GoldMiner, I am right there with you. My investments / swing trades produce easy money, but my day trading is not going as well.
I am easily gross positive, but commissions kill me, making me net negative. I recommend you read the book "The Psychology of Trading" by Brett Steenbarger. You WILL find something useful in there. It is a great book.
Day Trading is psychologically intensive, much more stressful than swing trading. You need to learn to remain rational. You often create setups in your head that aren't actually there. You are tempted to place so many trades throughout the day due to flutters of market activity. You have to stick to your system. I think the key thing to remember, is that its not about how much money you can make in a day, but rather how well you can stick to your system.
You have a decent approach. You are finding a strong sector. It is important you figure out which stock is leading the sector. Analyze that stock's chart and the market first. Make sure you know where each is capable of going. You should watch almost all the stocks that are moving together, watching how they all behave together. You need to develop an understand of how the sector is moving. When analyzing waves, remember that each subsequent wave is typically shorter that the previous. So your morning wave may be strong, but if the second wave is only a quarter of the length, or less, you need to make sure you are getting a realistic risk reward setup.
When buying highs, you often want to see some consolidation before you enter. If a stock is moving up to resistance and has not stalled or pulled back, you often get a false break. It will either fail, or work a little, and then pull back. One of the good tells is volume. If volume is DECREASING into the level, it is often a sign that the current wave is coming to an end. Be prepared to buy the pullback if you expect further movement. If volume INCREASES into the level, there is a better chance that it will work, but you need to be careful. Generally, it is always better to wait for the setup or pull in. It is often hard to stay away from a stock that is approaching a major break out level, but has not yet set up. Sometimes you will profit off it, though more often than not, you just take a small loss and get charged commissions. Let the price consolidate, let the MA's catch up. If the breakout happens, wait for the pull in. You have to fight the urge to trade. You'll be surprised how much better things look if you just wait a little longer.
Another tip I could give about buying highs.... try to figure out what kind of order this is. If a stock is IN PLAY, you will have programs AND humans both buying, you often get different behavior from such a stock. There will be more emotion, more friction at times, bigger swings in price. Things will extend, and pull back hard, then continue moving. Or, let's say a stock is trading strongly on its own, maybe it is midday or the afternoon. It has bounced perfectly off a MA time and time again. There is little struggle from the opposing side. It is a steady grind higher. You can often read the box and see that someone has placed an order that a program is carrying out. The price will reach a level, and often just die. Volume will kill off. The program is done. If you understand the nature of the movement, you can determine whether something is really worth the entry. You need to try and understand how and why a stock is trading. It comes down to screen time... I've bought the program buying highs. Buying the whole rather than entering on a pull-in before the whole. You just get ripped.
NoDoji is spot on. Don't just trade the setup. You need to look at the big picture, and zoom in on each time frame. Line up the factors that effect your trade's success. Look at the time of day, look at the volume, what is the news or story. Has the setup been created on high volume or low volume? Determining the REAL probability and the REAL risk / reward for each trade is crucial.
Learn to read the box (level 2). Sometimes you feel see something going on that changes everything about the trade. The bullishness / bearishness of the box is critical. Perhaps you see how the price is exactly moving higher, or what is holding the price back.
Also, position size. You need to know where to get bigger. Where to start small. When to ADD. What is noise, what is not noise. Is the noise presenting an opportunity? This is one of my personal problems right now. So I am not going to give advice yet. I absolutely suck at allocating proper position size to trades, because of my psychological demons.
That being said, I'll list some of my problems that I am working on correcting, you might have some of the same ones.
1. I do not get bigger on great looking trades after having a poor morning. I do not get big enough on good looking morning trades because I don't want to ruin my day early on. My decisions absolutely effected by my P&L. This is probably the worst quality a trader can have. I have trouble treating each trade as its own entity. If you have this problem, you can probably correct it much quicker than me due to your account size.
2. The market action often sucks me in to amateur hour. I often get in something that is beyond my risk tolerance. I get caught in the emotional swells. I am now staying away from the early morning, letting the market give tells, let things truly develop, and search for the most promising trades. There is no rush. If you do miss something great, be patient and something WILL present. Something ALWAYS presents if you give the market time.
3. I do not give my trades enough time to work. I get out of trades too early, or I do not let my trades reach their stop. You need to stick with your trade as long as the conditions that got you in the trade hold. You often enter a trade with a rational mind, but once you're in, your irrational self takes hold.
You are having trouble beating the commissions. You need to let your trades reach their targets, you need to make sure your expectations for the trade are realistic, you can cut down your number of trades by being more selective. Only reason for getting out of a trade early is if any of the conditions that got you in NOTICEABLY change. If the market ticks down, there is no reason to think the market is going to collapse! The market has waves and pulls in as well. As long as your entry is good, give your trade room to breathe. You can reach your profit target via 2-4 GOOD trades rather than 30 mediocre trades. And the stress will be cut way down. Often the best trade, is to not trade.
As someone said earlier, you need to master the psychology of trading, and that is what I am working on now.
