Overtrading

1) Limiting your trading to 5 trades per day is fine. However, let's assume you lose on all 5 trades, and you lose $ 200 per trade, are you fine with a $ 1,000 loss for the day. If not, decrease how many trades you will do in a day.

2) The 1 min chart is noise. There is a way to actually create higher time frames in a small chart on NT.

3) Stops are based on the chart, and in most cases, should not be a standard. I rather be stopped out for a small amount and then re-enter than trade at bad price which requires a big stop loss for the market to prove that my trade idea was incorrect.

4) It's better to decrease your stops and increase your targets rather than the opposite.

5) Each time before you enter a trade, you need to be able to say to yourself that you accept the risk that you will get stopped out, and also that you recognize this trade as one of your trade setups instead of just guessing or hoping the market will move in your favor.

Quote from Winston:

I blew up my account overtrading. There, I said it. I'm an overtrader. Not no more though, pardon the dble neg. Why did I OT, stupidity, and many of the reasons previously listed on this thread. Glued to L2 and 1min chart were biggies, not looking at the whole picture, trading w/.2 stops getting stopped out and then getting back in thinking now it will go my way instead of my going w/the stock. I didn't chase, just dumb and wild trading.

Looking back I'm disgusted and ashamed because I said it wonn't happen to me I can handle emotion. Expensive lesson to learn. I've taken time off and after much thought, I'm limiting myself to 5 trades/day to begin again. I'll use the 1min to fade gaps up/dwn in A.M. when the opportunity is there otherwise concentrate on three stocks I feel I know their movmnt pretty well and that have good daily trading ranges. For these I'll use 1min to enter/exit while looking at 5min and 30 day charts using simple S&R and 5&20 MA. I also have a 1min naz up and watch reversal times during the day.

I'm sure this helps nobody, y'all seem to be beyond this but just writing it down has helped me (outline of trading plan). Swifttrader I'd be interested on how your trading goes from here, thanks for the thread. I'm papertrading for the next week or so to get a little confidence, any comments pls feel free.
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Good points. Note that Winston is long gone (his last post was 6 yrs ago).

FWIW, day traders work for the market, non daytraders let the market work for them. :D
 
Quote from SwiftTrader:

It's killing me every day. I used to be a scalper and not a bad one but unfortunately I got that bad habit of jumping in on every freakin tick. Yesterday I traded 120K shares, made 1000 gross and paid 1200 comissions, today even worse. Every morninig I tell myself - make no more then 10-15 trades and I end up making 500. I know it's lack of discipline and nobody can help me with that but maybe somebody went through the same problem and finally found a way to sit on his hands. How can I fight it? I know - handcuffs would be a good solution but is there anything else?
Maybe I should change my style completely, swingtrade or enter a trade, place a stop and get the hell out for a couple of hours?
I read charts well but I take profit too early, also I cut my loss even earlier. Not to mention the number of scratch trades I make every day.
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''Swing trade??'', Swift Trader asks ;
i dont recommand that unless you want to work wisely, work a lot and have less comissions/ make a profit,LOL:D
 
In an early bull or bear market, you are right, it probably would be better to just get long or short and hold for 6 months to a year.

The problem, most investors don't know when the bull market will end, and lose all their profits and then blow out the rest of their money during a bear market.

For a shorter swing trade based off of a news even for example, the government was not shut down, yes you can safely be long a few days. The only problem occurs is if you are long and new news event comes out before you reach your target.

During a day trade after hopefully all reports have come out, you can trade based on pure TA. Some bias can be based on the reports, but you can counter trend trade if you get support from your indicators and price action.

What is the benefit of day trading, is that you can make more profit in one day than you can make in one month of holding a slow moving stock. For example, lets say you are long 100 shares no margin on BMRN. For the past 10 days it has not moved more than 1 point and instead trended sideways. Sideways movement in a small range is useless to trade. There is no money to make. So you have locked up $ 6,754 of your money. This is fine if you are investing and have a job. However, if you are trading, you want to be making at least $ 100 every day or much more, you are sure not doing it this way.

However, this is not a simple skill, it requires discipline to take a small loss for the day and walk away rather than revenge trading to try to make back that small loss which then turns into a huge loss. It requires you to follow your trading plan, and not trade during off hours when their are not enough traders to move the market. Finally, it requires you to find an edge and also apply that edge correctly and with patience. As one book I read says, you need the patience to wait for your setup.


Quote from Visaria:

Good points. Note that Winston is long gone (his last post was 6 yrs ago).

FWIW, day traders work for the market, non daytraders let the market work for them. :D
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I've given this some thought. A trader can daytrade, speculate (or swing as some call it) overnight for a day or weeks and also invest (weeks and months to years).

It is up to you, you can play all the time periods as long as you have the capital, and the time to do so and most importantly, you want to!

For me, I prefer just speculating (however a lot of my trades end up as day trades when stopped out lol) and investing.
 
Quote from SwiftTrader:

It's killing me every day. I used to be a scalper and not a bad one but unfortunately I got that bad habit of jumping in on every freakin tick. Yesterday I traded 120K shares, made 1000 gross and paid 1200 comissions, today even worse. Every morninig I tell myself - make no more then 10-15 trades and I end up making 500. I know it's lack of discipline and nobody can help me with that but maybe somebody went through the same problem and finally found a way to sit on his hands. How can I fight it? I know - handcuffs would be a good solution but is there anything else?
More...

You (i say you but assume swifttrader is loooooong gone) need an assistant who will slap you in the head anytime you do anything beyond your rules. A girlfriend/wife who has prior instructions could presumably qualify for this position. I recall reading In Marty Schwartz's book the day his wife went out shopping, he did a lot of dumb trades and lost a million dollars. If his wife had been there monitoring him, she would have stopped him.
 
Girlfriend or wife as trading assistant - what could possibly go wrong? :D

Simple question - there is an envelope with 500 dollars on your right, and an open manhole to your left. How much 'discipline' does it take to pick up the envelope to your right, and to refrain from throwing it down the manhole to your left? Zero. All it takes is KNOWING (not guessing) which side has the $500 and which side has the manhole.

If you have a roulette wheel that is biased to land red 75% of the time, how much 'discipline' is needed to bet on red every time with sensible size? None whatsoever. Only a complete moron would fail to do that.

Discipline is completely irrelevant when you KNOW the approximate odds on your trades, and bet on sensible size. They just become like picking up dollar bills, or betting on a biased roulette wheel, or flipping coins whilst getting paid out 3:1 for heads.

Discipline is only an issue when you are trading on emotions rather than dispassionately working the odds, with every aspect of the trade, and all possible market actions, and your reactions, known already. Emotions only come in when i) you are trading too big for your comfort level ii) you are unsure of some elements of the trade iii) you are trading for reasons other than earning long-run profit (e.g. You are an addict for 'action').

With experienced traders, the most common causes are trading too big - when you have a lot riding on one trade, you start caring about the result; taking marginal trades that aren't total slam dunks, or fully worked-out reliable statistical edges; and being emotionally invested in the trade - wanting to 'be right' for ego reasons.

So, good guidelines are:

1. Only take reliable fat +EV trade setups. No marginal trades or trades where you are not SURE of your edge.
2. Pre-plan and mentally visualise/rehearse EVERY possible market scenario, and your response, before you even enter.
3. Never trade size/risk above your comfort zone
4. Never care about any individual trade. You will make 1000s of trades in your career, no one trade is going to make you retire (unless you hit a lottery win I.e. pure luck). So, out each trade in perspective, think of all future trades over your future career, not just this one now. If you care, or have any other emotional attachment to a trade, you are trading too big, or focusing too much on this one trade.

Follow those principles and your 'discipline' problems will fade away, and you'll look back and what the f*%# you were doing.
 
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