Can Day Traders make a good living.

Originally posted by Kastro_316

Sorry for the dumb question, just wanted to know????????
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Not a dumb question at all...kind of interesting.


What if I told you I was making about $150 a day on average?

Most traders would agree that is very possible trading the ES-emini. You can make that(or lose it) on one trade a day, easy.


Some traders might say that's peanuts and not worth bragging
about, but I disagree.


The fact is, the average working man in this country makes
about $30,000 a year. A woman makes even less.


That's about $16.00 an hour on average for a 40 hour week,or
about $640.00 a week.

If you can make $640.00 a week on average trading, congratulations, you're living every mans' dream. You're your
own boss and making just as much money as the average guy.


www.census.gov/hhes/income/histinc/p05.html
 
breakout,

I completely agree with you. Fact is, if you can consistanly make $150 per day, eventually you can move up (with disciplined emotions, etc.). In addition, your $150 a day looks even better when compared to a self employed person (like I used to be) paying an EXTRA 15% a year in federal tax. Traders get a huge break in that respect.

One other note: what in the world is anyone trading a position so large it could take you out of the whole shootin match in one day. The really good traders (rich and stay that way) risk in the neighborhood of 0.5 to 1.0% of their account on any given trade. If you're concerned about a news surprise wiping you out, you're trading WAY to big a position. For example, you can become very wealthy swing trading, with the right plan, just trading a few hundred share lots.
 
Kastro

What is your idea of "Great Living" The average person in america makes 12 to 13 bucks an hour, works 40 hours a week, spends probably 5 hours a week in rush hour traffic and kisses tons of ass. To that average person it doesnt take much to improve their quality of living. If you have 25 thousands plus to play with it doesn't take alot of brains to make a living as a trader. What it comes down to is that average Joe in America makes 100 dollars a day. With a 25 thousand dollar account u can make that in an hour with a few ez techniques. Once u know the secrets, u can easily make a low 6 figure salary. The best way to get into this busines is finding a mentor. I did it the long way and probably the wrong way. I spent hour upon hour reading trading books, took seminars and spent even more hours paper trading. Probably took me a good 2 years to put everything together.. As for as making a great living, I spend about 2 to 3 hours trading in the morning and an hour trading before close. I play golf after lunch just about every day or do laps in my pool. I got the nicest tan in town!!!

Take Care

Sterling
 
Originally posted by rs7


Yes, and that was on an "exceptional day for anybody"....to AVERAGE over 1% a day? I guess my mistake has been NOT to trade part time. I figure if I traded 5 days a year, instead of 200+, maybe I could have had an average like that.
One very lucky super day...maybe an upgrade, takeover, something like that while holding. Done. Now I just have to tread water the other 4 days, and BINGO! Track record established for the year!!(Then worry about next year)
WAIT!!! Now that I think about it..... could be I averaged 100% a day when I was last in Vegas playing blackjack for a few days.....can't remember if it was positive or negative though:confused: :confused: :
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RS7 I agreed with your polite skepticism 100%.

On days when I call my plays right and get some good breaks to boot, I can bring in two percent. But that is a positive outlier, on the other side of the coin a total garbage day can knock me down two percent also (though the whacks happen less often fortunately). Then there are the typical in between days of up three quarters percent, down half a percent, etc. etc. (These are normal distributions, not the screamers where you get a grand slam home run or get completely destroyed courtesy of some wild external event.) The net result is positive- else I would not be paying my bills- but it is nowhere near an average +100 basis points.

The point is, if you are able to average one percent every day on balance, that means the distribution of your winning and losing days is so incredible that you almost never lose, ever, or alternatively that you hit so many home runs consistently that your losses are microscopic in comparison.

Look at it this way: averaging one percent a day, sans compounding, is still 20% per month. There are traders who have done this- but they are like the Tiger Woods or Michael Jordans of the trading world, and they study the markets fourteen hours a day. And even the greats have "runs" where consistency varies, no one EVER has been able to do that consistently and without fail/without losing streaks/without slowdowns. Show me a trader who can consistently make 20% per month PART TIME, and I will introduce you to the Easter Bunny.

I don't want to sound like the reality grinch, but there is a lot of phony baloney on this board.
 
I tend to agree with the last poster that steady income is hard to muster in daily in and out trading. But the 1% rule is one that I've heard for years from floor traders to upstairs traders. HOWEVER remember the BIG MONEY is made in the big move.
The superstars of our world are basically Big Specs they are not grinding themselves out in day to day trading.
 
Originally posted by onondaga


So what would you consider is a more reasonable average return per day for someone like you trading full-time?
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Interesting question....I don't know what numbers to use. Let's say, I am trading with X (buying power). Now since I virtually never use all of it, do I need to calculate the percent return using the full number? That cuts my return % down. Do I calculate on what I used? Does that make the return too high?

It is all about risk and money management. And a daily percentage return is not a number we ever really consider. The truth of the matter is that on average, I have been consistently around 25-30% return on all the buying power annually. Now divide that by 200+ days I trade, and it comes out to not much more than 1/10th of 1% per day. (Keep in mind that there are LOTS of losing days).

If I had taken all of my buying power and bought an index fund or tracking vehicle like the QQQs in 1999, or 2000, I would have done much better than I did actively trading. If I shorted them in 01, again I would have done better. But I am a daytrader, not an investor. I don't make market calls. I try to have no market opinion and be unemotional...(perhaps the toughest thing for me to do). But staying detached lets me make money no matter what the market does. Each day is a fresh start. I would say that you have to look at your success (or failure) rate in a longer time frame. Like year to year. I have had great and horrible days, weeks and months. But when I pay my taxes (I am on w-2 basis) I am happy to see that I made more than most people and I do what I love....which is worth a great deal ....not measurable in dollars or percentages.

It has been often pointed out that in virtually every case with the bigger traders in our firm, if you reversed the numbers on either the 5 best or 5 worst days (turn a loss of X into a gain of X, or vice versa), you would affect the years results enourmously...by 100% in most cases! If each trader had the option to take their best 2 days a month as opposed to the whole month, they would excercise that option almost every time.

I do know my best DAILY gains in the past several years were right around 5% (of buying power used), same for my biggest losing days. The only reason I know this, is the dollar amounts stuck with me. And I know how heavy I was. (All were overnight gap opens). I am not overnighting in the market presently with any significant amount of my buying power. When I did trade heavy overnights, I would add to my positions late in the day when my mark was about 1% of what I had on. Each time I added, that cut my percentage down. So making 5% meant essentially that I caught (about) a 4% gap the next open. (or got out when i was up (or down) 4% overall, which is different from maximum possible return...that is something one only dreams of).
 
Originally posted by rs7

Now divide that by 200+ days I trade, and it comes out to not much more than 1/10th of 1% per day. (Keep in mind that there are LOTS of losing days).
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Rs7:

Kudos for telling it straight. My longer term average is somewhere between 10 and 20 basis points per day also, w/ more losing days than I would like.

As I learn and improve and hone my edge to a sharper gleam over the years, I figure my average return could eventually creep up to, drum roll please, maybe 20-30 bp's per day (0.20-0.30%), while striving to keep drawdowns tiny. Hallelujah.

Conclusion: we suck compared to the other elites on this board, or we live in the real world. Hmmmm.
 
Originally posted by tradex21
HOWEVER remember the BIG MONEY is made in the big move.
The superstars of our world are basically Big Specs they are not grinding themselves out in day to day trading.
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Percentage return still applies.

Superstar hedge funds usually shoot for 20 to 40 percent once they are full size, with +40% being an exceptiona outlier. Soros, the greatest speculator of all time by most counts, has seen a lifetime average +35% a year on his flagship funds, maybe a little lower now w/ recent tough years. Not big in percentage terms, but monolithic in real dollar terms because it is measured against a capital base of billions.

Big hedge fund managers are like CEO's of major corporations. Daytraders/small funds are like sole proprieter owners of low maintenance simple businesses. It's as much a lifestyle choice as a financial one.
 
Players with tons of capital have a major handicap.

If you gave me 5 million to trade I would lose 40%+ per year.

But with a 30K account and semi-monthly withdrawals, an average net 1% per day is the norm and it takes an hour, the first hour of the day.

The guys who can make 20% annually on a billion are geniuses. Traders who make 1% per day on small accounts are pretty standard, myself included. I've been trading since 1999 and can't seem to break the 1% per day barrier. My best days tend to be 5% but I once lost 20% in a day. I've now lowered my expectations of myself and am content with 1%. Win lose or draw, after the first hour its over. Right now I've gone a month without a losing day, and my net average is 1.2%. If I had a bigger account I would likely flop for psychological reasons. as well as the fact that its a lot easier to find 500 shares at the best price than 50000 shares.

Adjusting for size is why it is hard for small time traders to jump to fund jobs.
 
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