Another day trader bites the dust

[tonyf]

Your friend is dumb or this story is not real. A) As a profitable trader, he should be smart enough to aware of that his new trading strategy aren't working and he should trash it after 3rd or fourth attempts. B) Every experience or mature trader would test out and improve new strategy for weeks to months before using real money to trade it because one needs to know what market conditions this strategy can help him/her to make money. C) There is NO WAY I'd let that new strategy to ruin my whole account. Capital preservation is #1 rule in this trading business and it's suck that your friend didn't realize it and therefore, calling him a day trader is an insult to this profession.

Or most likely he is his friend

 

[zghorner]

I don't have a stop loss in position trading and I have never exited on a loss.

It seems as though your apprentice did exactly what he was taught. The pain of going from $450k - zero must be excruciating.

 

[trickshot]

Only a fool/amateur would try to make 10k a day with 450k capital, thats a 50% monthly return or over 600% return a year, you'd have to take on an incredible amount of risk to achieve that.

Daytrading is not impossible, I've been at it for over a decade now, I make a very comfortable living averaging 35% a year on a 7 figure account.

 

[guowei58]

if your friend lost all of his money, i don't think whether he swing traded or day traded matter. he was going to lose all his money either way. day trading probably just expedited this.

 

[Dollardogs]

I have been day trading for 15 years.

My system gives about 30 day trade signals per month, and that is enough to keep me busy.

These days I also have a monthly loss limit: Down 6% for the month I stop trading for the rest of the month.

So if the month starts out bad i don't even take all 30 signals i just stop.
Keep powder dry for the easy months that are profitable from the get go.
Some times I hit the monthly loss limit 3 months in a row

Having to stop day trading is hard, because its very addictive.

And that is main problem with day trading its so addictive and sometimes rage inducing that you cant stop yourself and losses get out of control.

I'm very new to this world, trying out swing & a little day trading now after 6 months of fairly intensive learning. I have a regular job that isn't too demanding, so I can afford to add daytrading 4 days a week pretty easily if I want. Can I ask you a question, as someone who's been doing this a lot longer, how is this year different? Is it just as simple as higher volatility? I keep hearing this is a very easy year for beginners to make money, and I've done pretty well so far, considering I knew nothing whatsoever about stocks 7 months ago, but if I keep doing this when the world return to normal, what should I expect to be different?

 

[Dollardogs]

Only a fool/amateur would try to make 10k a day with 450k capital, thats a 50% monthly return or over 600% return a year, you'd have to take on an incredible amount of risk to achieve that.

Daytrading is not impossible, I've been at it for over a decade now, I make a very comfortable living averaging 35% a year on a 7 figure account.

Kinda wondering what you think about the question I just posed above too if you have a minute.

 

[Millionaire]

I've done pretty well so far, considering I knew nothing whatsoever about stocks 7 months ago, but if I keep doing this when the world return to normal, what should I expect to be different?

NDX going down 3000 points in a few months and then going up 6000 points in a few months is not normal.

But who knows what the new normal is going to be over the next 3 years.

Maybe the next three years are going to just as insane and volatile.

But at some point the VIX will go back 10 and the ranges will shrink, so daily moves are back to 75pts in the NDX and say 20pts in the S&P

When that will happen is anyones guess.

 

[Overnight]

...

But at some point the VIX will go back 10 and the ranges will shrink...

Nyet!

VIX will never ever fall below 10 again. Of this I am certain.

 

[Millionaire]

Nyet!

VIX will never ever fall below 10 again. Of this I am certain.

????

"A VIX of 10 means, based on the option premiums in the S&P 500 index, the S&P is expected to stay with in a +/- 10% range over 1 year, 68% of the time (which represents one standard deviation)"

We might not see a 10 handle on the VIX for another 5 years, but saying it will never happen again is a bit of a stretch.

 

[Overnight]

????

"A VIX of 10 means, based on the option premiums in the S&P 500 index, the S&P is expected to stay with in a +/- 10% range over 1 year, 68% of the time (which represents one standard deviation)"

VIX below 10 = NO. Like how the fuel at your local gas pump in the USA will never see $1.00 per gallon again.

The music has the answers. Prescient!