Sometimes though, I wonder if I should just take out 1-3 BTC just to "play" with and make some extra coin on the side. The problem with this is that the market would have to be watched almost all day every day with a constant fear of that particular "hot" coin tanking at any given second.
Yeah, I've considered doing the same thing, although I probably don't watch the market close enough to do it properly. I also don't keep a lot of spare BTC about, as it tends to be tied up in alts (although trying to rectify that a bit, at least), and I am a pretty small trader overall compared to most here... so losing 1-3 BTC out of my chunk of coins would definitely hurt.
So I guess those that do trade like that have a lot of spare coin and have more time than most people. An example probably would be polo trollbox regulars ... it's sort of amusing sometimes to watch their chatter. Some treat it like jobs, jumping from coin to coin daily, hyping nonsense basically.