Expert: Steven Taylor - 8/19/2011

Question
I have been investing in different businesses and real estate ventures since I sold my company in NY and went into semi retirement. I am still interested in finding a day trading system that fits my personality and something I am comfortable with. I have joined a few oil trading groups with limited success. It has been a very frustrating experience to say the least. As you probably know, approximately 90% of the people / companies selling these trading systems are either scams or they simply do not work and are only interested in making money selling their services / memberships. It is a jungle out there and it is very difficult to get objective information. It takes a lot of research to sift thru it all too weed out the bad from the good.

Can you give me some advice or suggest a direction to take.

Randy

Answer
Randy, I think you are being generous with your estimate that 90% of the day trading systems are scams or do not work. I think the number is really very close to 100%.

Once upon a time, individuals could make money from day trading. To make money in the market, you have to exploit inefficiencies. Over time, those inefficiencies are eliminated and the "system" no longer works. The traders that are losing money to the inefficiencies eventually catch on do whatever it takes to close the loophole and stop losing money. Realistically, if someone did have a profitable trading system, they not only would keep it for themselves and not spend their time with infomercials and banner ads. They would also never reveal how it works to the public - if they did, the loophole and inefficiencies that made it profitable would be closed up overnight.

Day trading for individuals is, for the most part, no longer viable for the vast majority of individual investors. Today, flash trading which is dominated by the huge trading companies exploits even the tiniest market inefficiencies that an individual day trader has no hope of taking advantage of. They have the supercomputers, the capital, and the access to conduct thousands of trades to net the same amount of money that a day trader would look for in a single trade back in the 1990's. Today, an individual trader just can't compete.

Therefore, I can't really point you in the direction of any recommendation. Personally, if I had a large amount of available capital and enough time to serious work at investing, I would instead look towards certain option strategies that are more available to individual investors.