Making $200-$400 a day (average), realistic goal for a new trader to grow into?
- Thread starter bryan942
- Start date
Have you taken into account that the daytrading income is taxable? 
Read the book "Enhancing Trader Performance", written by Dr. Brett N. Steenbarger
If you can structure a proper training plan for yourself and stick with it all the way, you will probably lose a lot less amount of money during the training process until you get to the point of being a profficient trader.
Good luck.
Read the book "Enhancing Trader Performance", written by Dr. Brett N. Steenbarger
If you can structure a proper training plan for yourself and stick with it all the way, you will probably lose a lot less amount of money during the training process until you get to the point of being a profficient trader.
Good luck.
OK, here's my couple of pennies... These are all things I've figured out over my five years of full time trading. I WISH I had been told these things when I started. It would have cut at least a few years off my progressions, because I wouldnât have jumped around so damn much.
Given you are seeking daily amounts (or at least 5 â 8K a month), Iâm assuming you expect to trade each day, rather than swing or position trade. I do this too and the following things are based on that assumption.
1. Figure you will need one full year of full time trading (after #4 below) to be making $400 a day on average. That's trading (or at least screen time) damn near every trading day for at least a 'school' year (October through May).
2. Start with 50K. Expect to lose it all. It's tuition. The same as an MBA that you wouldn't think twice about. This money is absolutely off limits for paying your bills. It's in your brokers account and you can NEVER remove any money from it until you've lost it all or doubled it. Period. It is NOT grocery money.
3. Trade futures. Specifically domestic stock index futures. Easiest to get fills with their great depth. Commissions are based on contracts traded, not per order (although there are lots of per shares stock trading brokers). Trade the YM. It's the 'slowest' of the big four, the least 'manipulated' and NEVER trade more than one contract for at least the first three months. Only then consider trading two, if your P&L supports it. Plus, future taxes are a breeze and most likely will never be subject to individual stock perils like floor rumors, take over bids, whispers etc. like any one stock can be.
3. Trade intraday. Carry nothing overnight. If you cannot trade for a minimum of four uninterrupted hours, don't. You will lose. This business cannot be done if the phone is ringing, the admin asst. is walking in, employees IM you etc. Be alone and isolated. It's the only way you can focus.
4. Find a method that works on paper for six months. Then start live for the year. You will make all kinds of fake money and lose your ass with real money. Accept this. Until you have real skin in the game, paper profits are the same to you as strippers would be if you really wanted sex.
5. Your method should be easy enough to be written on ONE 3x5 index card. If it requires more than that, or needs a spreadsheet to figure out what a trade looks like, itâs too complicated and you will flinch when you need to pull the trigger.
6. Your method must not require any proprietary indicators or special anything that you buy from a vendor. You are attempting to build a career of trading, not use one personâs method. You MUST make trading your own â not somebody elseâs. If Tradestation but not Esignal has the indicator (and itâs a PRIME indicator for your method), itâs probably too complex. Do NOT attach your success to any one vendor. If you can make it work with TS, you should be able to take it to Esignal, Sierra, Prophetcharts, whomever.
7. Your method should have three trades triggers (no more, but it could be less) to it. Learn these three as if they were your childrenâs birthdays. You MUST OWN THESE TRIGGERS. NOBODY ELSE on earth can trade these triggers better than you can. Then FORGET EVERYTHING ELSE that tempts you. Trading when youâre struggling and learning is exactly like being unsure about whether your girlfriend is hot enough and other incredibly hot chicks walk by and you think you should dump your wonderful but not as hot GF to chase the hot chicks. DONâT DO IT. STICK WITH YOUR METHOD. Don't chase other stuff thinking it's the 'Holy Grail' - a phrase that all successful traders will nod in sympathy for remembering their own struggle with seeking something 'better' or 'easier' than their current (at the time) losing method.
Think of it this way â struggling traders are one of the big five of âstarving markets.â The other four are fisherman (always buying the new product to find/catch fish); salespeople (new closes, lead generation), fat people (duhâ¦) and golfers (new clubs each year to finally break 100!). You will CONSTANTLY read about new methods, analysis methods, products, black boxes, indicators etc. You will feel the undeniable urge to add indicators to try to make each and every trade work in hindsight. This is called curve fitting and it doesnât work. Ever. Donât look at the past charts and think, âIf only I had had the 47 period moving average instead of the 50, I would have had the PERFECT entry and made XXXXXX).
No. It doesnât work like that. Refer to the beginning of #7. If itâs not a trade as you have defined it, itâs not a trade. Period.
8. Start with the lowest expenses you can as youâre learning. I would suggest Interactive Brokers and Sierra Charts. They arenât the âbestâ but they are well supported by their respective companies and there are lots of people using these products so there is plenty of online support for them. Think of trading as a horse race that takes forever but in the beginning needs the lightest jockey. Don't scrimp too hard though and attempt to do this on the total cheap because you will fail. But don't think that to start you need four 30" Dell flat panel monitors at $1300 a throw. You don't.
9. Learn from the past masters. There are millions of trading books. Search here for ones that others have recommended. My personals favorites are Oliver Velezâs âTools and Tactics for the Master Day Traderâ (although itâs old and was written when the market was going nuts, the warnings/psychological stuff is great); John Carterâs Mastering the Trade (ignore his stuff for sale (my opinion) but pay attention to his psychology stuff too); Mark Douglasâs Trading in the Zone (although it wonât make sense until you start losing bad, itâs an outstanding book to read when youâre grasping at why trading isnât working for you. There are plenty of others but these are three that I liked a lot.
10. Accept that you think â$200 - $400 a day? Thatâs EASY!â is untrue. Itâs totally doable. Itâs not a hard stretch at all once youâve got your sea legs. Just donât go broke before you get there. Oh, and having a supportive wife and family are critical too. You will be MOCKED and GASPED at if you leave corporate America safety to trade. YOU ARE CRAZY! ARE YOU FUC*&NG NUTS? Accept this too. Itâs part of the job. Also accept that when you tell people what you do for a living, the conversation tends to stop right there. That was kind of surprising to me (not that I cared) but people donât ask about what they donât understand and you might as well say youâre a âchicken house processorâ based on some of the reactions Iâve received. ;-)
Good luck my friend. Some if not all of this will get torn apart here. That's fine. It's my opinion and like I said, if I had been given these ten points early on, it would have helped immensely.
Given you are seeking daily amounts (or at least 5 â 8K a month), Iâm assuming you expect to trade each day, rather than swing or position trade. I do this too and the following things are based on that assumption.
1. Figure you will need one full year of full time trading (after #4 below) to be making $400 a day on average. That's trading (or at least screen time) damn near every trading day for at least a 'school' year (October through May).
2. Start with 50K. Expect to lose it all. It's tuition. The same as an MBA that you wouldn't think twice about. This money is absolutely off limits for paying your bills. It's in your brokers account and you can NEVER remove any money from it until you've lost it all or doubled it. Period. It is NOT grocery money.
3. Trade futures. Specifically domestic stock index futures. Easiest to get fills with their great depth. Commissions are based on contracts traded, not per order (although there are lots of per shares stock trading brokers). Trade the YM. It's the 'slowest' of the big four, the least 'manipulated' and NEVER trade more than one contract for at least the first three months. Only then consider trading two, if your P&L supports it. Plus, future taxes are a breeze and most likely will never be subject to individual stock perils like floor rumors, take over bids, whispers etc. like any one stock can be.
3. Trade intraday. Carry nothing overnight. If you cannot trade for a minimum of four uninterrupted hours, don't. You will lose. This business cannot be done if the phone is ringing, the admin asst. is walking in, employees IM you etc. Be alone and isolated. It's the only way you can focus.
4. Find a method that works on paper for six months. Then start live for the year. You will make all kinds of fake money and lose your ass with real money. Accept this. Until you have real skin in the game, paper profits are the same to you as strippers would be if you really wanted sex.
5. Your method should be easy enough to be written on ONE 3x5 index card. If it requires more than that, or needs a spreadsheet to figure out what a trade looks like, itâs too complicated and you will flinch when you need to pull the trigger.
6. Your method must not require any proprietary indicators or special anything that you buy from a vendor. You are attempting to build a career of trading, not use one personâs method. You MUST make trading your own â not somebody elseâs. If Tradestation but not Esignal has the indicator (and itâs a PRIME indicator for your method), itâs probably too complex. Do NOT attach your success to any one vendor. If you can make it work with TS, you should be able to take it to Esignal, Sierra, Prophetcharts, whomever.
7. Your method should have three trades triggers (no more, but it could be less) to it. Learn these three as if they were your childrenâs birthdays. You MUST OWN THESE TRIGGERS. NOBODY ELSE on earth can trade these triggers better than you can. Then FORGET EVERYTHING ELSE that tempts you. Trading when youâre struggling and learning is exactly like being unsure about whether your girlfriend is hot enough and other incredibly hot chicks walk by and you think you should dump your wonderful but not as hot GF to chase the hot chicks. DONâT DO IT. STICK WITH YOUR METHOD. Don't chase other stuff thinking it's the 'Holy Grail' - a phrase that all successful traders will nod in sympathy for remembering their own struggle with seeking something 'better' or 'easier' than their current (at the time) losing method.
Think of it this way â struggling traders are one of the big five of âstarving markets.â The other four are fisherman (always buying the new product to find/catch fish); salespeople (new closes, lead generation), fat people (duhâ¦) and golfers (new clubs each year to finally break 100!). You will CONSTANTLY read about new methods, analysis methods, products, black boxes, indicators etc. You will feel the undeniable urge to add indicators to try to make each and every trade work in hindsight. This is called curve fitting and it doesnât work. Ever. Donât look at the past charts and think, âIf only I had had the 47 period moving average instead of the 50, I would have had the PERFECT entry and made XXXXXX).
No. It doesnât work like that. Refer to the beginning of #7. If itâs not a trade as you have defined it, itâs not a trade. Period.
8. Start with the lowest expenses you can as youâre learning. I would suggest Interactive Brokers and Sierra Charts. They arenât the âbestâ but they are well supported by their respective companies and there are lots of people using these products so there is plenty of online support for them. Think of trading as a horse race that takes forever but in the beginning needs the lightest jockey. Don't scrimp too hard though and attempt to do this on the total cheap because you will fail. But don't think that to start you need four 30" Dell flat panel monitors at $1300 a throw. You don't.
9. Learn from the past masters. There are millions of trading books. Search here for ones that others have recommended. My personals favorites are Oliver Velezâs âTools and Tactics for the Master Day Traderâ (although itâs old and was written when the market was going nuts, the warnings/psychological stuff is great); John Carterâs Mastering the Trade (ignore his stuff for sale (my opinion) but pay attention to his psychology stuff too); Mark Douglasâs Trading in the Zone (although it wonât make sense until you start losing bad, itâs an outstanding book to read when youâre grasping at why trading isnât working for you. There are plenty of others but these are three that I liked a lot.
10. Accept that you think â$200 - $400 a day? Thatâs EASY!â is untrue. Itâs totally doable. Itâs not a hard stretch at all once youâve got your sea legs. Just donât go broke before you get there. Oh, and having a supportive wife and family are critical too. You will be MOCKED and GASPED at if you leave corporate America safety to trade. YOU ARE CRAZY! ARE YOU FUC*&NG NUTS? Accept this too. Itâs part of the job. Also accept that when you tell people what you do for a living, the conversation tends to stop right there. That was kind of surprising to me (not that I cared) but people donât ask about what they donât understand and you might as well say youâre a âchicken house processorâ based on some of the reactions Iâve received. ;-)
Good luck my friend. Some if not all of this will get torn apart here. That's fine. It's my opinion and like I said, if I had been given these ten points early on, it would have helped immensely.
One thing I forgot...
The trading psychology books are excellent (Steenbarger's are great too plus the Douglas I mentioned.) but until you're aware of the psychology you're dealing with, the books won't produce too many 'aha' moments.
Sort of like 'you don't know what you don't know until you know it.' Until you're fighting for air and your heart is pounding when yet ANOTHER trade is 'going against you and you're getting crushed' mindset ovetakes you, the psychology books won't help as much.
Long term, absolutely. Short term, not so much.
Oh, and Steenbarger has an excellent no selling free blog. Make it a part of your daily read along with other things.
http://www.traderfeed.blogspot.com/
The trading psychology books are excellent (Steenbarger's are great too plus the Douglas I mentioned.) but until you're aware of the psychology you're dealing with, the books won't produce too many 'aha' moments.
Sort of like 'you don't know what you don't know until you know it.' Until you're fighting for air and your heart is pounding when yet ANOTHER trade is 'going against you and you're getting crushed' mindset ovetakes you, the psychology books won't help as much.
Long term, absolutely. Short term, not so much.
Oh, and Steenbarger has an excellent no selling free blog. Make it a part of your daily read along with other things.
http://www.traderfeed.blogspot.com/
If you want my 2 cents I'd have to tell you that you're going to want to get some kind of direct instruction in trading. That could be from joining a prop shop, or becoming a Bright Trader, or from finding a mentor that can teach you the ropes.
A lot of people throw around statistics like 95% of traders loose money in their first year, and that sounds about right to me. However in my experience as a prop trader I'd say that only about 90% of guys that come into the office are unable to make money after 6 months. That still sounds pretty bleak, but it's a lot better than going in as a lone wolf.
I'm pulling these figures out of the air here, but I guess I just can't tell you how much it helps to have someone you can go to that'll explain to you simple and specific strategies to make money when you start out. In the end you're success will come down to your own abilities, but having someone point you in the right direction helps immensely. You will loose money trying to do things like trade futures if you're a newbie, there's no doubt about that, and you'll keep loosing money for a long time. That said, there are a lot of other fairly simple strategies that new traders have a shot at making decent money with after a few months.
I'm not a Bright Trader, but I scavenge every bit of info that I can from his posts on things like Opening Orders strategies. Little things like this really do work, and they provide a more structured framework to operate in. New traders need these sort of things. Having someone show you the basics of strategies like this helps big time.
In short if you join a good prop or retail firm, or find a mentor, your odds of succeeding at trading will increase dramatically and it'll happen faster. The chances are that you still won't be able to do it, and that's just a fact, but try and stack the odds in your favor. Trading is damn hard and you need every edge. Theres a lot more to trading than you'll be able to learn on Elite Trader.
A lot of people throw around statistics like 95% of traders loose money in their first year, and that sounds about right to me. However in my experience as a prop trader I'd say that only about 90% of guys that come into the office are unable to make money after 6 months. That still sounds pretty bleak, but it's a lot better than going in as a lone wolf.
I'm pulling these figures out of the air here, but I guess I just can't tell you how much it helps to have someone you can go to that'll explain to you simple and specific strategies to make money when you start out. In the end you're success will come down to your own abilities, but having someone point you in the right direction helps immensely. You will loose money trying to do things like trade futures if you're a newbie, there's no doubt about that, and you'll keep loosing money for a long time. That said, there are a lot of other fairly simple strategies that new traders have a shot at making decent money with after a few months.
I'm not a Bright Trader, but I scavenge every bit of info that I can from his posts on things like Opening Orders strategies. Little things like this really do work, and they provide a more structured framework to operate in. New traders need these sort of things. Having someone show you the basics of strategies like this helps big time.
In short if you join a good prop or retail firm, or find a mentor, your odds of succeeding at trading will increase dramatically and it'll happen faster. The chances are that you still won't be able to do it, and that's just a fact, but try and stack the odds in your favor. Trading is damn hard and you need every edge. Theres a lot more to trading than you'll be able to learn on Elite Trader.
Again, I just wanted to thank everyone who has posted so far. Before I made my first post here, I spent some time reading these forums and I was almost afraid to post because it seemed like anytime anyone asked a similar question, it was flooded with negative or overly critical responses. The responses I have received all appear constructive and both optimistic and realistic at the same time. Reading through everything so far, I can tell you what directions I am leaning and maybe ask a few more questions.
1. I think beyond a doubt, I need to spend some time paper trading before I jump in. Right now I don't have a ton of disposable income that I am willing to risk. I was thinking somewhere along the lines of 10k to start. Initial feedback appears that that will put me far short of what I should be starting with. I also would like to entertain the idea of simulated trading. Frank Thomas mentioned X-trader in one of his posts. Are there any other similar or more robust programs that can help me paper trade and keep a track record that I can look back on, or do i just stick to good ol' excel?
2. Also, I like the idea of swing trading, as it currently allows me to ease into this process. It also allows me to hold positions for periods of time that wouldn't require me to be in front of a computer all day, at least at first. Being that I will be working my regular job during the day, does it make sense to look at trading something like forex as opposed to equities, where the market is open beyond regular business hours or is this totally irrelevant?
3. I don't know really what the differences between a retail or prop firm are (this shows you how green i am), but am I wrong to assume that if I wanted to be a part of something like that, I would have to move to NY or Chicago ideally? Also, what kind of place would hire a computer engineer converted to business owner who has no relative trading experience?
I think my next step is to head to the local bookstore and investigate the suggested reading. I am gonna take the advice of learning the psychology of this business first.
If anyone else knows of any other great resources or has any other feedback for, please feel free to not hold back. I accept all forms of criticism
thanks
-bryan
1. I think beyond a doubt, I need to spend some time paper trading before I jump in. Right now I don't have a ton of disposable income that I am willing to risk. I was thinking somewhere along the lines of 10k to start. Initial feedback appears that that will put me far short of what I should be starting with. I also would like to entertain the idea of simulated trading. Frank Thomas mentioned X-trader in one of his posts. Are there any other similar or more robust programs that can help me paper trade and keep a track record that I can look back on, or do i just stick to good ol' excel?
2. Also, I like the idea of swing trading, as it currently allows me to ease into this process. It also allows me to hold positions for periods of time that wouldn't require me to be in front of a computer all day, at least at first. Being that I will be working my regular job during the day, does it make sense to look at trading something like forex as opposed to equities, where the market is open beyond regular business hours or is this totally irrelevant?
3. I don't know really what the differences between a retail or prop firm are (this shows you how green i am), but am I wrong to assume that if I wanted to be a part of something like that, I would have to move to NY or Chicago ideally? Also, what kind of place would hire a computer engineer converted to business owner who has no relative trading experience?
I think my next step is to head to the local bookstore and investigate the suggested reading. I am gonna take the advice of learning the psychology of this business first.
If anyone else knows of any other great resources or has any other feedback for, please feel free to not hold back. I accept all forms of criticism
thanks
-bryan
with all due respect sir ...
think of it as gambling as if you spent a yr on weekends
going to the racetrack or casino ( and be prepared to lose the majority of the 10K )
the odds are really stacked against you
even an expert trader with a defined "edge" who is in control of his emotions and does not kill his P+L breaking his trading rules
would find it hard to start with such a small amount and hope to
turn that 10K into 50K plus in one yr
-1. I think beyond a doubt, I need to spend some time paper trading before I jump in. Right now I don't have a ton of disposable income that I am willing to risk. I was thinking somewhere along the lines of 10k to start.-
think of it as gambling as if you spent a yr on weekends
going to the racetrack or casino ( and be prepared to lose the majority of the 10K )
the odds are really stacked against you
even an expert trader with a defined "edge" who is in control of his emotions and does not kill his P+L breaking his trading rules
would find it hard to start with such a small amount and hope to
turn that 10K into 50K plus in one yr
-1. I think beyond a doubt, I need to spend some time paper trading before I jump in. Right now I don't have a ton of disposable income that I am willing to risk. I was thinking somewhere along the lines of 10k to start.-
Bryan - few things from your recent post - $10k is not a lot, so be prepared for some wild swing with that, esp if you go into futures and/or forex. Start small regardless of what you chose to trade. Don't worry so much about the day-to-day P&L, just place some live trades (when you are ready) and see how the dynamics change.
If you go into futures, stick with ONE contract until you are ready for more. I would suggest you take a long look at Open ECry as their rates are very good and the platform is FREE. I know free sometimes implies junk, but after testing it out myself, I was/am very impressed with it. It's better than many platforms that you pay for. You can get a 2 week trial right away so you can test out on the sim. If you need more time after that, just email them and you should be able to get an extension.
If you go into futures, stick with ONE contract until you are ready for more. I would suggest you take a long look at Open ECry as their rates are very good and the platform is FREE. I know free sometimes implies junk, but after testing it out myself, I was/am very impressed with it. It's better than many platforms that you pay for. You can get a 2 week trial right away so you can test out on the sim. If you need more time after that, just email them and you should be able to get an extension.