The Day Trader's Aptitude Test

[redwing]

The Day Trader's Aptitude Test

1. When I want investment advice, I get it from:

a) The Stock Market Guide to Profitable Investments
b) The Wall Street Journal
c) Complete strangers I run into at the video store.

2. When I wake up in the morning, I:

a) Shower
b) Get dressed.
c) Lift my head off the keyboard and start shorting drug stocks.

3. In order to trade stocks intelligently, one must have a:

a) BA
b) MBA
c) Mouse

4. The last book I read was:

a) Madame Bovary.
b) The Stock Market Guide to Profitable Investments
c) Windows 2000 for Dummies.

5. I go to the doctor:

a) Once a year.
b) Once every two years.
c) When I put my fist through the screen.

6. "GE" is a company that manufactures:

a) Paper
b) Cowboys
c) I have no idea, but I just bought two hundred shares.

7. When I am in a bar and meet a beautiful woman/man who seems to be attracted to me, the first thing I look at is:

a) Her/his face.
b) Her/his body.
c) Bloomberg

8. "Beating the spread" refers to:

a) The way whipped cream cheese is made.
b) The way Honduran peasant women clean their bed coverings.
c) Don't know/care.

9. "P/E ratio" means:

a) Something to do with, like, stocks and junk like that.
b) The number of times per hour that a day trader has to use the bathroom.
c) Like I care?

10. A "tick" is:

a) A nervous syndrome common to day traders.
b) Something that often lives in a day trader's hair.
c) These questions are really starting to make me mad, dude!


If you answered (c) to any of the above questions ...

Congratulations!

You do have what it takes to succeed in the fast-paced, action-packed world of the day traders!

 

[jaycee]

If this forum were a video store, I'd start day trading first thng Wedensday morning when the market opens....

 

[Belbo]

A permanently broke employee of mine inherited $100k and went day trading. Result: broke. He then complained the $80K plus car & expenses I was paying him in a simple marketing position where he put in at best 30 hrs a week wasn't enough. Result: fired. He's now a gyprocker, I hear. Day trading is for experts or complete mugs. Now which was he?

 

[Deltaberry]

The Day Trader's Aptitude Test

1. When I want investment advice, I get it from:

a) The Stock Market Guide to Profitable Investments
b) The Wall Street Journal
c) Complete strangers I run into at the video store.

2. When I wake up in the morning, I:

a) Shower
b) Get dressed.
c) Lift my head off the keyboard and start shorting drug stocks.

3. In order to trade stocks intelligently, one must have a:

a) BA
b) MBA
c) Mouse

4. The last book I read was:

a) Madame Bovary.
b) The Stock Market Guide to Profitable Investments
c) Windows 2000 for Dummies.

5. I go to the doctor:

a) Once a year.
b) Once every two years.
c) When I put my fist through the screen.

6. "GE" is a company that manufactures:

a) Paper
b) Cowboys
c) I have no idea, but I just bought two hundred shares.

7. When I am in a bar and meet a beautiful woman/man who seems to be attracted to me, the first thing I look at is:

a) Her/his face.
b) Her/his body.
c) Bloomberg

8. "Beating the spread" refers to:

a) The way whipped cream cheese is made.
b) The way Honduran peasant women clean their bed coverings.
c) Don't know/care.

9. "P/E ratio" means:

a) Something to do with, like, stocks and junk like that.
b) The number of times per hour that a day trader has to use the bathroom.
c) Like I care?

10. A "tick" is:

a) A nervous syndrome common to day traders.
b) Something that often lives in a day trader's hair.
c) These questions are really starting to make me mad, dude!


If you answered (c) to any of the above questions ...

Congratulations!

You do have what it takes to succeed in the fast-paced, action-packed world of the day traders!

I think you mean punter, not day trader.

As a punter, I answered (c) to a number of them - I think once you've been in finance a while you start to realise an MBA / BA are the biggest waste of time, esp if you do it in Australia. Not sure why people do it, to land a $150k job at a top tier consulting firm? Could've been driving a train at 21 making that.

And who cares what the P / E ratio is. No one cared when JB Hi-Fi had a P / E ratio of 37x when it was $5.00 or when BTU has a negative P / E ratio at $0.14?

For Q 6, I just convinced myself and a bunch of people to drop a big sum into some random share we had no idea what it did the other day, but I heard it from some random guy I don't even speak to and I know his models are flawed (last I looked at one he had added tax to his DCF) - but hey it went up 50%, so do I really care what the DCF is or if it's done correctly...

I think if you want to know if someone is a trader, you might want to see if they are good at programming and have a price arbitrage system going... Your qs relate more to a punter.

 

[wobbycarly]

Deltaberry,
I think you miss the point/joke (perhaps deliberately).

Do you not think "inexperienced daytrader" = "punter"? Hence, the "joke" aptitude test?

 

[whatever123]

Pretty funny post! And I've been doing day trading for years so can relate to a lot of it.

An experienced day trader is a bit of an oxymoron.

By the time they have the "experience", the majority of day traders are broke, so arent able to day-trade any more!

 

[Belbo]

Um, thick question I know, but, then, why do you do it?

 

[whatever123]

Um, thick question I know, but, then, why do you do it?

I trade the only strategy I have ever found that works consistently. Its not a big earner as a trading opportunity for it only comes up every few days. So I stick to my day job in the meantime. But its good additional earner for my retirement fund.

I lost a bit in my early days which is why I can relate to the OP. Unlike some traders, I stick to low value trades so never lost large amounts, mostly brokerage.. oh, and rarely use derivatives.

 

[Belbo]

In a really bad period of despondency a few years ago I let myself start playing the pokies.

I justified it to myself as something to pass the time between drinks with mates at the pub, until it hit me that I was going to the pub to play pokies.

I stopped going to the pub. My pub mates never forgave me. I lost them.

Of course, real mates should have stopped me playing the stupid bloody things, so I know now they were only ever pub mates.

Gambling is a terrible, terribly addictive thing. Like a drug, it eventually starts to control you, not you control it, despite your best self-rationalisations.

I caught myself in time.

But I was one of the lucky ones, with money to burn, properties under the belt, and and no kids to feed.

I've channelled all my risk-taking propensities into real estate now, and I'm all too aware that it's no walk in the park vis a vis risk.

Day trading is too close to gambling for anyone's safety though.

I know you can use stop-losses and systems and limits, but the psychology of it is addiction.

Give it away, my friend, for it will never be yours.

 

[Deltaberry]

Deltaberry,
I think you miss the point/joke (perhaps deliberately).

Do you not think "inexperienced daytrader" = "punter"? Hence, the "joke" aptitude test?

Hmm punter = people who take big calculated risks

Inexperienced mum/dad day trader probably = random

 

[whatever123]

In a really bad period of despondency a few years ago I let myself start playing the pokies.

I justified it to myself as something to pass the time between drinks with mates at the pub, until it hit me that I was going to the pub to play pokies.

I stopped going to the pub. My pub mates never forgave me. I lost them.

Of course, real mates should have stopped me playing the stupid bloody things, so I know now they were only ever pub mates.

Gambling is a terrible, terribly addictive thing. Like a drug, it eventually starts to control you, not you control it, despite your best self-rationalisations.

I caught myself in time.

But I was one of the lucky ones, with money to burn, properties under the belt, and and no kids to feed.

I've channelled all my risk-taking propensities into real estate now, and I'm all too aware that it's no walk in the park vis a vis risk.

Day trading is too close to gambling for anyone's safety though.

I know you can use stop-losses and systems and limits, but the psychology of it is addiction.

Give it away, my friend, for it will never be yours.

I would have to agree with most of what you said. In my early days I am certainly guilty of having tried trading random patterns and mythical beliefs expecting them to be right and occasionally even going over my margin of safety or SANF. I hate losing money more than I like the feeling of winning so it didn't take long for me to realise where my day trading activity would end up. It wasnt all bad though as I still learned a lot about the dynamics of the markets, various trading platforms, psychology etc so I can be happy that it helped me onto my current path.

What I enjoy, more than making money, is trying to beat the system, much like a computer hacker who does it for fun. I've spent endless hours scientifically back testing day trading theories and have not found a single strategy that works reliably. I know that any person who declares they are going to become a day trader will lose in the long run (need to be sensitive if I tell them this though as most already have $$ signs in their eyes by then which stops them from thinking rationally). The problem I see is that most people become anchored to their beliefs so aren't willing to objectively question them. Unfortunately I see the same flaws in some property investors.

I should say that my current system of trading in the last couple of years is not day trading as such, but more of a calculated semi-arbitrage play. Not a huge earner, but covered the cost of a few o/s trips and some other toys so I can't complain. I'm the first to admit its not investing, although I do plenty of that as well for the bulk of my portfolio!

 

[Belbo]

It sounds then that on my earlier question of a day trader being either "an expert or mug", you're definitely in the "expert" category (at least mindset-wise). Which is a relief to hear. Attitude, not aptitude, might be the most essential difference between the careful trader and the carefree gambler.

 

[Sunfish]

It's a case of do something, or do nothing. Those here, by definition, are in the former camp.

So you decide to "do something" and you're too old or impatient for property to work what DO you do? It doesn't take long before you ralise that advisors and investment professionals generally just mouth platitudes and mots meant to impress. The good ones know the law and can give advice on markets and structures but they will also admit (in private) that they have no crystal ball. So you set out to find your own investments, as you should.

Having reached that point, we all spread out looking for the holy grail. Some end up day-trading. Why do you take the ****? I have a grudging admiration for them because it is hard work.

 

[Belbo]

Why do you take the ****?

Sorry. Was that query directed at me?

 

[Sunfish]

Originally Posted by Sunfish

Why do you take the ****?

Sorry. Was that query directed at me?

Why did you single yourself out Belbo?

 

[redwing]

some market humor

Analyst recommendations: –

Strong Buy – Buy
Buy - Hold
Hold – Sell
Sell – It’s too late.

Back–testing: –

the art of adjusting trading system parameters so as to ensure maximum profit in the past and zero profit in the future.

Charting: -

“join-the-dots” for adults.

Cycle analysis: -

a method of analysis that allows losing trades to be organised into regular patterns.

Float (initial public offering): -

stock that is offered to you because other people have turned it down. The guiding principle in relation to floats is as follows: “never participate in a float that you are able to participate in.”

Fundamental analysis: –

a method of analysis that provides compelling reasons for why a stock shouldn’t fall in price when it does.

“Fundamentally sound”: -

the condition in which an economy finds itself immediately after a stock market collapse.

Money-management: -

the art of hiding trading losses from a spouse.

Stop-loss: –

the trader’s equivalent of a condom. It’s something you know you should have used after it’s too late.

Support: -

a line drawn on a chart, the breaking of which is deemed extremely significant, even if the only people trading the stock at the time are two of three ladies at the tennis club.

Support/Resistance: -

supposed allies that flee at the first sign of trouble.

Technical analysis: –

subjective analysis of the markets whilst dressed up in a lab coat.

Technical indicator: –

a transformation of a price series that contains less information than the series itself. Different technical indicators throw away information in different ways.


Trading genius: -

a reckless spirit in a bull market.

Trendline analysis: –

a form of analysis that works best on a computer screen, where lines can be erased and re-drawn without trace.

Zero-sum game: –

a game in which the players slug it out with each other and the broker wins.

 

[Belbo]

Because, Sunfish, I was expressing my deep skepticism about the wisdom of day trading, and thought you might be viewing that as my "taking the ****".

Taking the **** would require an injection of sarcasm though. I admit I was sarcastic above about the former worker who threw away his inheritance day trading, but I was being very serious about what I see as the psychological proximity of day trading to gambling.

 

[Belbo]

Thanks for that, Redwing. What a laugh! My favourite in there is -

some market humor

Trendline analysis: –

a form of analysis that works best on a computer screen, where lines can be erased and re-drawn without trace.

 

[Sunfish]

It was a reply to "the thread". Yours just happened to be post above. That you were serious was evident and I respect your view, even agree with it.

But day-traders are the butt of many jokes by people who believe in their own superiority. I'm saying one size does not fit all and that your ex-employee has the right to go to hell in his own way. I hate gambling and NEVER play the pokies, buy lotto tickets or raffles costing more than $2 and not drawn within the hour.

But I am constantly called a gambler on this forum so I get defensive.

 

[Belbo]

So am I to take it Sunfish that you're a bit of a day trader?

Well, then you're a self-evidently delusional fool and deserve to be tied to a tree and thrashed!