How can someone blow up in day trading?

T

traderzhangSan

If you follow very simple rules, there is no way you can blow up.

Let's say once you enter the trade, you put stop loss and exit.

let's say you have some TA chart, which doesn't work at all. it means that you have 50% chance of winning in every trade.

All you lose is commission. if you put 5 trades each day trading one contract ES, your cost is like 50$ max. it takes one year to wipe out 10k account.



did I miss something here?
 
Have you ever actually traded?

Are you missing something? Yes- losing trades are not always "scratch" trades where all you lose is commissions. Sometimes price actually -gasp- moves against before you can exit.
 
Can you elaborate more on what you said?

I am talking about day trading and every trade is intended to make 2-3 ticks. stop is also 2-3 ticks.

Quote from bh_prop:

Have you ever actually traded?

Are you missing something? Yes- losing trades are not always "scratch" trades where all you lose is commissions. Sometimes price actually -gasp- moves against before you can exit.
More...
 
Quote from traderzhangSan:

If you follow very simple rules, there is no way you can blow up.

Let's say once you enter the trade, you put stop loss and exit.

let's say you have some TA chart, which doesn't work at all. it means that you have 50% chance of winning in every trade.

All you lose is commission. if you put 5 trades each day trading one contract ES, your cost is like 50$ max. it takes one year to wipe out 10k account.



did I miss something here?
More...

Liquidity is what you're missing. It can vaporize or the nature of execution can change. Your assumption is that execution on both sides of your trade (win/loss) is the same and that the market has a kind of symmetry to it, but there isn't necessarily symmetry.
 
I never said it is easy to make money. I am just saying it is not easy to lose money either.
Quote from spinn:

you're right its easy, you should start with 15 contracts and retire in two weeks.
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Quote from garchbrooks:

Liquidity is what you're missing. It can vaporize or the nature of execution can change. Your assumption is that execution on both sides of your trade (win/loss) is the same and that the market has a kind of symmetry to it, but there isn't necessarily symmetry.
More...

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.
 
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.


Quote from traderzhangSan:

Can you elaborate more on what you said?

I am talking about day trading and every trade is intended to make 2-3 ticks. stop is also 2-3 ticks.
More...
 
I think your point is when you lose, you lose bigger amount than when trade is good. However you can set up stop loss level in a such way to minimize such risk.




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.
More...
 
Quote from traderzhangSan:

If you follow very simple rules, there is no way you can blow up.

Let's say once you enter the trade, you put stop loss and exit.

let's say you have some TA chart, which doesn't work at all. it means that you have 50% chance of winning in every trade.

All you lose is commission. if you put 5 trades each day trading one contract ES, your cost is like 50$ max. it takes one year to wipe out 10k account.



did I miss something here?
More...

lol
 
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