profitable daytrading is possible, but probably not worth the effort

D

dozu888

Based on my observations and experience, profitable daytrading is achieveable, but it takes a lot of effort.

1) must spend hundreds if not thousands of hours of screen time to get to a point where one is technically proficient

2) must spend another hundreds if not thousands of hours to practise psychological fitness

3) market is mostly random.. it can be predicted to a very small extent. this determines that long strings of losers are inevitable and it takes incredible psychie to be able to trade thru such losing streaks.

4) considering the above, daytrading is probably below average on the scale of reward/effor ratio among all the professions. True, to be a good doctor/lawyer/professional, one needs to put in just as much effort, if not more.... but at least the reward is more predictable.

therefore, HATS OFF to those who can do it consistently.
 
If profitable daytrading is possible (which it is), then it certainly is worth the effort, at least in a financial sense, because a profitable daytrader will be able to keep increasing size.

Of course, just because it is possible does not mean that it is probable for most. It isn't.
 
glad you are taking your hat off to the people that can trade but you don't know what you are talking about. sorry you were never able to be around a bunch of good traders.

i "work" very little. probably about 4-5 hours a day and i generally take off when i want. and yes i make a good amount of money.
 
Quote from smilingsynic:

If profitable daytrading is possible (which it is), then it certainly is worth the effort, at least in a financial sense, because a profitable daytrader will be able to keep increasing size.
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Most daytrading strategies have an "edge" if you will because the daytrader is moving around less size than the players pushing the stock around are with their large orders, thus they have an ability to ride an institution's panic or greed as they work market orders. You can only do that with so much size. Also, the more you size up, the more you experience slippage, and with profit margins so small in daytrading (.0015 consistently is a superstar daytrader) a few extra cents of slippage can make or break a strategy.

There are some skilled traders who have strategies with high scaleability, who can maybe size up to a mill or two a year, but for the vast majority of daytraders if they make 150k from their strategy they're already taking the most possible size they can.
 
Quote from NYOBScalper:

Most daytrading strategies have an "edge" if you will because the daytrader is moving around less size than the players pushing the stock around are with their large orders, thus they have an ability to ride an institution's panic or greed as they work market orders. You can only do that with so much size. Also, the more you size up, the more you experience slippage, and with profit margins so small in daytrading (.0015 consistently is a superstar daytrader) a few extra cents of slippage can make or break a strategy.

There are some skilled traders who have strategies with high scaleability, who can maybe size up to a mill or two a year, but for the vast majority of daytraders if they make 150k from their strategy they're already taking the most possible size they can.
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It all depends on the right mix of:

(a) very experienced decision making

(b) automation

I make 500 stock trades/day...
But will probably double that as my software systems continue to evolve.

Since I'm net netting close to $1 million/year...
A better capitalized trader with more leverage...
Could probably make several million/year.

Does anyone really NEED more than that?

And you are right about the $0.015 profit margin.
It can be done by an experienced quant trader...
And I'm around there...
But it's pretty much the upper limit...
And that's an 80% profit margin if paying about $0.003/share in fees...
And that is NOT scaleable beyond a few million.

Scaleable strategies will have MUCH smaller profit margins.

But what is also very important...
Is annual return on capital.

The magic level is around 40-50% return...
Where compounding really starts to kick in...
And you can double your capital roughly every 2-3 years after taxes.

It can be done... but don't try this at home.
 
Quote from NYOBScalper:

Most daytrading strategies have an "edge" if you will because the daytrader is moving around less size than the players pushing the stock around are with their large orders, thus they have an ability to ride an institution's panic or greed as they work market orders. You can only do that with so much size. Also, the more you size up, the more you experience slippage, and with profit margins so small in daytrading (.0015 consistently is a superstar daytrader) a few extra cents of slippage can make or break a strategy.

There are some skilled traders who have strategies with high scaleability, who can maybe size up to a mill or two a year, but for the vast majority of daytraders if they make 150k from their strategy they're already taking the most possible size they can.
More...

if you are only making .0015/share then you just aren't a good trader. not sure where you got the idea that is a great efficiency.
 
Quote from robbie380:

if you are only making .0015/share then you just aren't a good trader. not sure where you got the idea that is a great efficiency.
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robbie380, you sound very confident in your post, perhaps you could share some details on your trading strategies and how you went about becoming consistent. Do you have a blog somewhere?
 
2) must spend another hundreds if not thousands of hours to practise psychological fitness


thats the number one issue for a lot of traders, I am working on it now - as soon as I overcome the fear factor I will post in the 2008 profit thread. Stay tuned for huge profits :D (hey just being optimistic)
 
Quote from robbie380:

no blog. i work at a prop firm, kershner trading, where we have a lot of good traders. i have been trading since march 04 and i have seen our efficiencies increase as the traders have gained more experience. we see things as fast as anyone on the street due to our technology so we are able to make money on stuff most people don't see until later.

also, i just looked and my efficiency for last quater was .0751/share.
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So you made 7 cents per share, daytrading? That's a fantastic number! What kind of volume are you doing?
 
robbie380,

If you are indeed making the number you say you are, congratulations. You are a superstar daytrader beyond all reason and have incredible, godlike efficiency. For me, if I can average $500/day over a month trading 30,000 shares, I am quite content with my performance. Regardless, of all the profitable daytraders I know, only maybe one makes more than .0015/share and he trades crazy high priced stocks.

While you may be capable of producing far more, the reality of the business is if you're making .0015 consistently you're a superstar daytrader. Look at trader P/L 2007 or trader P/L 2008. See the guys who post the biggest numbers and look at their volume. Many of the top guys are below .0015.
 
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