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I Had to Develop an iPhone App to Understand Swing Trading

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Re: I Had to Develop an iPhone App to Understand Swing Trading

#31

Post by enjo »

Hermel wrote: post #14
jeffreyrogers wrote: post #7

Earlier quoted context omitted.

> People literally spend all their time doing this, if there was free money to be made someone would be making it:) I agree with everything you said above, including this. I want to add though, that there is effectively free money in the stock market. For example, just by buying a low-fee index fund (e.g. something from Vanguard), you're almost guaranteed to do better than most investors and probably better than near…

Note that you are somehow arguing in favor and against the efficient market hypothesis at the same time. By arguing for ETFs, you are implicitely assuming that there is not much to gain by doing your own research because markets are efficient and have already priced in everything. By arguing that most people underperform the market, you are implicitely assuming that it is easy to underperform the market - something t…

My wife (a PhD holder in the field) would smile and say "that is of course because markets aren't efficient".

Re: I Had to Develop an iPhone App to Understand Swing Trading

#32

Post by MagicWishMonkey »

smrtinsert wrote: post #27
jeffreyrogers wrote: post #7

Earlier quoted context omitted.

> People literally spend all their time doing this, if there was free money to be made someone would be making it:) I agree with everything you said above, including this. I want to add though, that there is effectively free money in the stock market. For example, just by buying a low-fee index fund (e.g. something from Vanguard), you're almost guaranteed to do better than most investors and probably better than near…

12%! I would love to join this fantasy world of yours :)

Vanguard Vanguard Vanguard.

Don't try to be clever. Just invest your money in a few different indexes and let it be.

Last year my account grew ~30%, it's increased 16.1% so far this year (the market isn't as crazy as it was in 2013 but it's not bad, either). You need to be disciplined enough to let your money sit and resist the temptation to do dumb things when the market dips.

It's not rocket science, the best way to fuck it all up is to try and manage your money yourself and play the market. Don't do that. There are thousands of bankers out there working 12-14 hours each day to take advantage of people who don't know what they are doing. Don't be a sucker.

Re: I Had to Develop an iPhone App to Understand Swing Trading

#35

Post by fennecfoxen »

hoopism wrote: post #3

"The reality is that it’s easier said than done! It’s actually very hard to make money in the stock market!" There should be a follow on sentence... It can be very difficult to make money in the stock market IN THE SHORT TERM. You should not do this... most people should not do this. See this: https://personal.vanguard.com/us/insights/investingtruths/in...

I'll go a step back from that to something simpler:

You can use the stock market to make money. You can't use the stock market to make free money.

There's a number of different ways to pay for your money. You can pay for it by doing intensive in-depth research and figuring out undervalued stocks. You can pay for it in cash up front (buying a bond or index fund) and make it back over time while other people do the work (your returns will be lower). You can pay for it by taking crazy risks with your money, hoping the market will swing in your favor (not necessarily gambling if you accurately understand the risks involved and don't overpay for risky assets).

It's just like a lot of other business, when you get down to it, except the really crazy risks are easier to find and harder to analyze.

Re: I Had to Develop an iPhone App to Understand Swing Trading

#36

Post by lutusp »

cheepin wrote: post #34

> It’s actually very hard to make money in the stock market! Can't you just buy an index fund, forget about it and come back to ~8% per year gain?

Good for you for knowing this. It's true, and it's something brokers wish people wouldn't point out. If you're simply interested in making money in equities and not gambling, index funds are the way to go.

http://arachnoid.com/equities_myths

Re: I Had to Develop an iPhone App to Understand Swing Trading

#38

Post by dirtyaura »

chollida1 wrote: post #16
dirtyaura wrote: post #12

A tangential question: It seems that a lot of smart people believe in technical analysis, but to me it sounds like telling the future from tea leaves. Does it really work or are successes just part of the standard randomness of stock investing?

This is a good question, and I don't think you'll get a definitive answer. If by technical analysis do you mean watch for patterns to appear, then yes it works. There are patterns all over the place. Renaissance Technologies is famous for its pattern matching AI. They hired 2 key employees out of IBM many years ago that layed the base for their technology and the rest has been money making history. See: http://www.bu…

Yes, I meant the latter version, i.e. manual detection of patterns from the price charts. Given how optimized modern trading is, I find it hard to believe that a crude method like this would work.

I totally believe that with algorithm trading you can detect patterns, but I would assume that the sweet spot - like you described - would be detecting and exploiting patterns of individual actors (or a cluster of actors) instead of the patterns of the chaotic mass.

Re: I Had to Develop an iPhone App to Understand Swing Trading

#39

Post by Mikeb85 »

While this is interesting, it's pretty much useless. Traders can do the basic maths in their head, in a split second. If they can't, they have no chance of making sense of any sort of financial numbers and indicators.

Furthermore, the price of the stock doesn't really matter for anything above a penny stock. 100 shares at $25 is the same as 10 shares at $250, all else equal (for instance, market cap).

I also think larger positions are better, for instance $10K per trade is a good number. It's high enough that commissions are trivial, so you can make money off a 1-2% swing, rather than needing to make 3-4%. Of course, the ideal is 5-10% (well, more is ideal, but 5-10% is a realistic enough number for a short time frame, say a week or two), but it's nice to exit out of a trade that turned against you and still take a small profit at the end.

And of course, this app ignores the most important part - picking and timing stocks. Some understanding of technical analysis as well as sentiment is required, and basic market dynamics (supply vs. demand, volume, etc...).

Re: I Had to Develop an iPhone App to Understand Swing Trading

#40

Post by encoderer »

MagicWishMonkey wrote: post #32
smrtinsert wrote: post #27

Earlier quoted context omitted.

12%! I would love to join this fantasy world of yours :)

Vanguard Vanguard Vanguard. Don't try to be clever. Just invest your money in a few different indexes and let it be. Last year my account grew ~30%, it's increased 16.1% so far this year (the market isn't as crazy as it was in 2013 but it's not bad, either). You need to be disciplined enough to let your money sit and resist the temptation to do dumb things when the market dips. It's not rocket science, the best way t…

Your 20 months of returns hardly make a compelling argument.

We are in the midst of a 3 year old bull market. We are just barely off all time highs in the S&P and Dow. Nasdaq is also killing it -- even after some pullback in high beta (volatility) stocks.

Your returns the last 2 years are not typical of an average year. A return approaching double digits over a long trendline is not beyond reach, but it would be a mistake to bank on a 12% return IMHO, and even more of one to suggest other people could expect the same.

There are tons of calculators where you can play with average returns over time, check one out.

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