Are you a successful at home day trader with no other source of income who began with modest means?

[DHOHHI]

Well I just signed up here at EliteTrader... but here is a short version of my story.. Ive been a full time trader for 9 years and loving it... It is my sole income. I got into a car accident almost 10 years ago and was unable to walk for 2 years.. So I tried to pick a job that I could do online and I was always interested in the stockmarket, so I started to read everything I could on the subject. I had no money so I took out $3,000 cash off my credit card and I started to trade Penny stocks with my new Interactive Broker account.. I made consistent money right away and in a month or two paid back my credit cards. I have had many brokers over the years as my funds grew and till a few months ago I was still trading penny/pink/otcbb stocks.. 2014 was my biggest year $$.. But this January I decided to leave the little word behind and start trading the bigger stuff...(heres my reason for the move: My strategy trading in the small stuff is not scalable, im always stuck taking small positions... I can never seem to make more than $1,000 a day with a few exceptions. My biggest day in 9 years has been $2,400... Also here in Canada I will be able to trade bigger stocks out of a TFSA Tax Free!!.. I could make a living tax free!! I have to figure out a way to take advantage of that..)

So I have been spending all day and night trying to work out a trading plan, but its not going very well. My old tricks don't seem relevant in the bigger stuff. I have been reading tons of books on options (John Carter, Chuck Hughes, etc) and im quite overwhelmed with it all. Im biting my nails because im not used to not making money everyday, and I keep fighting the urge to just return to my easy money days in pennyland I need direction.

If you were able to survive, and even thrive, trading penny stocks then I would think you could find a way to trade larger cap stocks or more liquid equities. I don't know what approaches you used in the past or your methodology for picking stocks, entry points and exits. I trade a lot of tech stocks that tend to have a higher beta so I can see more intra-day movement.

 

[kut2k2]

I saved the $$$ over time to have what I felt was needed to have adequate capital. People who start with a few thousand dollars, whether trading prop or retail, are at much higher probability of blowing out. If I were starting a business, whether a restaurant or whatever, I'd make sure I had adequate cash on hand to get the business running as it takes time to generate profits in any new venture.

Understood, and nothing wrong with what you did. I'm just saying $90K disposable account is pretty rare for a large majority of Americans, so it hardly qualifies as modest. But the OP himself seems confused on the issue, so apparently no big deal.

 

[DHOHHI]

My story-
I started with 10k in March of '99. Lost $2400 my second day trading. 90% of it in my first three months. Treaded water through most of the summer then things started making sense. Made back all my losses in August, then made 160k+ from Sept-Dec (traded mostly ORCL, SUNW, CSCO, INTC...the tech mega caps slowly increasing my size from 500 shares to 3000 at a time).
I sized up quickly and immensely in 2000 (the jump from 3000 share trades to 10k, 25k and 50k lots was far easier and faster than going from 500 to 2000.)
Made 1.65MM in 2000 purely intraday scalping mega caps after commissions (which as you older guys know were obscene back then. Especially because I needed to use Instinet on 80% of my trades to move that kind of size. Paid over 800k in commish/ECN fees that year).

Not going to get into great detail about the last 14 years, but I've never had a down year (lowest was '99, best was 2008). Made low 8 figures in my trading career thus far.

Now let me be clear-
The late 90's through April 2001 (decimalization) were a trading dream. Literally free money if you just had the discipline to take small losses and size up when the opportunities arose.
Then the relentless bull market from '03-'07 and the crash of '08 were fantastic.

What I did and other guys that I know from the same period (yes, there are a lot of them) CANNOT be done intraday in today's market by a human without taking on massive risk.

It's nearly impossible to efficiently move size without getting absolutely raped by predatory algos.

News trading, which was a goldmine for a number of years, is all but over thanks to news reading bots and the complete vacuum of liquidity on volume spikes.

Earnings season used to be stellar, now stocks move 10%+ before you can see the first word of the press release.

My monthly volume is roughly the same now as an average DAY from 2000-2009, and obviously my trading earnings are down too (I have moved into other investment ventures such as rental properties, restaurants, and start ups so I keep busy).

I rarely sit at my desk from 9:30-4:00 intraday trading anymore, as I feel the risk/reward has been destroyed by the bots.
The old days of consistently ripping out multi thousand dollar days, day in day out month after month are long over. Now you need to have a handful of big trades holding over the course of a few days or longer to put together a solid year...And obviously avoid the train wrecks.

I knew many guys who made MM's over years and lost it all on one or two trades not taking losses, or worse- doubling, tripling down etc.
TAKE A FUCKING LOSS AND MOVE ON.

Lastly- I am fully aware and very thankful that I started when I did and was able to build up a nice bankroll for the lean times (second half of '01 to mid '03 was like watching paint dry).
I have no idea if I would have been successful had I started trading after the tech bubble, but I do know the chances of someone "making it" now are slim compared to 15 years ago.
(Edit- Browse the "Trader P&L" threads over the years and you will see the complete destruction of profits.)


That's as honest a post as you will get on here.

Haters- fire away. I couldn't possibly care less

Best of luck to everyone.

Nice history that goes back to the old days. A few related points from my recollection.

You mention many of the stocks you traded .. to add a few more you had DELL and most any large cap tech stock in late 90's. A guy in our office I traded in could make $40K a day trading 5K blocks of DELL (or INTC, SUNW, MSFT, etc.). He also could lose $20K in a day. But he kept his emotions in check. Losing was, and always will be, part of the game.

Re: $800K commissions. I was paying $25 each way at All Tech plus ECN fees. Commissions today are dirt cheap compared to that. That said, back then trading for teenies or 1/8 or 1/4 could be quite profitable versus the penny spreads we have now.

Like you my volume is less today than back then. And one has to adapt to the changing conditions. I often scale into more trades today than back then. Back then we could SOES a MM for 1000 shares and then maybe hit another. Once they moved off the ask a stock could move 1/8 or 1/4 and you could pocket easy $$$ pretty fast.

 

[DHOHHI]

The story has become increasingly improbable unless there is more to it that has not been disclosed (Dr. spouse, trust fund, substantial investment income, etc). Ocean front, never mind island properties imply a very large overhead - can't see supporting that trading 150K. If u do swing it, that is amazing. Never known anyone to do that on such little capital base.

I already posted I was a former engineer with math background. No trust fund etc. I was single at the time and lived below my means so as to save up the $$$ I felt I needed to succeed. I met the woman I married13 years ago. She was well aware trading income was my sole source. Last, ocean front and island living do not mean high overhead. I don't need a 5000 sq. ft. house. And greed has never been a part of who I am. Living in an ideal environment and having access to the outdoors (run, bike, kayak) is there for whether you own a mansion, condo or relatively simple smaller house.

 

[DHOHHI]

1) "all but over" does not equal extinct. I still make money on certain news events, but for many years there were multiple opportunities DAILY to crush individual stocks and economic numbers.

I recall when I traded in an office we'd pounce on new stories when CNBC was blaring away. Get a bunch of guys to buy (or short) whatever was being talked about. And with fractions things could move really fast. Then exit ... and wait for the next one.

 

[marketsurfer]

We aren't talking about real estate, smurf, we're talking about a newbie trader who starts killing it in his first six months. Nobody does that good without insider info, and yes I do remember the Nineties.

BTW, smurf, why didn't it happen to YOU?
.

I did ok and spent it all on a 7500 sq foot home in Villanova PA, cars and wasted the rest.

The Realtor I am talking about it did it with e*trade in .com stocks--- not real estate. He just started trading too.

 

[JTrades]

Understood, and nothing wrong with what you did. I'm just saying $90K disposable account is pretty rare for a large majority of Americans, so it hardly qualifies as modest. But the OP himself seems confused on the issue, so apparently no big deal.

Given that only about 20 percent of American households break the six-figure mark, yeah it's a fair point 90 or 100k is not a modest amount for many. It's a subjective term, but for the sake of discussion I'm not sure it matters whether someone's initial stake was 5k or 150k. Interesting nonetheless.

 

[clacy]

Understood, and nothing wrong with what you did. I'm just saying $90K disposable account is pretty rare for a large majority of Americans, so it hardly qualifies as modest. But the OP himself seems confused on the issue, so apparently no big deal.

"Modest" is a relative term, but the simple fact remains, the more capital you start with, the longer you can survive, which has to equate to a higher success rate.

Starting with $10k and making a good living is probably squarely in lottery territory. Starting with $100k gives you better odds. $1mm even better, and so on.

 

[kut2k2]

"Modest" is a relative term, but the simple fact remains, the more capital you start with, the longer you can survive, which has to equate to a higher success rate.

Starting with $10k and making a good living is probably squarely in lottery territory. Starting with $100k gives you better odds. $1mm even better, and so on.

It's the old joke:

Q - how do you make a small fortune in the stock market?

A - start with a large one.

Of course the more money you have to start with, the bigger the drawdown you can withstand and the better odds of recovery and long-term success. But that wasn't the spirit of the first post. Of course the OP has capitulated on that point so whatever.

 

[VPhantom]

Also here in Canada I will be able to trade bigger stocks out of a TFSA Tax Free!!.. I could make a living tax free!! I have to figure out a way to take advantage of that..)
(...)
Im biting my nails because im not used to not making money everyday, and I keep fighting the urge to just return to my easy money days in pennyland I need direction.

At the risk of going off-topic (this thread went South since around page 8 anyway), but just in case you're still following here, be careful about using a TFSA for trading, especially day trading! Even though the law doesn't explicitly forbid anything in a TFSA, recently Harper's been auditing an increasing number of TFSA's with "suspicious activity" which seems to equate simply "any account yielding more than 1%/year". Several publicized cases of people having to pay back taxes on TFSA gains already exist (some traders, some are just (un)lucky investors). Apparently they're pushing that the intent of the TFSA is to give a break to regular savings accounts with literally no interests to save taxes on anyway. Likely in the coming years they'll clarify the law to explicitly forbid trading in those things, and in the mean time they're already collecting taxes regardless of the "tax-free" designation so there's little incentive to jump into it now. I'm still considering it, but it sounds like a soon to be closed loophole at best, and already too late at worst.

The only people who seem to stand a chance in these tax audits right now are those with full-time jobs unrelated to finance and the markets, who simply got lucky with the right long-term long positions (held longer than 30 days). The ironyinjustice is that nobody with a loss in a TFSA can use it as such for tax purposes: it's one-way, making it worse than a regular account where trading's treaded like a normal self-employed business.

As for the nail biting: why not continue with the easy penny money in parallel with your new ventures until they're profitable to your liking? Too time-consuming I'm guessing?