Is day trading worth it?

[Laissez Faire]

The question is not:Is day trading worth it?
The question is:Is day trading worth it FOR YOU?

Not everybody is succesful in daytrading, but the same applies for LT. Not everybody is succesful there too. Find what suits you best, and trade that.

Okay. I'm curious about that as well...

I made over 100% on my risk capital on my recent long-term trade that lasted me 5 months where I virtually did 'nothing'.

In a day trading position, my working hours would be at least 500 hours during the same time period.

So, I'm thinking that with the added stress and extra hours put in, it would not be worth it unless my return was at least better than 100% by a wide margin.

That's why I'm also curious about the return from the gurus in this thread. Being profitable is simply not enough. You need to look at the alternative cost here. Some people park their money long term in an index fund and is infinitely better off in the end than many day traders who assume huge risks and barely break even if they're lucky.

I think it's possible for a few to be very successful as a day trader, but for those who are merely grinding it out, win some, lose some, I'm thinking it is probably better to simply invest their money in an index fund and do something else with their time.

 

[Frederick Foresight]

LF, it appears you have answered your own question. For yourself. As each person must answer it for himself.

 

[i am nobody]

Okay. I'm curious about that as well...

Well, I think the probability that you will have to stay curious and will never know is very big.

I made over 100% on my risk capital on my recent long-term trade that lasted me 5 months where I virtually did 'nothing'.
In a day trading position, my working hours would be at least 500 hours during the same time period.

You would need 500 hours, but the daytrader has nothing to see with how many hours YOU would be busy. For him only the hours HE is busy are important. Maybe he needs much less hours than you. He is daytrader and you are not. There is a reason for that.

So, I'm thinking that with the added stress and extra hours put in, it would not be worth it unless my return was at least better than 100% by a wide margin.

You have a problem with the added stress in daytrading? Maybe the daytrader has little or no problem with stress. To know that you should first know how HE trades, not how YOU would trade. Stress can be eliminated for a big part, depends of the way you trade. Daytraders sleep always well as they have no open positions overnight like LT traders.

That's why I'm also curious about the return from the gurus in this thread. Being profitable is simply not enough. You need to look at the alternative cost here. Some people park their money long term in an index fund and is infinitely better off in the end than many day traders who assume huge risks and barely break even if they're lucky.

Maybe the daytrader has returns far beyond the wide margin of your 100%. You made 100% in about 100 days (5 months of 20 days), which equals merely 1% a day on your capital. Good trading opportunities are more frequent for daytraders than for LT traders.

How many 100% trades did you make the last 12 months? One? So the return of 12 months is not 2.4 times 100%, or 240%? Or in others words: your 100% are not representative. Daytraders can also have a good day and make 10%, which would mean 2600% on a yearly base following your logic.

I think it's possible for a few to be very successful as a day trader, but for those who are merely grinding it out, win some, lose some, I'm thinking it is probably better to simply invest their money in an index fund and do something else with their time.

I know a few LT traders or "investors" that lost up to their complete account. I even know some who had to sell their house. So for them LT was not a good idea. But I agree that in general in LT it is easier to make money than in daytrading.

I trade at max what I can trade depending on my limited abilities. So do you probably.

But I find it unrespectful to call people gurus because you cannot achieve what they pretend to be able to do. I don't call you a guru although you post a 100% return in 5 months. People who are threated unrespectfully will never answer any of your questions.

 

[Handle123]

Whether you trade LT or day trading it all boils down to risk, people who bet all they have on one stock might get 100% returns but eventually they keep doing that will get zapped, putting all your eggs in one basket and having no diversification will catch up. I know those with small capital will think it bs about the 2% rule, but it truly will save you from losing it all, when I hear someone wiped out, most likely they didn't adhere to 2% rule. I certainly didn't think it was important when I started futures and one of main reasons I blew out accounts right and left.

Think about it, you have traders with $2,500 accounts and they risk $200 to trade 2 ES, that is 8%, they might do 10 trades in a day which adds up to 80% of the account being risked and $2,000 total was risked, not going to even consider any profits cause those with $2,500 accounts seldom make any profit cause they have no staying power, just dreams of grandeur. Just cause you can open an account does not mean you should. And when asked how many contracts to trade per $25,000 and I respond "one", they say I am crazy. Well, when you have no experience......you are Bait.

I just think it better to learn how to do long term first, have years to discover/remember it all and keep back testing, it one can't make money in long term having days to figure out to take a trade, how are you going to make many decisions in seconds?

 

[i am nobody]

And when asked how many contracts to trade per $25,000 and I respond "one", they say I am crazy.

Size of position depends of statistics of your system, you can not give a correct size without knowing that. For me the first rule to calculate size is the drawdown. After that there can be additional considerations to be made. Saying $25,000 for every trader is too much for some of them, and maybe not enough for others.

2 hypothetical and overexagerated samples (overexagerated because that show more clearly the point):

• system 1 has a max drawdown of 2% and recovers it within 1 trade on average
• system 2 has a max drawdown of 25% and recovers it within 4 trades on average

The first system can take more contracts than the second system when trading the same product. The first system handels losses much better. Even doubling the size will keep the drawdown at 4% which is still 6 times less than the second system.

Second sample: some drivers can drive safely at 100 mph, while others risc their live (and the live of others) already when they go 25 mph.

 

[Laissez Faire]

But I find it unrespectful to call people gurus because you cannot achieve what they pretend to be able to do. I don't call you a guru although you post a 100% return in 5 months. People who are threated unrespectfully will never answer any of your questions.

It wasn't meant to be disrespectful, so maybe we have a communication problem.

I'm not trying to teach or mentor anyone, nor do I make claims of having figured it all out like some other do, hence I'm not qualified to be labelled a guru.

 

[Handle123]

Size of position depends of statistics of your system, you can not give a correct size without knowing that. For me the first rule to calculate size is the drawdown. After that there can be additional considerations to be made. Saying $25,000 for every trader is too much for some of them, and maybe not enough for others.

2 hypothetical and overexagerated samples (overexagerated because that show more clearly the point):

• system 1 has a max drawdown of 2% and recovers it within 1 trade on average
• system 2 has a max drawdown of 25% and recovers it within 4 trades on average

The first system can take more contracts than the second system when trading the same product. The first system handels losses much better. Even doubling the size will keep the drawdown at 4% which is still 6 times less than the second system.

Second sample: some drivers can drive safely at 100 mph, while others risc their live (and the live of others) already when they go 25 mph.

And what I didn't read in your post was duration of back test. Many only back test over past year, I back test using tick data going back fourteen years, many signals have over 30,000 sample size, what many will say it is way too far of testing, what some will say when trading their method is "testing never showed this much drawdown" cause like in baseball or other sports record, eventually extremes becomes a new record by someone else. I once was trading a Soybean system and tested it on three years of data, drawdown was $2,000, well, one year market went way beyond the norm and I was down $7,000 before it came back to profitable.

But when 9-11 happened and you didn't get out before exchanges closed, I believe it opened week later $3500 bucks down in ES? Way too many who are inexperienced trade on shoe string, if your experience does not equal your Trading Plan, odd occurrences will wipe you out.

I understand what you are saying based on the numbers and I agree with the numbers, but I have done dumb trades in my life and been hurt cause I believed in these numbers. Old saying is right. Bulls make money, bears make money, and Pigs get slaughtered.

And I am the guy who goes 25mph, I have some farmland and grow alfafa, get 2-4 cuts a season, bale it, load it, tarp it and I have a CDL, gets me out of the office/Starbucks to going down the road at 25mph, of course not down an Interstate.

Hope all having a safe Holiday weekend.

 

[jl1575]

People probably are not going to trade 100 contracts of ES at a time in LT mode, but people could easily put in 100 or even more in scalping trades that lasts from 30 second to 2 minutes for sure, if your system is like risking 2-3 ticks max and targeting 1-3 points with a high win rate; It all boils down to what kind of systems you have.

 

[i am nobody]

It wasn't meant to be disrespectful, so maybe we have a communication problem.

Maybe I became oversensitive for the word "guru". No hard feelings.

 

[i am nobody]

People probably are not going to trade 100 contracts of ES at a time in LT mode, but people could easily put in 100 or even more in scalping trades that lasts from 30 second to 2 minutes

I would think just the opposite. It is far more easy to get 100 contracts in LT mode than in "seconds" mode, without influencing the price too much.