Thursday, May 31, 2007

Why I S*ck at Daytrading

Someone wrote with, “You’re writing again, does that mean you sucked at Daytrading?”

Wow. See, I’m used to ASKING those sorts of questions, not answering them.

For all practical purposes that is exactly what it means.

I do suck at daytrading and for a specific reason. I like being smarter than the herd. In most ways, in most things, usually (not always, there are many, many people in my own zip code who are way smarter than I am) I am ahead of the herd. I’m 44 and haven’t worked at all in the last 5 years and live in one of the most desirable zip codes in the world. From this perspective I am smarter than the herd.

But that isn’t how the stock market works: NOT for daytraders. For investors, sure, there is some value, often high, in being able to outthink the herd on a longer-term basis. However, on a daily basis, in that point of time, the herd ALWAYS wins. So from a daytrader perspective I’d disband with just about every tool provided to me and simply go with: FOLLOW THE HERD. You won’t ALWAYS be right, but you’ll be right SO MUCH MORE than 50% of the time that you’ll be way, way happier than I was trying to bet AGAINST the herd.

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