Thread: JTH's Account Talk

Originally Posted by jkenjohnson

Just kidding buddy.

Riiiiight...

C'mon RMI don't be a dink - it's time you know to buy, buy, and buy some more. The answer is to keep on buying as our mega trend secular bull market rides the rails.

Originally Posted by jkenjohnson

Been stuck in the G and now RMI is ahead of me on the autotracker. Something is wrong.

Originally Posted by RealMoneyIssues

That hurts...

Don't worry RMI, My laziness this year has earned me the title of "woulda, coulda, shoulda!" This year will be the implementation of the "Frixxxx's inverse corrolary of maximum investment participation." BTW, nice performance RMI!

JTH,

The other day you clarified with grace and detail, my concerns regarding what and how to study, observe, and reduce time in the market and trading risks. I appreciate your response. Other fellow members also contributed important viewpoints and ideas to your answer.

I also recall having read one post in which you expressed some interest in TNA, the Direxion 3x leveraged small cap bull/bear ETF. You also gave an excellent explanation of a study you had carried out some years ago, regarding the correlation between IWM and TNA. Some others also contributed very good technical opinions.

Today the situation in Ukraine is quite tense and the problem seems to be heating up. Of course, no one really knows what additional negative impact on the markets, if any, this will have. Nevertheless, I take the liberty of asking you and others whether I am correct (or not) in my observations:

Using TNA as an example; and provided that one has either an IRA or a trading account outside of the TSP, you can use a relatively small portion of funds to trade TNA each day, by remaining in the market for perhaps 2 or 3 hours per day. The first premise is to establish the correct direction of the market, and set your sights correctly, by using a real-time daily chart. But you and other members here are very technical-analysis oriented. One can increase the profits significantly in a couple of hours per day. Some members are taking very good guesses in another thread. I believe that the same indicators that are being discussed here, can be scaled down to a day or so and thus, remain invested for a shorter less-risky amount of time. Have you (or others) made some sort of comparison in this area as to the risk/reward issue? Thank you in advance.

Originally Posted by airlift

JTH,

The other day you clarified with grace and detail, my concerns regarding what and how to study, observe, and reduce time in the market and trading risks. I appreciate your response. Other fellow members also contributed important viewpoints and ideas to your answer.

I also recall having read one post in which you expressed some interest in TNA, the Direxion 3x leveraged small cap bull/bear ETF. You also gave an excellent explanation of a study you had carried out some years ago, regarding the correlation between IWM and TNA. Some others also contributed very good technical opinions.

Today the situation in Ukraine is quite tense and the problem seems to be heating up. Of course, no one really knows what additional negative impact on the markets, if any, this will have. Nevertheless, I take the liberty of asking you and others whether I am correct (or not) in my observations:

Using TNA as an example; and provided that one has either an IRA or a trading account outside of the TSP, you can use a relatively small portion of funds to trade TNA each day, by remaining in the market for perhaps 2 or 3 hours per day. The first premise is to establish the correct direction of the market, and set your sights correctly, by using a real-time daily chart. But you and other members here are very technical-analysis oriented. One can increase the profits significantly in a couple of hours per day. Some members are taking very good guesses in another thread. I believe that the same indicators that are being discussed here, can be scaled down to a day or so and thus, remain invested for a shorter less-risky amount of time. Have you (or others) made some sort of comparison in this area as to the risk/reward issue? Thank you in advance.

Just a note:

Off the top of my head, you would need a 'special' type of 'margin' IRA in order to do what you suggest: pattern day trade.

Originally Posted by airlift

JTH,

Playing TNA as a day trader requires intense focus, with your hand on the eject button at all times, I personally wouldn't recommend it to anyone who does not live and breathe this stuff 24/7. You'll also need substantial cash flow, trading platform, and tested performance. The truth is, the vast majority fail as day traders, do you remember all the day traders in the 90s, where are they now?

In a famous study of individual investors' behavior, professors Brad Barber and Terrance Odean found that the most active traders realized the lowest returns. In Barber's latest, yet-to-be-published study, he found that 80% of active traders lost money and "only 1% of them could be called predictably profitable." from Day Traders: Dumber Than Ever

Have I adjusted my methodologies to smaller time frames and do I believe it can be successful? Short answer is "yes", the long answer is "prove it." I did have much success with scalping last year with a 70% winning ratio but let's face reality, is it really all that hard to trade a bull market? There is no shortage of disillusioned traders out there who believe they have the magic elixir. The best advice I have is to take the most complicated system you can find and throw it in the trash.

When it boils down to nuts and bolts, the only thing we need is Price, Volume and a reference (time) combined with a proven & disciplined approach to money management.

Originally Posted by userque

Just a note:

Off the top of my head, you would need a 'special' type of 'margin' IRA in order to do what you suggest: pattern day trade.

Userque,

This is interesting to explore. I knew it was not the usual day trading that requires a special software, but I think a pattern recognition system in order to scalp the market. Don't you think that this can be done in a recognized upside, without using margin, but by using sufficient funds in an IRA. Perhaps 1/3 of your available cash. Example, surprises aside; if a bounce is expected today and the major indexes open in a gap-up, you can weigh the possibilities of TNA coming down a bit (you buy in an intraday low, and you place a limit order to sell at a price where the daily patterns allow to get out within the probable range and reasonable 1% or 2% gain and then out).

This is sort of trading is based on probabilities. Yes, you have to keep watching and ready to pull the trigger. True, it is a ball park pattern recognition trading without using software, but watching the market with a real-time daily chart of TNA - "as flying by the seat of your pants style"; but based on the most likely probability that the bounce is occurring. Of course, you have to calculate the amount of cash that clears the fees and gives a profit. The bounce should be sustainable at least during the morning so that you can clear the deck, make a profit, and get out. Not saying that one should risk all the funds, but part of the funds; thereby, you can build the IRA over time, leaving the bulk of the funds in a more conservative mode, which may include Major indexes, stocks and bonds. All bets are off, if global issues or other unexpected surprise interferes with your assumption of the bounce being the more probable result. Please give me your opinion. Tia.

Originally Posted by userque

Just a note:

Off the top of my head, you would need a 'special' type of 'margin' IRA in order to do what you suggest: pattern day trade.

Margin has its perks, but is not absolutely necessary for pattern day trading.

Originally Posted by bmneveu

Margin has its perks, but is not absolutely necessary for pattern day trading.

Just my 2 cents on the issue of day-trading: I know a very intelligent guy who says he tried his hand at this ... and lost $80,000 (almost all of the cash assets he started with) in about 6 months. True story. He warned me off it when I talked with him a couple years ago about maybe trying my hand at day-trading in retirement. ... Well, I'm retired for about a year now and grateful for HIS experience. Doing just fine with swing trading. No need to mess with that.

Originally Posted by airlift

...Have you (or others) made some sort of comparison in this area as to the risk/reward issue?...

Originally Posted by airlift

Userque,

This is interesting to explore. I knew it was not the usual day trading that requires a special software, but I think a pattern recognition system in order to scalp the market. Don't you think that this can be done in a recognized upside, without using margin, but by using sufficient funds in an IRA. Perhaps 1/3 of your available cash. Example, surprises aside; if a bounce is expected today and the major indexes open in a gap-up, you can weigh the possibilities of TNA coming down a bit (you buy in an intraday low, and you place a limit order to sell at a price where the daily patterns allow to get out within the probable range and reasonable 1% or 2% gain and then out).

This is sort of trading is based on probabilities. Yes, you have to keep watching and ready to pull the trigger. True, it is a ball park pattern recognition trading without using software, but watching the market with a real-time daily chart of TNA - "as flying by the seat of your pants style"; but based on the most likely probability that the bounce is occurring. Of course, you have to calculate the amount of cash that clears the fees and gives a profit. The bounce should be sustainable at least during the morning so that you can clear the deck, make a profit, and get out. Not saying that one should risk all the funds, but part of the funds; thereby, you can build the IRA over time, leaving the bulk of the funds in a more conservative mode, which may include Major indexes, stocks and bonds. All bets are off, if global issues or other unexpected surprise interferes with your assumption of the bounce being the more probable result. Please give me your opinion. Tia.

I also find this interesting. 'Pattern Day Trader' has a specific meaning with regard to the SEC and doesn't actually have to do with chart patterns Even so, more correctly than I previously suggested, I believe it only refers to margin accounts, which IRA's aren't, typically. What I was actually thinking about when I mentioned it was 'Free Riding!'

Trading in IRA accounts, and avoiding “free riding” - Six Figure Investing

Simply, you have to wait three trading days before you can sell what you buy.

(Using probabilities based trading strategies sounds interesting...)

You've received some good advice on day trading a non-IRA account, but regarding what you asked about initially, I don't think you can scalp in an IRA.

In my off-the-cuff opinion,
Que

Originally Posted by bmneveu

Margin has its perks, but is not absolutely necessary for pattern day trading.

How would you get around the no free riding rule?

Free riding - Wikipedia, the free encyclopedia