[ruby_roo]

Heh, so this has piqued my interest. I have absolutely no experience in online investing/day trading, although I'm pretty sure a lot of you are veterans.

Any books you'd recommend to a programmer with day trading aspirations?

[mattmaroon]

Yeah, don't daytrade. It's a sucker's game. The market is too close to efficient for you to recoup what you lose in brokerage fees and excess taxes.

Fund your IRA to the max, and if you're 20+ years from retirement buy all ETFs with low expense rations. If you're closer to retirement, buy fewer stocks and more t-bills, etc.

[Brushfire]

Its hardly a suckers game if you know what you are doing. I know prop traders that make huge bank essentially daytrading on the forex and others.

Sure, its highly controlled gambling, but you of all people should realize that its not a losing game for everyone. If anything, its just a suckers game for small timers -- like all other gambling.

[mattmaroon]

Any sufficiently volatile form of gambling has big winners. That doesn't mean it's +EV. The markets (especially forex, from what I hear) are such that even if it were impossible to outperform the broader indexes, you could very well know multiple people who did so over a period of years or even decades.

See Fooled by Randomness for a more detailed explanation.

[volida]

if you open 1 lot in your life and sell it and outperform the market, yes that's random. If you open more lots and your success rate is higher than 50% then you can't really call it random. Playing random in forex kills you.

You can treat it as gambling yes, but it's not.

[mattmaroon]

You can win more than 50% of wagers even over fairly large numbers if you're -EV, especially if you're only slightly so and the variance is large. And with tens of millions of people attempting to do this between forex, stocks, futures, etc., it's a virtual certainty that one could find a large number who have.

Again, read Fooled by Randomness.

[volida]

I think it's a combination of factors luck, knowledge, practice, that ultimately their result may be called random.

However my opinion is that Forex is not gambling. In wagers to win big you must either combine different bets with odds that pay as someone predefined. If you combine more, the need for luck increases. If you bet a large amount of money on high paying odds then again you need luck.

In contrary, foreign exchange you just trade the currency according to your prediction. The only way to automatically lose the negative lot is going off your margin. To win big, your prediction doesn't need to go against the odds like a soccer bet for example.

But, I will check out that book. Thanks

[steveplace]

The market is too close to efficient for you to recoup what you lose in brokerage fees and excess taxes.

No, it's not. Far from it. EMT is not practical in the short term.

[fallentimes]

I'd learn about finance before you learn about day trading.

The Intelligent Investor - Warren Buffet's favorite

A Random Walk Down Wall Street for one perspective.

Mark Douglas books for a different perspective

Options Volatility & Pricing for the technical stuff.

And Inside the Mind of a Street Addict for the bathroom read.

[fattyfatfat]

Intelligent Investor: absolutely. My first investment book. My deep suspicion is that THIS book will be more important in the next few years as company valuations tank. Even now tons of firms trade below book value, which was one of Ben Graham's great criteria. For years this has been impossible to find, but with the credit crisis, its back. Now... to choose the good ones...

Options Volatility and Pricing by S. Natenberg (sp) is a great theoretical primer for options, though typically a bit dense for people outside the industry. The writing style is brutal, but this book has probably made more millionaires than any single other book in history. Walk around the option exchange floors and every clerk has a copy, to this day.

[steveplace]

There's a ton of financial blogs that would help you get started, and those can be more valuable than books. The ones I read are on my blogroll at investingwithoptions.com

Read Van Tharp's Trade Your Way to Financial Freedom it's a must... teaches you that the entry is not important. It's the position sizing, risk management, and the exits.

Also: - Options as a strategic investment

- Mind over markets

[pjharrin]

http://www.amazon.com/Technical-Analysis-Financial-Markets-C...

[fattyfatfat]

http://fattyfatfat.com/2008/10/automated-day-trader-most-tec...

I still stand by my above claim that Tech Analysis (and especially LONG term trending) has no theoretical basis, except for the fact that everyone else believes in it.

[pjharrin]

I agree that trend analysis has a lot smaller foundation for the long term, but in the short run its essentially analyzing the supply and demand of the stock, which can be predicted (not all of the time of course).

Outside factors like news don't occur everyday, so the using technical analysis for intraday trading is very reasonable

[steveplace]

Then you better not buy index funds. Those are basically trend-following systems over the long term.

And there is statistical data to back up that trend following does work.

[jcl]

I think he means that there is no theoretical basis for a long-term system that claims to beat the indexes. Index funds don't, by definition.

[andylei]

regardless of whether it has "theoretical basis", there are plenty of hedge funds that make plenty of money with it.

[wildwood]

Anything by Van Tharp. He trains traders at all levels for a living. My personal favorite is "Trade Your Way to Financial Freedom".