior of the market, I doubt that assertion very much. More power to ya if you make money day trading, though.
Quote: mkl654321Of course. But that doesn't mean that getting in at 100 is necessarily a superior outcome. The casual investor could just as easily get in at 99.9. No day trader has ever been able to accurately project what the market will do in the next two minutes. Perhaps I should restate that the sum of all day traders' positions is a net of zero. Of course, many day traders have convinced themselves that their trading is +EV, because they are somehow better able to read the electronic tea leaves than others who are trying to do the exact same thing.
Like horse race bettors, day traders tell themselves that they can overcome the vig (commissions from constant trading) because of the presence of all those "unsophisticated" bettors in the market. Given the irrational and volatile behavior of the market, I doubt that assertion very much. More power to ya if you make money day trading, though.
There's something strange about a guy who's made 1249 posts in less than 3 months. Is this an Einstein, a Webster....or just a lonely old man?
Quote: JerryLoganThere's something strange about a guy who's made 1249 posts in less than 3 months. Is this an Einstein, a Webster....or just a lonely old man?
So rather than contribute to a majority of discussions, you're just going to attack mkl654321's character on whatever thread you can?
Quote: SOOPOOAfter months of this vacillation the company had some bad news, and plummetted to 7/16, the day after I bought. In a short while it recoverred, and I sold at 15/16 as I felt very lucky to get even a small profit, as I felt I lost almost half in 1 day. After I sold it continued climbing to a peak of $4 per share. So I have proven to myself that I do not know when to sell a stock.
Yeah, but you did make profit, which is certainly what the whole business of being in the stock market is about. Hindsight is 20/20, right? You'd be singing a different tune if the stock had turned around and dropped again!
Quote: ElectricDreamsSo rather than contribute to a majority of discussions, you're just going to attack mkl654321's character on whatever thread you can?
That appears to be his goal. People find personal fulfillment in whatever way and in whatever place they can. I assume that he is a wildly popular young stud, since to him, the term "lonely old man" seems to be the ultimate pejorative.
Quote: ElectricDreamsSo rather than contribute to a majority of discussions, you're just going to attack mkl654321's character on whatever thread you can?
I do contribute, but I'll never post to something with made-up info just to try and impress the masses. If you've been reading you'll notice it is HE who levies the most attacks on character along with anything else he can get his hands around. And it's usually only brought on by a small disagreement with his assertions.
Quote: JerryLoganThere's something strange about a guy who's made 1249 posts in less than 3 months. Is this an Einstein, a Webster....or just a lonely old man?
Sounds like a good poll question. As for me, I blocked him long ago. Everytime I do look at one of his posts it reminds me why I blocked hi. (eg: I mention craps is the only game where the player and not the dealer controls the outcome and he replies it being the dice that controls the outcome. No need to waste time with someone who misses the point like that.)
