Day Trading don't work

I have been lurking over a year and never posted until now. There is something in his post that hit me. I have been daytrading equities for about ten years and believe it to be one of the hardest mentally taxing jobs in the world. I lost so much money the first few years I look back and tell myself I could've bought a decent sized office building and lived off the rents.
I became profitable on a consistent basis only when I understood my limits. I daytrade only several ETFs every day long and short and ignore everything else. I know these ETFs like the back of my hand and believe I know how they react under daily market conditions. I realized I couldn't trade the momentum stocks as they moved too quick for me. I trade the same things over and over again. Boring, yet profitable.
You may have a gambling problem if you are about to blow through a third account. You need to face reality and go get a good day job. It won't matter how well capitalized you are if you have a gambling addiction since you will lose it again and again. Go get some help and don't feel ashamed by admitting you have a problem.
 
Quote from reno4nook:

IF you are down to $7500, then you are severely undercaptialized.

No way that's enough money to make a living with. If you keep trading, you will be too stressed out to make good decisions and you'll quickly blow the rest of your bankroll.

Keep your $7500 and go get a day job. You can still swing trade and maybe do the occsional day trade from your job.

When you get up 20-30K in your account, then maybe try going solo again.

Again, you simply don't have enough cash to run your business at this time. Sorry but that's the bottom line.
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All that will do is mean he loses $20-30k instead of $7500.

At this stage, he has to learn how the market works. He can do that just as well with $1000 positions as with $30k ones. Whilst he has a negative expectation, the smaller his account the better it will be for him.
 
Why don't you trade with ES options intraday ?? Buying 1 atm option gives you equivilent exposure to one half of ES contract. And buying them otm (even intraday, yes) gives you even less deltas. [with less position risk as well]

Not to mention that failed trades can be turned to positions if you have a propensity for swing trading.

Spreads aren't perfect, but they make up for your leverage issues, and allow you to set wider stops and capture larger moves (which it sounds like you need).


3 ES contracts on 15k of acct is a good way to be scared money. Too big for even a good system, since drawdowns are inevitable.


Scalping with tight stops is a recipe to give money to the market. Hell scalping with wide stops may be the same. Just think about it.

At least with options you are lowering your exposure and limiting your losses based on position size.

With varying deltas, you can fine tune position size to any acct size (and I mean any).

Alternatively try the NQ... its might be a little more forgiving to you.
 
Quote from Lonely trader:

Day Trading don't work

I been trading for a few years, I have read all the books, seminars, Spent hours and hours and I mean hours!!!!..Spent 16 hours on weekends studying testing. Today got me thinking, my account is down 50% I've blown 2 accounts in the past, I don't want to blow a third, this is my last chance.

I use stops

I don't over trade

I stick to my rules. Yes, I know what you are going to say, its my method, "well back testing it works great," but every time I trade for real it don't go to plan, I've read all the books but it seems I still do not know how to develop a sound trading plan...or maybe I do, but day trading is so hard most do fail.

I have bought or sold, and been right in the direction which I thought it would go ... but I still lost money on the trade? ... Today I felt depressed and felt like giving it all up and keep what little money I have left. $7500 in my account after the close tonight, I lost $1525 in one day...NOT GOOD FEELING. I feel sick with the thought of trading tomorrow, I may have a day off.

To anyone who is looking to trade full time, take it from me it's tough I've been trading full time for 1 year. with 4 years of study. I'm writing this to warn others how hard it is.

Im giving it till December, if my account don't show any improvement I will knock it on the head and will not look back. I will do something else far less stressful than day trading ES & ER2.

Then you get the rainbow merchants who sell you the dream of making money day trading for Just $1,000 or $299 a month...I asks these so called Gurus if you so good, why do you want our money. The whole day trading game, is a corn, even your broker will tell you there are people making money from day trading/scalping, They only say this to make commission off you.

Had to get it of my chest and tell someone.

Bill
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Trading is hard. Daytrading is even harder.
 
Quote from Lonely trader:

Hi

Thanks guys for some of your comments.

I should say this I said to my self and my wife a few months ago, if I don't make any money worth talking about by December I will stop trading.....But like you say why wait till December. Well this quote says maybe I should hold till December as I planned, it goes something like,

"Many of life’s failures are experienced by people who did not realize how close they were to success when they gave up."

By the way the account have been up this year, but I have given it back to the market. I feel day trading is making a little then giving back more to the market. Basically I would like to see if anyone else thinks the same about day trading as I do. I think the saying is 95% lose could be true over a prolong period.

Regards

Bill
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My experience with daytrading is this:

In an inefficient market with decent orderflow (for example, the early electronic futures before black boxes came in; or the SOES system before Island etc came to the fore; or internet stocks during the bubble) it can be very lucrative and low-risk indeed. You can actually take 10k and run it up to 1 million or more in a few years.

The other 98% of the time, i.e. pretty efficient markets, it is an extremely marginal approach. You have to be top tier and work your nuts off to grind out a profit. Even then, it is only really worthwhile to trade during periods of high volatility. This is because high vol causes order-execution inefficiencies and high volume & swings. Most daytrading is about front-running large orders (which generate intraday trends), spreading between related stocks/markets, gunning stops, and fading capitulation or naive opening orders by other market traders. All these strategies work 10 times better in times of high volatility than during more normal periods.

Therefore in a fairly efficient market, I would only advocate daytrading during periods of high volatility like we are experiencing now. The other 85% of the time it's better to work on other strategies IMO.

If you look at people who succeded daytrading, almost every single one of them did so during a period of "free money" i.e. where there was an identifiable market inefficiency that they exploited. I have yet to read about a daytrader who cranks out returns year in, year out, in a pretty efficient market. I am sure one or two exist but it's not exactly something you are likely to be able to emulate.
 
Quote from Lonely trader:

Day Trading don't work

I been trading for a few years, I have read all the books, seminars, Spent hours and hours and I mean hours!!!!..Spent 16 hours on weekends studying testing. Today got me thinking, my account is down 50% I've blown 2 accounts in the past, I don't want to blow a third, this is my last chance.

I use stops

I don't over trade

I stick to my rules. Yes, I know what you are going to say, its my method, "well back testing it works great," but every time I trade for real it don't go to plan, I've read all the books but it seems I still do not know how to develop a sound trading plan...or maybe I do, but day trading is so hard most do fail.

I have bought or sold, and been right in the direction which I thought it would go ... but I still lost money on the trade? ... Today I felt depressed and felt like giving it all up and keep what little money I have left. $7500 in my account after the close tonight, I lost $1525 in one day...NOT GOOD FEELING. I feel sick with the thought of trading tomorrow, I may have a day off.

To anyone who is looking to trade full time, take it from me it's tough I've been trading full time for 1 year. with 4 years of study. I'm writing this to warn others how hard it is.

Im giving it till December, if my account don't show any improvement I will knock it on the head and will not look back. I will do something else far less stressful than day trading ES & ER2.

Then you get the rainbow merchants who sell you the dream of making money day trading for Just $1,000 or $299 a month...I asks these so called Gurus if you so good, why do you want our money. The whole day trading game, is a corn, even your broker will tell you there are people making money from day trading/scalping, They only say this to make commission off you.

Had to get it of my chest and tell someone.

Bill
More...
Follow the trend, if there is one.

If not, just roll and roll 4 week t/bills, and wait until a CLEAR trend develops.

Big/picture analysis and moving averages should give you an very accurate idea of trends.

For example right now there is NO clear trend. A bullish trend migh be about to develop, but wait until it is confirmed.
 
<i>"I am focusing my time and $$$ on learning as much as I can about the way I think about trading and studying trading psychology. This is a mind game, trading that is. It is designed by the pros to slowly bleed the sheep dry."</i>

There many stages between newbie and consistently profitable trader. Layers built upon layers.

Once we have a positive performing approach, the next step is to learn how it behaves in all market conditions. Rising markets, falling markets and sideways markets are three completely different circumstances. If you doubt that, ask yourself if the tape seems any different from Friday morning 'til now versus prior couple of weeks.

Adjusting to those subtle but profound differences is the next step for many (if not most) traders. Same method, same signals, different market behavior.

That's the part which seems purely mental. Seeing any given approach work differently on any given day, without realizing the difference of each day. Some sessions throw off money in mind-blowing fashion. Some are miserly as can be. Most fall somewhere in the middle.

<i>Daytrading doesn't work</i> is an incomplete sentence.

"I've reached the conclusion that <i>daytrading doesn't work</i> to my expectations of personal performance in exchange for personal time and efforts expended" is a complete sentence.

Day trading works. That part is indisputable. It might make you feel better to think it doesn't work for anyone, therefore you are not a failure. I'm simply saying it does work, problem is your timetable of expectations falls short of your own personal learning curve. Simple as that.
 
ES Hammer

when you trade in the middle, instead of being patient.

this principle is one of the key principles in trading. The high R:R opps are at the extremes of the ATR, whether it be daily weekly monthly yearly. The longer the timeframe the better the R:R.

the daily high or low is a inefficiency, if you understand this statement, your ahead of the crowd.

so if you carry this principle even further, daily, weekly, monthly, yearly highs and lows are inefficiency zones.

whats characteristic of these zones, the market moves away from these zones rapidly whether it be above or below the zone.

1376-80 is a inefficiency zone.

Another name for inefficiency zones, support and resistance.

efficiency = (open interest/number of participants)

[(current price - average price of leveraged positions)]absolute value

if the open interest is high, and the price differential is positive(profit), prices will rarely move to that level, it means the few have cornered the many.
 

Attachments

Hypothetical Market A

open interest = 5000

long
account a 1250
account b 1250

short
account c 1250
accound d 1250

Price C - Price P = (100 - 90)



Hypothetical Market B
open interest = 5000

long
account a 100
acount b 1150

short
account c 100
account d1-dn 5(230) = 1150

Price C - ((d1-dn(5)x Price P))/230)

Hypothetical Market B, account b is holding a concentrated position, fear and greed are used to create inefficiency, that account holder b uses to his advantage cornering the market.

Hypothetical Market A, is aren't the norm.

The MM's try to create situations of Market B using fear and greed. The small participants 5 loters are overleveraged usually and are forced to close as price is driven further away from their level.

The COT reports try to give indication of it, but the public versions aren't detailed enough to take advantage of.

How is account b able to realize a profit when he has to exit out of a concentrated position, by distribution using greed to entice the 5 loters. Otherwise if he tries to exit the market, major slippage occurs.
 
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