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Daytrader Paradox
- Thread starter sunggong
- Start date
I am a fairly new trader and I have a big problem with taking profits way to fast, I mean after just 6-10 cents. I keep very tight stop-loss, if trade doesn't go my way I am out. I find that while I have small profit at end of day commissions and ECN fees eat it up and I am in the negative. I am just churning my account. I don't know how to get past this fast profit taking thing that is killing me. I get so frieking frustrated at myself. I enter strictly on break of support or resistance with confirmation of futures. This seems to produce a lot of winners but taking profits fast kills me. Also I need to work on entry timing. If I would enter a little sooner I think I would do better as well. I think it may have to do with risk taking or something because I need the so-called confirmation from futures. My style would be called scalping and I can see why people say you don't really get any where scalping. Buying dips and selling rallies just isn't for me. The markets seem so damn volatile that it is hard to pick a direction. Who knows maybe I just ain't cut out for daytrading. My confidence level gets better and better with time and winning trades but my account size keeps getting smaller and smaller. Does anyone have any suggestions when it comes to scalping, what share size, stop, target would be? Thanks.
Traderdave
Traderdave
Quote from traderdave72:
I am a fairly new trader and I have a big problem with taking profits way to fast, I mean after just 6-10 cents. I keep very tight stop-loss, if trade doesn't go my way I am out. I find that while I have small profit at end of day commissions and ECN fees eat it up and I am in the negative. I am just churning my account. I don't know how to get past this fast profit taking thing that is killing me. I get so frieking frustrated at myself. I enter strictly on break of support or resistance with confirmation of futures. This seems to produce a lot of winners but taking profits fast kills me. Also I need to work on entry timing. If I would enter a little sooner I think I would do better as well. I think it may have to do with risk taking or something because I need the so-called confirmation from futures. My style would be called scalping and I can see why people say you don't really get any where scalping. Buying dips and selling rallies just isn't for me. The markets seem so damn volatile that it is hard to pick a direction. Who knows maybe I just ain't cut out for daytrading. My confidence level gets better and better with time and winning trades but my account size keeps getting smaller and smaller. Does anyone have any suggestions when it comes to scalping, what share size, stop, target would be? Thanks.
Traderdave
Traderdave,
One of the reasons I do not trade a lot (less than 7 trades per day) is because I ran into a similar issue. Granted, I'm trading on my own (not with any firm), but I found that quick scalping is tough and just does not fit my personality.
What I had to do was to really spent a lot of hours analyzing my winning trades that gave me a good profit and tried to come up a system that offers a high probability trades. I've been staring at these charts every freaking day for last 4 months for several hours everyday and I now have a good feel for the right setup when I see one and I get in with confidence.
I also sat down and came up an Excel-based worksheet that figures out the potential scenarios of entering certain trades and whether the trade is even worth it. I tested 100s of scenarios using this model and came up with a few, select enter/exit strategies that work well based on my lot size, profit target per trade, stock's ADTR, etc.
This way, I have minimized unnecessary trades because my system tells me when to enter and even before I enter I have a strict exit plan.
I may miss some big profit if the stock runs past my exit target, but I don't care at this point as I'm trying to develop consistency and continue to test my system.
I hope this offers some help. Good luck.
Quote from polpolik:
My personal opinion is scalping is a loser's game in the long run. I daytrade throughout the day but probably scalp once or twice a day for little gains really just to keep my juice going.
But to try and make a living out of it, I tried it and it's very difficult and stressful - albeit, not impossible.
I've done pretty well scalping, but it will burn you out. Sometimes your style of trading changes without you realizing it. However, you have to do what's best in your ability to make money. Every quarter you should look at yourself and figure out where you need to make improvements.
Patience has nothing to do with it. It's a loser's fairy tale.
If you have a WORKING strategy, simply act as your strategy directs you. If you don't, nagging about patience on psycho forums ain't going to help.
If you have a WORKING strategy, simply act as your strategy directs you. If you don't, nagging about patience on psycho forums ain't going to help.
Traderdave72,
If you have confirmation from futures, you are likely to get more than 60-10 cents gross profit as long as you are quick enough. Your 6-10 cents profit you mentioned, is gross profit right?
Perhaps you are trading stocks that move very little each day due to large size etc and that's why you can only get 6-10 cents profit? Or maybe you are just wanting to get the 6-10 cents profit without waiting to see whether price will go further up?
If you have confirmation from futures, you are likely to get more than 60-10 cents gross profit as long as you are quick enough. Your 6-10 cents profit you mentioned, is gross profit right?
Perhaps you are trading stocks that move very little each day due to large size etc and that's why you can only get 6-10 cents profit? Or maybe you are just wanting to get the 6-10 cents profit without waiting to see whether price will go further up?
Quote from traderdave72:
I am a fairly new trader and I have a big problem with taking profits way to fast, I mean after just 6-10 cents. I keep very tight stop-loss, if trade doesn't go my way I am out. I find that while I have small profit at end of day commissions and ECN fees eat it up and I am in the negative. I am just churning my account. I don't know how to get past this fast profit taking thing that is killing me. I get so frieking frustrated at myself. I enter strictly on break of support or resistance with confirmation of futures. This seems to produce a lot of winners but taking profits fast kills me. Also I need to work on entry timing. If I would enter a little sooner I think I would do better as well. I think it may have to do with risk taking or something because I need the so-called confirmation from futures. My style would be called scalping and I can see why people say you don't really get any where scalping. Buying dips and selling rallies just isn't for me. The markets seem so damn volatile that it is hard to pick a direction. Who knows maybe I just ain't cut out for daytrading. My confidence level gets better and better with time and winning trades but my account size keeps getting smaller and smaller. Does anyone have any suggestions when it comes to scalping, what share size, stop, target would be? Thanks.
Traderdave
dave,
I'm in the exact same position as you. Eventhough I may be green in the day, the commissions, ecn fees, and other fees such as software, etc.. really eats up the account slowly. It's true that green does make your confidence level higher, but we have to look at reality. I am looking at pair trading, and that may be something that will help shed some light in our favor in terms of market volitility. I noticed that sizing up on size in trades is a matter of getting use to. Of course, 200 shares a round is twice the proift, but also twice the loss, it takes trades, time, to get comfortable with more size. In the end, comission average is the same.
Can you explain a little more about your trading strategy? I assume that you look for chops, and wait for breakouts. You look for confirmation of S&P Futures (which, in many cases may be the cause of breakouts), but at what point do you really pull the triger? Do you look at openbook, or just the charts? How about volume?
Quote from billp:
Traderdave72,
If you have confirmation from futures, you are likely to get more than 60-10 cents gross profit as long as you are quick enough. Your 6-10 cents profit you mentioned, is gross profit right?
Perhaps you are trading stocks that move very little each day due to large size etc and that's why you can only get 6-10 cents profit? Or maybe you are just wanting to get the 6-10 cents profit without waiting to see whether price will go further up?
right, dave, are you scalping the breakouts or position trading them?
Quote from nononsense:
Patience has nothing to do with it. It's a loser's fairy tale.
If you have a WORKING strategy, simply act as your strategy directs you. If you don't, nagging about patience on psycho forums ain't going to help.
true, in scalping, patience is a double edge sword, if lean prints, you are gone, parties over, but there's a fine line between gotta go time and taking profits too early. If patience is part of the trading plan, of course adhere to it, but otherwise, it's definitely important to cut losses short and not turning a trade into an investment.
I was up 6% this week basically trading quickly or scalping. I got into a short at the end of the day, and I kept telling myself to wait for an exhaustion. It felt like 20 minutes went by in 1 minute. Anyhow, I didn't bail because I was feeling cocky, as I had made 90% of my trades profitable for the day. By the time 20 minutes were up and the exhaustion had hit, I was down 3%. I had ruined today's profits and I had cut into some of yesterdays profit. I didn't bail in time. I don't know what happened to me, but not bailing in time was such a stupid mistake. I knew that I should, but I kept convincing myself to wait....I "knew" I was right. Oil was down, so the stock can't go up that much. This kind of trade is very aggravating.