Meh. People with seasonal jobs manage perfectly fine in other industries. Trading is no different, it's simply a matter of managing your cashflows to be consistent with your strategy.
Am I Wasting My Time?
- Thread starter Tall Mike
- Start date
That was also my first impression. The more you have in the beginning, the more you will lose in dumb mistakes. It's probably better to fund an account with 10k and go from there.
You are bucking tremendous odds if you want to trade as your main source of income. If you have a job that leaves your mornings open, trading for extra income is "possible" but still perilous. Exception being in a strong bull market when you can almost make a profit accidentally. Until you can't anymore.
If you have your mornings free, trading as entertainment can be rewarding. Say you have a $10k account. Say you average a very respectable 1% every trading day consistently. Thats $100 income on your trading days only. And you are more likely to average a LOT less than that. In fact, overall, you are more likely to lose money. At least during the first year or two. Except in a bull market. Sure, you can sell short in a bear market. However, the risk is great and you pay for the privilege of borrowing the stock you are selling short. Also while long positions can see a stock go down to zero and no further, short positions don't have that protection. There is NO LIMIT to how high a stock can go. Your losses can be worse than merely catastrophic, worse case scenario. Sideways market is tough to trade. It will always seem like despite your best efforts, you buy the peak and sell the dip, instead of the other way around. You think it will keep going up and it goes down as soon as you click, and you start off way in the red. You are fighting the spread, too. Then the stock takes a dive and you get spooked and sell, congratulating yourself on a fortuitous escape, and suddenly the stock flagpoles back up 3% in five minutes. You go back in and immediately hit a reversal, as if "they" were waiting for you to click that "Buy" button. Your rhythm is off and you trade more aggressively to recoup your loss. You get hit from both sides. It takes a while to get where you don't get swept up in the maelstrom of day trading in a sideways market.
Obviously, some guys do make a living at day trading. Many, many more do not.
So basically as a beginner you need to be trading... when? When the market is trending strongly upward on an hourly, daily, and weekly basis. At other times, meh. Put your money somewhere else. Leave it there until the bulls are back in power. That makes it a part time gig for you. Your benchmark will be the QQQ, SPY, and other index funds. You need to be beating them while they are going up, and only trading when they are going up, until you REALLY have a firm grasp on intraday trading in hostile markets. If you want to make money. Or even if you just want to have fun with it, cause it will cost you too much.
Lets say you can fund a $100k account. Trading the way all the books and courses tell you to trade will be difficult if you are trying to keep all that money in play. You will maybe make more money than on a $25k account, but your percentage will probably be quite a bit lower. When you are winning. But yeah once you are learned and skilled, you could as others have pointed out, make a modest living. Probably better, though, to put those winnings into buy and hold, or maybe rental property. In the right market you could make a down payment on 3 or 4 houses that rent for considerably more than what you pay in mortgage, taxes, insurance, and routine maintenance. So you are in the black month by month, while at the same time building equity in the property, which will also probably appreciate. A win/win/win situation. And you don't have to watch the value of your property minute by minute all day long. Not saying it is without its hassles and perils, but it is an excellent alternative to day or swing trading, with some or all of your money. And don't think of your daytrading winnings as income. Plow it back in to something and count on something else to make you a living.
If you just WANT to day trade, even if you have no reason to expect profitability, then stay small and keep it fun, for now, and never buck the market. Get a RH account and stick a couple thou in it, and be one of those guys you see always checking his stocks on his phone all the time. LOL! It looks lame until you are the one doing it.
Are you doing any paper trading? How is that going? Even success at paper trading is not assurance that you will be profitable trading real money. But if your performance paper trading is less than stellar, then you can be certain that your money trading will be much worse. Let your paper trading be your doorkeeper.
If you have your mornings free, trading as entertainment can be rewarding. Say you have a $10k account. Say you average a very respectable 1% every trading day consistently. Thats $100 income on your trading days only. And you are more likely to average a LOT less than that. In fact, overall, you are more likely to lose money. At least during the first year or two. Except in a bull market. Sure, you can sell short in a bear market. However, the risk is great and you pay for the privilege of borrowing the stock you are selling short. Also while long positions can see a stock go down to zero and no further, short positions don't have that protection. There is NO LIMIT to how high a stock can go. Your losses can be worse than merely catastrophic, worse case scenario. Sideways market is tough to trade. It will always seem like despite your best efforts, you buy the peak and sell the dip, instead of the other way around. You think it will keep going up and it goes down as soon as you click, and you start off way in the red. You are fighting the spread, too. Then the stock takes a dive and you get spooked and sell, congratulating yourself on a fortuitous escape, and suddenly the stock flagpoles back up 3% in five minutes. You go back in and immediately hit a reversal, as if "they" were waiting for you to click that "Buy" button. Your rhythm is off and you trade more aggressively to recoup your loss. You get hit from both sides. It takes a while to get where you don't get swept up in the maelstrom of day trading in a sideways market.
Obviously, some guys do make a living at day trading. Many, many more do not.
So basically as a beginner you need to be trading... when? When the market is trending strongly upward on an hourly, daily, and weekly basis. At other times, meh. Put your money somewhere else. Leave it there until the bulls are back in power. That makes it a part time gig for you. Your benchmark will be the QQQ, SPY, and other index funds. You need to be beating them while they are going up, and only trading when they are going up, until you REALLY have a firm grasp on intraday trading in hostile markets. If you want to make money. Or even if you just want to have fun with it, cause it will cost you too much.
Lets say you can fund a $100k account. Trading the way all the books and courses tell you to trade will be difficult if you are trying to keep all that money in play. You will maybe make more money than on a $25k account, but your percentage will probably be quite a bit lower. When you are winning. But yeah once you are learned and skilled, you could as others have pointed out, make a modest living. Probably better, though, to put those winnings into buy and hold, or maybe rental property. In the right market you could make a down payment on 3 or 4 houses that rent for considerably more than what you pay in mortgage, taxes, insurance, and routine maintenance. So you are in the black month by month, while at the same time building equity in the property, which will also probably appreciate. A win/win/win situation. And you don't have to watch the value of your property minute by minute all day long. Not saying it is without its hassles and perils, but it is an excellent alternative to day or swing trading, with some or all of your money. And don't think of your daytrading winnings as income. Plow it back in to something and count on something else to make you a living.
If you just WANT to day trade, even if you have no reason to expect profitability, then stay small and keep it fun, for now, and never buck the market. Get a RH account and stick a couple thou in it, and be one of those guys you see always checking his stocks on his phone all the time. LOL! It looks lame until you are the one doing it.
Are you doing any paper trading? How is that going? Even success at paper trading is not assurance that you will be profitable trading real money. But if your performance paper trading is less than stellar, then you can be certain that your money trading will be much worse. Let your paper trading be your doorkeeper.
A trader that trades the same thing will eventually know when its favorable to trade and when not...respecting its seasonal tendencies.
That trader can then use position size management to minimizes the losses and maximize the profits.
Sounds great until a black swan event. Yet, the recovery from a black swan event can be great...statistically it usually is.
wrbtrader
%%
10K;
+ONE SPY share.May make more with one MSFT or one qqq/but the risk is so much trying to be a billionaire I don't even try to be a billionaire or win the lotto/LOL
If all they post is useless drivel day by day, that has no value or whines and cries about the stockmarket because they continue to lose their monies due to their ignorance, that is an ET troll. Anyone who actually, trades the stockmarket can root out the charlatans from the real traders.
You cant predict when the big winning periods will come. Otherwise hedge funds wouldnt trade through those periods of losing months. They would just stop and wait. Same applies to smaller traders. Unless you have a highly monthly win rate you never know when those winning periods will come, you could be waiting a long time. Lumpy trading profits are not predictable like other seasonal businesses, like retail shops, where large profits are almost guaranteed to come every Xmas.
That's why I started the post with that...it can be difficult for the noob to know.
Depends. Especially relative value strategies need a bit more capital in order to establish dollar neutrality...but I agree...less is more in the beginning
Not a fair question without knowing what your constraints are? Obviously u have some ways to go before u realize whether u can make it or not? Can u/family sustain? Says u are greater NYC area - not the cheapest but maybe everything is paid for, you have no commitments and need any simple job to pursue your dream? Maybe not!!! What are your constraints
Well maybe u have family money and you want freedom and need to make 5k/month? Maybe not ... what’s the goal?
A trader making 4K per month full time is still a full time trader who made it if he doesn’t care about having any other day job
also let’s say u need to make x every month? Do u have to trade every day? What if it comes in only a few trades? Do u know? Have u tested that?
Ok now what skills/education do u have for alternatives? sorry don’t mean to vague but more give u questions to either think or answer - good luck
Well maybe u have family money and you want freedom and need to make 5k/month? Maybe not ... what’s the goal?
A trader making 4K per month full time is still a full time trader who made it if he doesn’t care about having any other day job
also let’s say u need to make x every month? Do u have to trade every day? What if it comes in only a few trades? Do u know? Have u tested that?
Ok now what skills/education do u have for alternatives? sorry don’t mean to vague but more give u questions to either think or answer - good luck