Daytrading leads to Inevitable Failure? Is Swing Trading the only Viable Path?

Quote from heynow:

Exactly if not for those three massive losses, I'd be up 75k for the year. But the fact this that such huge losses are Unavoidable. I can trade using very little leverage and trade the trend and make money 30 days in a row but then one day I come in fade a trend, average down, and its game over (25k loss).
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Quote from Pa(b)st Prime:

I've known traders who went two decades without a losing year-in one case I know a trader who went 15 years without a losing week only to over trade a big position in 2000 and lose 90% of his net worth. Being disciplined in the past isn't good enough: on each and every trade you must be disciplined. Forever. Like a drunk in a program you can NEVER slip off the wagon. Easier said than done.
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Lets put it this way heynow.

You're almost at the finish line, know exactly what you need to do to get across it, but can't quite get past your current challenge, because it's one that is inside of you, not external.

It's one that we all face, and is like the riddle of the sphinx that keeps us from the land of milf and money. :p

If you can work to solve your problem, you can get there! :D
 
Quote from infolode:

I always think of it like being a good driver with no accidents for 20 , 30, 40 or more years, then one day....
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Yep, after hanging-out and having a couple of brews with the boys and thinking you can make it across the light that is changing from yellow-to-red this time. :eek:
 
Heynow,

The best advice for you is quit trading now before you lose it all. You are definitely in the wrong business. Mostly what you are saying is because you don’t have the discipline to cut your losses, all day traders are doomed to fail. Discipline and independent trading successfully is only a myth for those who think like you and don’t have it.

The person who said you don’t have a edge and don’t really have a true understanding of why you are taking your positions and the expected outcomes of those positions is right on the money. If you had a system, you would follow it and not average down to your own peril. Unless you are a gambler or don’t have an edge. Either way you are doomed to fail until you figure out what discipline means in your trading.

The rest is so patently false that it isn’t worth adding more to what has been already said. It boils down to: “Those who can’t, say no one can.” Again, typical sour grapes.

Your comments about the big traders not using their own money are also patently false. Cohen and his company have made so much money over the years that the majority of funds under management these days are his and other employee’s own money.

Pabst, that line is one of the best expressions of the reality of trading I have seen in a while. “Being disciplined in the past isn't good enough: on each and every trade you must be disciplined. Forever. Like a drunk in a program you can NEVER slip off the wagon. Easier said than done.”

A great reminder of the need for constant vigilance regarding discipline that I will print off and put on my desk. As Martin Schwartz used to say, “We are only a few sunspots away from unemployment.”

Good luck heynow. You will need it until you change your attitude and actually learn some discipline.

Good trading all.

BM
 
Quote from MandelbrotSet:

Yep, after hanging-out and having a couple of brews with the boys and thinking you can make it across the light that is changing from yellow-to-red this time. :eek:
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Yes, something along those lines.

Personally, I envision learning to drive and being extremely cautious. You've been told and you know intuitively that you're very vulnerable at this early stage and from sheer lack of experience, you're very cautious and focused.

Time passes by and you gain experience, knowledge and confidence.

Years go by and you have a daily routine and you travel familiar roads that you could almost navigate blind-folded.

Then one day, a day like any other, you're multi-tasking, driving on autopilot, thinking about various things, looking at a message on you phone when you look-up just in time to see death in three (3) seconds.
You lose two seconds by default because the adrenaline that instantly shot into your blood stream has blurred your vision.

You have one (1) second to respond and a mixture of disbelief and guilt is attempting to trump all else.

I figure that on any given day, the possibility exists for a trading accident therefore I resist the temptation to become complacent and I always embrace the risks. Check and double check everything. Money management is the mantra.

On any given day...
 
Quote from Big Money:

Pabst, that line is one of the best expressions of the reality of trading I have seen in a while. “Being disciplined in the past isn't good enough: on each and every trade you must be disciplined. Forever. Like a drunk in a program you can NEVER slip off the wagon. Easier said than done.”
BM
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Printed and posted on my wall twice :D
 
Quote from infolode:

I always think of it like being a good driver with no accidents for 20 , 30, 40 or more years, then one day....
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Poor analogy - a driver cannot totally control his risk level.
 
Quote from Cutten:

Poor analogy - a driver cannot totally control his risk level.
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To a degree neither can a trader.

I've seen cascading stop imbalances in Bonds two weeks ago and Wheat last year where a short could have placed a protective buy stop several hundred dollars away per contract and been filled from $3000 to $7000 worse than their stop price.

Then there was that SET (expiration settlement) on September triple witching in $SPX that carried out several big time options traders. Few would assume Sept futures could trade 1145 late Thursday yet open up at 1292 on Friday.

A short has unlimited theoretical risk. Position sizing then becomes the difficult equation of striking an optimal balance between expectation and assumption of maximum loss. One must trade big enough for it to matter or why else trade. On the flip side though truly knowing your worst case is simply unknowable.
 
Quote from Pa(b)st Prime:

To a degree neither can a trader.

I've seen cascading stop imbalances in Bonds two weeks ago and Wheat last year where a short could have placed a protective buy stop several hundred dollars away per contract and been filled from $3000 to $7000 worse than their stop price.

Then there was that SET (expiration settlement) on September triple witching in $SPX that carried out several big time options traders. Few would assume Sept futures could trade 1145 late Thursday yet open up at 1292 on Friday.

A short has unlimited theoretical risk. Position sizing then becomes the difficult equation of striking an optimal balance between expectation and assumption of maximum loss. One must trade big enough for it to matter or why else trade. On the flip side though truly knowing your worst case is simply unknowable.
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Rather than *few* traders assuming this *could* happen, ALL traders should KNOW that this WILL happen, and far more extreme events will happen too in their trading lifetime.

Much more "shocking" moves like this have happened many times before.

These risks are usually hedgeable by using deep OTM options and trading cautiously when news, fundies, volatility or sentiment show signs of extreme potential moves. Anyone who blew up September 2008 was trading way too big, because the move was pretty slow and steady, there was no sudden gap - that example is actually one of the *low risk*, easy to avoid "surprises". Even on 9/11 there was enough steadiness and liquidity from the first place impact to exit in plenty of time.

Even in the event of a non-optionable market going 5-10 times further than any historical prior example, there are ways to hedge, such as using limited liability corporations, or only taking small positions in non-optionable markets with the potential to spike dramatically (e.g. electricity or OJ futures).
 
Given that Sept ES traded limit up pre-open I'd say the move was pretty rare, lol. I mean how "slow" can a 147pt move from Noon Thursday to the open Friday truly be? I remember posting my trades here that day and thought I was a hero because I caught 30pts only to see the stuff rally another 6k per contract by the next morning-which turned out to be the spike high btw.

The question isn't whether something is "hedgable"-although unless one is using an apples to apples like options there is no true hedge. The question is will you be hedged. This goes back to my dislike for rapid fire scalping. It's costly for a scalper to always maintain a long gamma hedge-you'd need to be long BOTH puts and calls-so your scalping better be pretty good to eat up your daily theta drip. Not to mention being short futures vs. long calls doesn't guarantee you can't lose on both positions during a grinding rally that collapses implieds.

The only way to truly mitigate the chances of blow out are via long options and like any other insurance policy infinite protection has a cost.


Quote from Cutten:

Rather than *few* traders assuming this *could* happen, ALL traders should KNOW that this WILL happen, and far more extreme events will happen too in their trading lifetime.

Much more "shocking" moves like this have happened many times before.

These risks are usually hedgeable by using deep OTM options and trading cautiously when news, fundies, volatility or sentiment show signs of extreme potential moves. Anyone who blew up September 2008 was trading way too big, because the move was pretty slow and steady, there was no sudden gap - that example is actually one of the *low risk*, easy to avoid "surprises". Even on 9/11 there was enough steadiness and liquidity from the first place impact to exit in plenty of time.

Even in the event of a non-optionable market going 5-10 times further than any historical prior example, there are ways to hedge, such as using limited liability corporations, or only taking small positions in non-optionable markets with the potential to spike dramatically (e.g. electricity or OJ futures).
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