Is Daytrading difficult or impossible ?

[wrbtrader]

...Emotions is protection mechanism inside us - build in by nature.
They are making us the humans.

Not understanding this - is primary reason for traders failure - day trader, swing trader, investor doesn't matter.

Emotions is normal to have and we need to just learn how to manage emotions. Trading is not unique...its something we have to learn how to manage in relationships, social interactions and so on.

I've a believer that those that don't know how to manage their emotions in trading...most likely have problems dealing with emotions in other social situations. Ironically, some traders get involved in trading because they want the privacy or they're the "lone wolf" types and believe in error they'll be able to rid themselves of emotions...

They can't and nobody can. Yet, they can learn to manage their emotions although not that easy to do for many traders even for those that are profitable.

Some traders (not all) navigate to automation because they believe they can get rid of emotions. Reality, they don't get rid of emotions...they're just using automation to help them manage their emotions. Seriously, automation traders can have emotions too.

I agree at 100%. We are told that emotions are bad in trading and it is why we see a lot of auto or robot style traders (not talking about HFT which is a different story).
High volatility and high emotions.
Short term trading = More leverage and more volatility. Day trading is usually associated with gambling and high emotions.

Learning how to work with our emotions is much clever than trying to control or to hide them.

Some traders enter day trading when volatility conditions are low or feel safer at day trading when the volatility environment is low. I do agree about the leverage issue...too many brokers abuse it via offering crazy leverage but the same crazy leverage is offered to "all traders"...not to just day traders. Other types of traders obviously need to meet margin requirements to be able to hold their overnight positions.

Yeah, there are other traders that enter the markets when volatility is high or markets going crazy.

My point, regardless if volatility is high or low...emotions are always there and we need to know how to manage them. The other point I'm making is that there are "outside influences" not related to trading that has a direct impact on our trading as day traders, swing trading, position trading, scalping, long term trading or whatever. These outside influences can be relationship problems, death in the family, alcohol, drugs, debts, sick love family member (e.g. cancer) and so on. These are the type of "outside influences" not related to trading but do for fact have an impact on our trading.

Simply, these particular traders would still have problems if they worked in another career. For example, think about all those people that snap in other jobs that we hear about in the news (e.g. postal worker, law enforcement, military, professional athlete or any other high stressful job)...

Crap happens in life and if people don't know how to manage it...they'll snap too or do stupid things.

Heck, one of my best friends spent 3 days in jail after he punched a nurse in the face at the hospital many years ago after she said something rude to him. He lost control of his emotions because the nurse wasn't caring properly for his mom at the hospital. He's a travel agent...

Day traders aren't the only ones that needs to manage their emotions but the electronic world of trading...misguides many. That's the issue with margins, leverage and so on. At first, many doesn't see the real costs of using such...its just numbers on paper (computer screen). We only see what can happen if things go right while we "think" we can manage it when things go wrong or we failed to be prepared when things go wrong.

I compare it to how people misuse credit cards, abuse student loans and so on. The U.S. and Canada have high debt problems involving just those two issues by themselves. Sorry, I'm not trying to change the topic but there's a relationship that I'm not smart enough to explain clearly.

 

[murray t turtle]

Question: If this is true and I was profitable on a simulator, to take emotions and psychology out, I should automate my trading algorithm and should then be profitable with real money?

%%
Sure could be.
And remember to add slippage + commissions...... [By taking emotions out you ,most likely mean controling them]And another flaw with a simulator; its not near as good as paper trading- the weakest ink/paper is better than the strongest memory. I am not going to bad mouth paper trading; i use[ paper] federal reserve notes all the time [US dollars LOL]

 

[Oz435]

Yep its all about the process, that why i laugh at people who subscribe to these people who are supposedly going to show them how to trade for 30 bucks a month. Bottom line is at the end of the day the only way to be successful is through the school of hard knocks, trial and error, you need to learn your own weaknesses. I could give people my exact entries every single day and they wouldnt be profitable till they learned how to trade those positions, and how to manage positions, when to add/exit. So many newbs are focused on the entry like there is some holy grail of trading, really the only holy grail is buying support and selling resistance, and buying/selling capitulation....... its very easy to find your spots, but its how you manage it once your in the trade that makes or breaks you.

Inevitably every time i hit a rough patch i start holding losers longer and cuttingf winners faster, so im in a constant battle against myself trying to fight that tendency, there is no trading system in the world unless it was automated, that is going to get a person around that fight, so its pointless trying to learn the way someone else trades, other than picking up on some tidbits about position sizing, and pattern. If you cant have confidence in what your doing you are screwed, and you dont get that confidence from someone else giving you entries.

 

[Oz435]

Excellent answer and advice. Read no further gents.

 

[Jahine]

Although there is pretty amount of liquidity in currency pairs during day trading, one thing that is not so good is there is too much movement. You may be overtly excited and mistake all these movements for signals to enter or leave the market. But at the end most of these movements turn fakeouts.

 

[misterkel]

Given that 95% or more mutual fund managers are NOT able to beat the S&P500, proves that investing both long and short term is "very difficult"

Most fund managers don't give a shti about beating the mrkt. They make fat $$ win or lose by taking a percentage of funds, not profits.
They're mostly scams - ie, would've been better in the index.

 

[ironchef]

Most fund managers don't give a shti about beating the mrkt. They make fat $$ win or lose by taking a percentage of funds, not profits.
They're mostly scams - ie, would've been better in the index.

It is not that they don't care about beating the market, it is just that statistically, it is not possible for every mutual fund to beat the market all the time when they are the market, after net of fees. Once 80% of investors' $ are in indices, I think actively managed mutual funds will do better.

 

[toc]

It is not that they don't care about beating the market, it is just that statistically, it is not possible for every mutual fund to beat the market all the time when they are the market, after net of fees. Once 80% of investors' $ are in indices, I think actively managed mutual funds will do better.

But year after year, most of the fund managers lag behind the index returns pre or net of the fees. what are the main reasons?

 

[wrbtrader]

But year after year, most of the fund managers lag behind the index returns pre or net of the fees. what are the main reasons?

Could it be due to the "risk management" department at their firm or maybe its in combo with the fact that the fund manager knows he/she is still getting paid via a salary from their firm. Thus, they will still get pay even when they call in sick for the day or get pay when they go on vacation and they know they still have health/dental insurance benefits or they know they still have a pension plan ?

I'm just thinking out loud.

 

[Mtrader]

But year after year, most of the fund managers lag behind the index returns pre or net of the fees. what are the main reasons?

Main reason: Incompetence.