Engineer looking to make a career change into trading

Quote from the1:

Easier said than done. You have to develop an edge first. The sword cuts both ways and you could easily be down 100k, which would be limited to your 50k put up. If you're brand spanking new to trading going prop right now with that kind of leverage is a recipe for disaster. The slower you go the faster you'll get there.
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Oh boy. Here we go. That 'edge' garbage talk again. My favorite quote on here: "You have to develop and hone an edge so as to ensure positive expectancy with your chosen strategy..."

Markets are efficient. 'Edges' won't help you. Other than "buy and hold" (index funds), there is no such thing as a "positive expectancy" strategy - over the long, long term. What you think works... only works until it doesn't. Then it's time for something else.

A never ending, high stakes rat race. 12 to 14 hours a day... doesn't sound like "freedom" to me... I'm not working that many hours. Day trading or any other job!

There is so much more to life.

At most, you're looking at break even, or slightly negative, given taxes, commissions, fees, etc, etc, etc.

A death by a thousand cuts awaits you.

Consider reading a "A Random Walk Down Wall Street." Written decades ago, still true today.
 
Quote from sneakoner:

But is it unreasonable to expect to make on average $500 a day using $500,000 trading capital?

The prop firm I met with offers 10:1 leverage, I figure I would put in $50,000 once I'm comfortable.

$500 a day on average ~ $100,000 a year, 20% return
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You're asking if it's reasonable to double your money every year (putting in $50k and making $100k a year). I don't think it will take you too much time to decide how reasonable that really is.

I agree with the earlier comment: as an engineer, you have actual knowledge/skills/experience that you invested money and dollars to hone... which in practice delivers real economic value. By day-trading, you will instead be playing mouse-click games with no discernible edge against high-school drop-out professional poker players living in their mom's basement.
 
Quote from sneakoner:

i understand, i learned never to risk more than 2% of your capital on any one trade and never risk more than 6% per month (courtesy of dr. alexander elder)
2% of 50,000 is $1000 risk per trade
6% is $3000 risk per month
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This is nice in theory. But when you are in the heat of battles, or when you get punched on the face in a fist fight, those "rules" are so quick to be out the door. When you get a big burn, it will take many $500 days to recover.

I have been an engineer/tech support for 20 years and traded on the side for a long time. Only a few years ago after I got consistently profitable, I finally decided to quit the day job and do trading for a living.

My advice is: see if you can "engineer" a work schedule for yourself where you can trade the opening hours (may be first 2). The heavy price actions are the first 2 hours. Then the market enters a doldrums in most days. And the last 2 hours got back with some movements (usally, not always). And the closing hour actions are not as good/profitable as the first two. If you want to do both, working a full time job and trade the first two hours are quite manageable, especially if you live in the US west coast. After you get consistently profitable, and you conclude that having a full-time job will deter you from making more money from trading, then quit.
 
Quote from heech:

You're asking if it's reasonable to double your money every year (putting in $50k and making $100k a year). I don't think it will take you too much time to decide how reasonable that really is.

I agree with the earlier comment: as an engineer, you have actual knowledge/skills/experience that you invested money and dollars to hone... which in practice delivers real economic value. By day-trading, you will instead be playing mouse-click games with no discernible edge against high-school drop-out professional poker players living in their mom's basement.
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$500 a day was a number a trader friend of mine came up with...i did think it was too good to be true
 
Quote from Bolimomo:

This is nice in theory. But when you are in the heat of battles, or when you get punched on the face in a fist fight, those "rules" are so quick to be out the door. When you get a big burn, it will take many $500 days to recover.

I have been an engineer/tech support for 20 years and traded on the side for a long time. Only a few years ago after I got consistently profitable, I finally decided to quit the day job and do trading for a living.

My advice is: see if you can "engineer" a work schedule for yourself where you can trade the opening hours (may be first 2). The heavy price actions are the first 2 hours. Then the market enters a doldrums in most days. And the last 2 hours got back with some movements (usally, not always). And the closing hour actions are not as good/profitable as the first two. If you want to do both, working a full time job and trade the first two hours are quite manageable, especially if you live in the US west coast. After you get consistently profitable, and you conclude that having a full-time job will deter you from making more money from trading, then quit.
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I live on the East Coast but that is really good advice. Do you have any advice on how to pick a market, stock, or etf to trade? Also what strategy should I use?

I feel like I read all these books and understand whats out there but there are a million+ strategies, indicators, etc to choose from. I have no idea where to begin...
 
(Quote from sneakoner)

RE: Do you have any advice on how to pick a market, stock, or etf to trade? Also what strategy should I use?

I always advocate the following:

1) Beginners: easiest... start with going with the trend. That means identify a good trend, then go with the trend at about a 20MA area. e.g. if the trend is up, wait to see when price drops to about the 20MA (still moving up)... and long it. Usually price would bounce off the 20MA a couple of times before trend ends. Don't get in too late. This is usually described as "Bull Flag" pattern.

2) Intermediate: after you become better at what you do, then you can do #1, plus fading a late trend. It could go to consolidation. Or it could for a reversal. It depends. Reversal if on a higher time-frame it is ripping in a consolidation range.

3) Advanced: when you have become very experienced, then you can do #1 and #2, plus playing the range-bound consolidation.

Pick an instrument you want to trade and learn to trade it well. ETF: QQQ and SPY are good. OIH also has good volatility that you can go long or short and flip a few times intraday. Go with something liquid and has some volatility. NFLX AMZN BIDU AAPL GOOG FFIV are all good day-trading stocks. Don't trade deaddogs and "have beens" like CSCO or C.



RE: I feel like I read all these books and understand whats out there but there are a million+ strategies, indicators, etc to choose from.

Yes there are million of strategies. All you need is a few and stick with them day-in day-out. Go with the trend, fade the trend, or trade range-bound consolidation.

Look for bull flags and bear flags. Those are more predictable (price moves usually are 2-leg moves). But you need to be patient and wait for such occurrences. Break-outs or break-downs.
 
thanks for the advice Bolimomo

do most traders pick a few stocks and etf's and stick with those? one trader told me he scans all of the stocks in each letter of the alphabet ... he'll go through the A's one day, the B's the next, etc... to look for setups, breakouts, etc.
 
I always got the idea that engineers don't make good traders? Everything must be explained to them, everything is by the book.
 
Quote from Renegen:

I always got the idea that engineers don't make good traders? Everything must be explained to them, everything is by the book.
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well if it makes me any different, i'm not a great engineer :p
 
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