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Day trading is losers game
- Thread starter oilfxpro
- Start date
Quote from 2steps:
I wish I saw this thread earlier and I would have quit trading and saved me some money.
I wished someone told me earlier that day trading is a loser's game.
Day trading is only a loser's game if thats what you make it. Most of the people posting on this and many other boards most likely have never made a trade with real money in their life.
Too many people give up because it is not as easy as they thought. It can and is being done by many people successfuly. It's like any other thing, most people are lazy and will not put the effort into it. You get out of something what you put into it.
Others try to make it too hard and too techincal. Trading is really pretty easy if you allow it to be.
it is true: the brokers and exchange are the consistent winners.
and the game is not zero sum.
when two parcipants put into $100 in a trade ( a buyer and a seller), the loser lose his commisin and fees, plus his $100 worth trade, also the winner lose commission and fees, he/she does not win $100, he/she needs pay to collect his rewards. so we have two losers if you stand in the view of brokers and exchange.
only if we go curb trading.
day trading is hard. sure it is. even looks every day is the same kind of up/down. but from mathematical point of view, the combinations of up/downs is unlimited. the kind of up/downs you bet is just a small set of them, so the odd is very low, just like picking a needle in a sea. the more you zoom in (the magnitude of up/down) or the smaller the timeframe, the more combinations (tick to tick, quote to quote, one1minute to 1minute bar) you get, so the less chance the expected up/down event will occur.
but if you zoom out a little bit, less combinations are there. for example, 100points move in NQ in a day session is very rare, in other words you have slim chance to get 100point move either against you or in your favor. 3points move is just one 1' bar, in a day there (9:30 to 4:00), there are 6.5*60 bars=390. you will see 390bars, your odd to win your 3point move is slim since there are too many 3points there, the particluar one you expect is just one of them, if you think each 3point move as an indepent event, the chance to win your 3point move is 1/390. of course it is not that kind of low, but that tells you: you should bet on high probaility event, while not low odd event.
most people have an illusion about high probability and low probability. they may think 3point move is a high probability event, but the probability of to win a paticular 3point move which you expect is very low. I can almost 100% be sure next monday NQ will not have 100 point either up/down, that is the high odd of betting, even though it is a low low probability event. or I even further claim none of those five days will have 100points move (tuesday AAPL earning may cause such exception).
day trading is just this illusion. I once see one tutorial to cateer day trading use a gap down example, a stock trends very well up, around $80, then something like peer compettitor or financial maniuptaltion news release overnight, the stock gap downed to $10, lost almost 90% of its value, so the daytradeing tutorial claims you should do day trading otherwise you see you lose so much.
actually it is misleading, if you short it before the news release or you buy put options, hold overnight, man, one deal you are in the rich people 10% club.
day trading is just one way to make money. but the requirements to day trade successfully is higher than any other ways: such as option trading betting on scheduled event, stock swing/investment. you must be able to reponse to the market on the fly. if you do others, you have plnty of time to plan your trade, so the trade quility is high. for example, option earning play (you know the date, market expectation etc. beforehand ), or trend following in a trending market (you can easily see the trend whether using EMA or trendline methods, what event such as FDA drug approval agenda etc./earning)
day trading really is not for everyone.
and the game is not zero sum.
when two parcipants put into $100 in a trade ( a buyer and a seller), the loser lose his commisin and fees, plus his $100 worth trade, also the winner lose commission and fees, he/she does not win $100, he/she needs pay to collect his rewards. so we have two losers if you stand in the view of brokers and exchange.
only if we go curb trading.
day trading is hard. sure it is. even looks every day is the same kind of up/down. but from mathematical point of view, the combinations of up/downs is unlimited. the kind of up/downs you bet is just a small set of them, so the odd is very low, just like picking a needle in a sea. the more you zoom in (the magnitude of up/down) or the smaller the timeframe, the more combinations (tick to tick, quote to quote, one1minute to 1minute bar) you get, so the less chance the expected up/down event will occur.
but if you zoom out a little bit, less combinations are there. for example, 100points move in NQ in a day session is very rare, in other words you have slim chance to get 100point move either against you or in your favor. 3points move is just one 1' bar, in a day there (9:30 to 4:00), there are 6.5*60 bars=390. you will see 390bars, your odd to win your 3point move is slim since there are too many 3points there, the particluar one you expect is just one of them, if you think each 3point move as an indepent event, the chance to win your 3point move is 1/390. of course it is not that kind of low, but that tells you: you should bet on high probaility event, while not low odd event.
most people have an illusion about high probability and low probability. they may think 3point move is a high probability event, but the probability of to win a paticular 3point move which you expect is very low. I can almost 100% be sure next monday NQ will not have 100 point either up/down, that is the high odd of betting, even though it is a low low probability event. or I even further claim none of those five days will have 100points move (tuesday AAPL earning may cause such exception).
day trading is just this illusion. I once see one tutorial to cateer day trading use a gap down example, a stock trends very well up, around $80, then something like peer compettitor or financial maniuptaltion news release overnight, the stock gap downed to $10, lost almost 90% of its value, so the daytradeing tutorial claims you should do day trading otherwise you see you lose so much.
actually it is misleading, if you short it before the news release or you buy put options, hold overnight, man, one deal you are in the rich people 10% club.
day trading is just one way to make money. but the requirements to day trade successfully is higher than any other ways: such as option trading betting on scheduled event, stock swing/investment. you must be able to reponse to the market on the fly. if you do others, you have plnty of time to plan your trade, so the trade quility is high. for example, option earning play (you know the date, market expectation etc. beforehand ), or trend following in a trending market (you can easily see the trend whether using EMA or trendline methods, what event such as FDA drug approval agenda etc./earning)
day trading really is not for everyone.
Quote from trader198:
and the game is not zero sum.
when two parcipants put into $100 in a trade ( a buyer and a seller), the loser lose his commisin and fees, plus his $100 worth trade, also the winner lose commission and fees, he/she does not win $100, he/she needs pay to collect his rewards. so we have two losers if you stand in the view of brokers and exchange.
If you add a third player - exchanges and brokers - the game becomes zero-sum.
Sure, even the NFL final game is zero-sum. Only one wins the final and the other loses it. It is time for people here to stop using this term. Trading is a financial game for wealth (re)distribution and if you are smart enough you take advantage of it. If you are not, you go around complaining that it is a zero-sum game, blah, blah, blah...
Quote from Brass:
I think you've done a splendid job of convincing yourself.
Apart from the illusive George Sorroses of forums who make their money from trading or selling courses and trading coaching , my posts are subjective as to why day trading is a loser's game.
The costs of day trading ,profit potential , mindset problems , signal verification issues and other reasons make day trading a virtually impossible game .80 % of intra day trend trading illusions fail on the longer time frame.
Another fact :longer term traders can make money because they pay the spread for much higher returns , whereas day traders pay the spread for much lower returns.Infact trend trading systems make money cause they don't pay the spread so many times.A trend trader may pay a 1 pip spread for 100 pip potential whereas day trader may pay 1 pip for 5 to 10 pips profit potential , ie 10 to 20 % of profits in trading costs.
Thee market is a self-similar fractal system, so it makes sense that you trade the shortest timeframe you're able and comfortable with. If you can't make it in that timeframe, you can't make it in the longer ones either.
Quote from oilfxpro:
Another fact :longer term traders can make money because they pay the spread for much higher returns , whereas day traders pay the spread for much lower returns.Infact trend trading systems make money cause they don't pay the spread so many times.A trend trader may pay a 1 pip spread for 100 pip potential whereas day trader may pay 1 pip for 5 to 10 pips profit potential , ie 10 to 20 % of profits in trading costs.
Yes!
Note that the time frame is not as important as much as how much potential there is in the trade. If you could obtain 100 pips worth of potential many times a day, then fine, go ahead and day trade (many times).
Typically you can't, hence you need to look at longer term trades.
Quote from rockefehler:
Thee market is a self-similar fractal system, so it makes sense that you trade the shortest timeframe you're able and comfortable with. If you can't make it in that timeframe, you can't make it in the longer ones either.
Other way around, you should look towards making money in longer term time frames and only if you are successful, look at shorter time frames. You'll probably realise you don't want the hassle.
This is only a generalisation, if somehow you are the new Marty Schwartz, then sure go ahead and trade v short term.
jessise livemore seems he was a good day trader. when he lost in his long-term trading, he back to bucket shop to day trade.
he read tape, bet the tape. sadly he switched to speculation, and broken, commited sucide.
I think it depends on someone's personality. someone may be suitable for long-term, they can not sit 24hrs a day before the screen.... or someone may be just for day trading, a tiny profit here and there, if added up, become a big pile, he enjoyes the in/out....
but most people may be just between. if you are particularly long-term players, you may end like warren buffet. or you are particularly short term, you may end up like martin schwartz.
those between are those 90%?
he read tape, bet the tape. sadly he switched to speculation, and broken, commited sucide.
I think it depends on someone's personality. someone may be suitable for long-term, they can not sit 24hrs a day before the screen.... or someone may be just for day trading, a tiny profit here and there, if added up, become a big pile, he enjoyes the in/out....
but most people may be just between. if you are particularly long-term players, you may end like warren buffet. or you are particularly short term, you may end up like martin schwartz.
those between are those 90%?