[RobinHood]

I've heard many times of daytraders who were raking in money during the late 90's bull but then went broke when the market topped in 2001.

So I guess they were buying the dips or the breakouts.

Even so, wouldn't they have had time to learn different market environments during a market correction before the top? it would only take a market correction of a week or more for them to experience a drawdown and learn to adapt no (since they are trading more frequently than a EOD breakout type of guy)?

[brownsfan019]

Not sure what it means that you have heard about this... from who? where? any reliable sources?

In the truest sense of the word, a 'day trader' in theory should be flexible enough to deal w/ any market conditions, but that is not always the case.

[Hlm]

Originally Posted by brownsfan019 »

Not sure what it means that you have heard about this... from who? where? any reliable sources?

In the truest sense of the word, a 'day trader' in theory should be flexible enough to deal w/ any market conditions, but that is not always the case.

I agree, most true daytraders I know that were in the markets back then did not get hurt. For most of them it was quite the opposite. A day trader cares about volatility and will trade in either direction. I believe that many of the professionals that did go broke were highly leveraged in positions longer than a day. The whole "it can't go lower, buy more" concept. However, most non-trading baby boomers I have met will use the word "daytrader" when talking about all the people that went broke. Maybe someone with more market experience (ie older ) can give some insight.

[Kiwi]

I've read accounts of day traders who faded away and died.

Basically they had strategies that had worked well in the up froth and couldn't adapt.

Darwin didn't say "survival of the fittest", he actually said "survival of the most adaptable."

[brownsfan019]

Traders blow up daily, regardless of market conditions.

[Hlm]

Yeah, if it takes you until BROKE to realize that your edge is no longer working...then you have a much deeper issue (like many traders do) . From the stories I have heard it seems like the act of putting more money into losing positions is what killed most. If you were a daytrader that understood the concept of a stop (both position and daily) you should of been okay if not profited greatly from the volatility. Of course it also depended on your methodology and edge. However, going back to the original thought of this thread...I believe (someone please tell me if you know otherwise) that there was not an abnormal amount of professional daytraders that blew up around that time. Most of the people that did were over leveraged swing traders who didn't know when to let go.

[fifty2aces]

I reckon there were a lot of people who quit their jobs and called themselves daytraders, but if a position was in the red, they'd just leave it overnight (or longer) until it was profitable. Basically no risk management, which might work temporarily in the middle of a raging bull market, but will kill you when it ends.

[brownsfan019]

Good point 52A. The term daytrader is so loosely used, it's hard to distinguish what is being included in that description sometimes.