A lot successful traders start out with small amounts of capital. It is what you do with that capital which is what matters. So, $100,000 is plenty. Option Sellers had control over what? $120 million and lost every penny and ended up owing monies on top of that? Ever hear of compounding? Banks make out like bandits because they compound their monies? They get their monies from the US Federal Government at 2% and charge us 18% or more for credit card interest when we use their monies. Now, a competent trader can multiply his monies at an even faster rate. Most day traders start off with $1,000-$2,000. Take the day trader, he is compounding his monies at a fast rate, every single day. The only flaw in most day traders is they risk so much of their capital on each trade, risk management be damned. One day, they will blow up their account. Eventually, you will have losing trades even if you are a very good trader. That will be enough to destroy your capital base. That is the reason most day traders fail but, they will have a period of success where they run up their monies from a few thousand into hundreds of thousands of dollars.
Am I Wasting My Time?
- Thread starter Tall Mike
- Start date
A lot successful traders start out with small amounts of capital. It is what you do with that capital which is what matters. So, $100,000 is plenty. Option Sellers had control over what? $120 million and lost every penny and ended up owing monies on top of that? Ever hear of compounding? Banks make out like bandits because they compound their monies? They get their monies from the US Federal Government at 2% and charge us 18% or more for credit card interest when we use their monies. Now, a competent trader can multiply his monies at an even faster rate. Most day traders start off with $1,000-$2,000. Take the day trader, he is compounding his monies at a fast rate, every single day. The only flaw in most day traders is they risk so much of their capital on each trade, risk management be damned. One day, they will blow up their account. Eventually, you will have losing trades even if you are a very good trader. That will be enough to destroy your capital base. That is the reason most day traders fail but, they will have a period of success where they run up their monies from a few thousand into hundreds of thousands of dollars.
I think reading up and listen to a ton of different interviews led me to thinking that trading can provide me better returns and a better lifestyle.
Fair point.
I think I was thinking of competition more in the sense that markets are highly competitive and therefore, the edge you can pull out from it would be razor thin.
I agree with everything you said above though, that makes sense.
Okay so maybe my thought process behind this is wrong but in my mind, the only way to potentially trade for a living would be the day trading route.
Here is my thought process:
As a day trader, let's say you do 2-3 trades per day and you risk 1% of your capital on every trade. You have a very large number of occurrences here.
If you are a swing trader lets say you have 1 or 2 trades per month and you risk 1% of your capital per trade. You have a very small number of occurrences here.
The difference in the number of trades you have based on the numbers would leave me to believe that there is no way anything but day trading could potentially earn you a living just going off the numbers and probabilities and law of large numbers.
So going by this, I could never understand when people say that there is more profit in swing or position trading because you can let your profits run more because when you normalize the trade by % of the risk, the $ value should be the same.
So IF I decided to go down this path, I feel that my only option would be day trading. Looking at the numbers this would only make sense to me.
Theoretically, day trading will always outperform swing trading a single market, assuming you're actually profitable and consistently capture a piece of the daily range. Easier said than done, obviously. And generally, I think swing trading is easier to master than day trading for multiple reasons.
You're not limited to 1-2 trades per month, either. Some of the swing traders I've talked to follow a huge amount of markets worldwide and basically scan these markets systematically finding the best set-ups or markets about to set up an interesting play.
As for earning a living I wouldn't want to earn a living from trading. Rather focus on getting filthy rich instead such that you don't need to 'make a living'. It's perfectly possible to combine day trading and swing trading, too.
Like a unicorn, you hear of people that day trade a 100K account that make a living but has anyone ever seen one?
I know a few(3), they trade with less than 100K. But they never post and never show. Posting or showing can only bring them problems, so they are not interested at all in posting or showing.
Where did you hear about these unicorns? Link?
search youtube, you will find plenty.