what I meant is you some some win and some lose, on average, you win 50% trades and lose 50%. all you lose is commission assuming wining and losing same number of ticks
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How can someone blow up in day trading?
- Thread starter traderzhangSan
- Start date
average down
increase size
refuse to accept loss
hope for reversal
watch loss become impossibly large
crumble and close out just shy of blow up
rinse
repeat
increase size
refuse to accept loss
hope for reversal
watch loss become impossibly large
crumble and close out just shy of blow up
rinse
repeat
Quote from traderzhangSan:
I am talking about day trading and every trade is intended to make 2-3 ticks. stop is also 2-3 ticks.
I am not sure what futures you have traded or plan to trade.
You are assuming the spread - the difference between ask and bid - is at a minimum movement of 1 tick. Take a look at the e-mini Dow. The spread is at least 5 Dow points (5 ticks). Unless you trade the e-mini S&P.
When you enter a trade, the spread itself already costs you 1 tick. Setting a stop of 2-3 ticks away and think that you can win/lose 50% of the time is naive.
Also, when you actual have money on the table (in a trade), your psychological make up changes.
Mike Tyson said: Yeah, everybody's got a plan. Until he gets punched in the face.
You might as well go to a casino and keep betting on black. Double down everytime you lose. Long term you cannot lose unless you lose 7 times in a row, assuming you can double down 6 times and still stay within the minimum and maximum bet limits.Quote from bh_prop:
Your initial post suggested $10 avg losing trades with ES. Good luck with that.
But to answer your original question: most "daytraders" blowup when a daytrade gone bad becomes a longer-term trade due to inability/unwillingness to accept a loss. The problem is typically amplified by "doubling down" and eventually leads to a blowup.
Oh wait, this thread is about trading. You confused me. My bad.
Quote from garchbrooks:
Moreover, this is why when people do backtests, they really have to account for asymmetric results and add a hefty dose of slippage and commission.
Not really my friend.
Take the ES for example.
Unless you are unloading more than 1500-2000 contracts you probably wont even move it.
If you are talking thinly traded securities that might be another thing.
my point is when you blow up , it is not because of your skills, but rather you don't follow simple rules.
If aiming for 2-3 ticks, 'scalping', your stop can't be 2-3 ticks. You need to watch ES on a 1-min or tick/volume chart to understand it's price action....aiming for 2-3 ticks should only be done in trying to find the short term inefficiencies that occur between price/volume levels (relevant to time of day/event related)....and even then, the 'natural movement' of ES will move the spread 2-3 ticks against you and stop you out. Don't quote me on natural movement, I've just watched it enough to know.
Remember something, the best scalp trades where price runs 2-3 ticks immediately, NON news/economic release related, JUST market supply/demand, WITHOUT running 2-3 ticks in the other direction, just by natural movement.....the bots/algos are already there. The bots will eat a level as SOON AS YOU RECOGNIZE IT'S GONNA MOVE. They are hunting. You have to be quicker than quick. I watch it every day.... as a ES discretionary/systematic scalper, you're swimming with the sharks.
Remember something, the best scalp trades where price runs 2-3 ticks immediately, NON news/economic release related, JUST market supply/demand, WITHOUT running 2-3 ticks in the other direction, just by natural movement.....the bots/algos are already there. The bots will eat a level as SOON AS YOU RECOGNIZE IT'S GONNA MOVE. They are hunting. You have to be quicker than quick. I watch it every day.... as a ES discretionary/systematic scalper, you're swimming with the sharks.
Quote from traderzhangSan:
what I meant is you some some win and some lose, on average, you win 50% trades and lose 50%. all you lose is commission assuming wining and losing same number of ticks
Your thinking is very flawed.
You can lose 10 in a row just as easy.
If we were all guaranteed 50% there wouldn't be much point to there being a market anymore.