Day Trading

air

Hi fintan, firstly a 7% increase in return compounded over a few years is a serious difference.
Lets look at the return after 4 years at each rate on 1000 euro.
Year Capital(3%) Interest(3%) Capital(10%) Interest (10%)
1 1000 30 1000 100
2 1030 30.90 1100 110
3 1060.9 31.82 1210 121
4 1092.72 32.28 1331 133.10
5 1125.50 1464.1

Thats a whopping 371~% better return after only 4 years.
Also I havent taken account of DIRT hacking into your compounding rate with the deposit

So to answer your next question, yes the increased reward is worth my time. This is more or less a hobby to me anyway so I'm not comparing return per hour of my time with working or whatever.
With regard to things going pear shaped, I never invest with "scare money". I am always prepared to take a 100% loss on my investment, I'm very unsentimental about money.

With regard to fx changes, even something like a 10% swing is very rare. This is a long term strategy which would involve leaving the cash abroad for a number of years so I dont think fx will have a major influence. The intrinsic value of the share shouldnt be effected in any case (unless the company is directly effected by it but this is going down a different road altogether).

I'd love to hear more input on why it's too good to be true.
I dont think its easy to achieve and i'm not trying to say that it has worked or will work I'm only airing a theory.
In general terms I dont think its unreasonable to expect better returns from the stockmarket by taking time to educate oneself on it and doing some research rather than blindly handing over your cash to an investment managment company (ie bank or whatever) as these have historically always underperformed the market.

ticketyboo

air wrote:

unsentimental about money.

With regard to fx changes, even something like a 10% swing is very rare. This is a long term strategy which would involve leaving the cash abroad for a number of years so I dont think fx will have a major influence. The intrinsic value of the share shouldnt be effected in any case (unless the company is directly effected by it but this is going down a different road altogether).

I'd love to hear more input on why it's too good to be true.
I dont think its easy to achieve and i'm not trying to say that it has worked or will work I'm only airing a theory.
In general terms I dont think its unreasonable to expect better returns from the stockmarket by taking time to educate oneself on it and doing some research rather than blindly handing over your cash to an investment managment company (ie bank or whatever) as these have historically always underperformed the market.

FX moves of 10% are rare ? 31st December EUR closed 1.355 currently it's 1.215. I make that 11.5% Granted this move would be in your favour but if you had a similar rally in the FX all your hard work would be rendered useless. Why sell calls? You should be trying to maximise your upside. Also if you're short calls you're selling vol and that brings you into the realms of delta hedging particulary if they go into the money. I'd imagine that would be time consuming and expensive for a small investor

air

Over the long term fluctuations in the FX are stable enough in fairness, look at the dollar:euro over 10 years.
Why sell calls?
Well if you read my post above the idea is to only sell calls above the target for that months return. As I've said I'm not worried about the calls going in the money.

Here's a post of interest elsewhere:
http://www.traderji.com/options/2124-make-money-writing-call-and-put-options.html

ticketyboo

I've got to be honest I think this is not a good strategy for a small-time investor. You are limiting your upside and leaving yourself with unlimited downside. Don't know how you can so cheerfully write off the down side risks. There are plenty of external and unforseeable factors which could mean a large fall in the share price. As a trader I firmly believe you should always look to maximise your upside so that when you're right you make the most of it. You certainly won't get every trade right but when you pick a winner you should look to take as much as possible out of it.

air

I'll agree to disagree then.
I dont buy shares where I feel there is a possibility of a large drop that wont be recovered from in the medium to long term.
My strategy is focused on improving the return on a buy and hold portfolio.