Forum Archive Index - April 2000

[Sarah Corkill <Sarah.Corkill@directbroking.co.nz>]

Hi Mike,

I think the term 'daytrader' in the NZ market is kinda misleading.  We do
have alot of short term traders in the NZ market who are essential for
providing liquidity and depth of market but they usually buy today, hold for
a day or so and then sell - not in and out in one day.  I have been known
when I think something is looking too cheap to jump in and out in a short
space of time.

I'm not sure on the figures but I do see alot of people who try and trade to
make quick money.  Some do very well and it and I have seen some clients who
are VERY good at reading the market and profiting from it but they are a
very small portion of traders.
Unless you have to time, patience and capital to put into trading then most
should steer clear of the idea. 

I am of the opinion that individual traders can compete with the
professionals (brokers/fund managers) if everyone is trading with the same
information but information is expensive and traders have to be prepared to
wear the cost.  Brokers pay buckets of money for news feeds such as Reuters
& Bloomberg to receive information but it's how you interpret the
information that counts.

Happy Easter!

Sarah Corkill
Direct Broking



-----Original Message-----
From: Mike Hudson [mailto:mikehudson@clear.net.nz]
Sent: Wednesday, 19 April 2000 21:14
To: sharechat@sharechat.co.nz
Subject: Re: [sharechat] Daytrader ?


As I  made the comment about day traders I  guess it is up to me to respond.

"This forum's a real time-wasting addictive trap Ben, you've created a
monster ! I wish I could stop myself from popping in, & then I wouldn't be
reading the endemic bigotry, hype, crystal-ball gazing, and endless
speculative nonsense."

It is addictive - long may it continue. But without the hype,  bigotry etc,
there would be no Sharechat, that's what makes it fun. Having said that
though I have just caught up on the posts from the past the last few hours
which are in the main a waste of cyberspace.

"The claim that "daytraders" whoever they might be cannot compete with the
professionals is nonsense. The "investors" making that claim are the ones
whose buying habits provide the bulk of the pros' income.

When I talked about professionals I meant the brokers, market makers and
other people close to the action, the old boys net, the people who always
win.  I have seen it reported (no idea where or when) several times that
surveys show that something like 80% of day traders lose money. This could
be an urban myth but I don't think so. Perhaps somebody out there could
provide the reference to the source."

"Just who are the "daytraders" referred to below...are they the brokers who
indulge in a bit on the side when opportunity presents itself, fleetingly,
on their screens ? Are they the folk who sit at home with Omnitrader getting
continuous data from the ASX buying & selling during the course of the day ?
Or are they the ones looking at daily NZSE data and holding positions for a
couple of days to a couple of months ? "

I think they are closer to the second group that Tony mentions. The first
group are the part of the professionals I referred to above.  To me a day
trader  is someone who makes many transactions during the day looking to
take advantage of small price movements. They use a direct access broker and
probably do not trade in head shares but rather in options, puts, calls,
straddles, spreads and other esoteric instruments which I don't pretend to
understand. I have a sister in law in the States who does this, she
specialises in  four or five stocks (which are high volume and volatile) and
will buy and sell them many times a day. Typically a day trader may close
out his or her positions at the end of the day. The poker analogy is a good
one; there is only so much money on the table and for every win there is a
loss, except for the dealer (the broker) who skims a little bit from every
transaction. I don't think that there many  day traders in NZ and if there
are they would be trading on overseas markets as ours does not lend itself
to day trading. I am sure that none of the Sharechatters come into this
category.

In case anybody missed them I suggest reading the Fool articles  posted
yesterday are well worth reading.

http://www.fool.com/FoolFAQ/FoolFAQ0048.htm
 http://www.fool.com/boringport/2000/boringport000118.htm

The third group which includes most of the Sharechat fraternity (or
sorority) to a greater or lesser degree, consists of Short Term Position
Traders as Tony describes himself. These are not day traders. Momentum
traders is the term I think. These make up the bulk of the new breed of
Internet enabled players in the market and IMO are more responsible for the
volatility in the markets than the day traders.

"An individual, working from home with his own capital, no regulatory or
policy restraints on portfolio balance, unlimited time to sit & watch, and
virtually unlimited ability to instantly trade most markets can, because of
his/her unique degree of flexibility make regular money, have lots of fun, &
co-exist with the big guys, on their coat -tails if possible !!"

Agreed.

There are folk out there, I can name a few, who have more money to put into
the market than I could even dream about.They also hold down , and
presumably enjoy, excellent jobs, which I envy them more than their
money....enjoying their work that is...I hated my building business for a
decade at least.... Trading is my way out of the work dilemma. I work from
home.I make money. And I take offense at the comments from the bastards who
look down on me, but it's my own fault 'cos I keep coming back.

I couldn't possibly comment except to say that my mother and father were
married.

"I don't mean to offend , but , some of you should stand back & take a hard
look at what you post."

Non offense meant, non taken.

As the level of debate from this group has now descended to the level that
one would expect from the Yahoo boards I will take a break and hopefully
rejoin in a week or two when some normality may have returned

Have a nice Easter
Mike H



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