Prop Trader Journal

[ksmetana]

Quote from atlTrader666:

Yes because the 1% of day traders who actually make money are skilled and that's not what you would expect from chance alone. If day traders consistently made money and you add exponential growth (scale-able strategy) the 1% would be billionaires.

To have any edge in the market you need to have great patience and take trades that have good risk-reward. If you think you can trade everyday or consistently in the short-term then you're a jacka$$... otherwise exponential growth would make you the ridiculously rich.

Lol for you to think the stock market, especially the US mkt, is inefficient. It's the most liquid mkt in the world, news comes in an instant, there's a bunch of money managers tracking every tick, a bunch or algo arbs taking advantage of any price inefficiencies, HFT, and you think the stock market is inefficient. Is that why even Pareto's law looks generous when applied to the markets you buffoon lol? If you think that you can extract money from the stock market on a daily or consistent enough basis then god bless you. Enjoy your $10,000,000 house, $3,000,000 yacht, $350,000 car, trophy wife, etc.

Btw ElecEquity, I saw your journal and hope that you enjoy your $1k up or down days after trading 100,000 shares. Those commissions, regardless how inexpensive, are not your friends huh? Please advise the OP how to churn his account and consistently beat the market in the short-term.

uhhhhhh......

Guys in my office pull 1k+ 8/10 days. Maybe one -1000 day a month. Losing days are like -500 or break even. Not sure where you are getting your info.

The 90% of traders who fail pay off the guys who figure it out. To say it is impossible is to be misinformed.

Then, you are very wrong about the billionaire potential of day trading. A successful day trading strategy does not have unlimited potential if you expontentially increase size. It is not a guarantee that strategies that pull in 200k a year would pull in 200 million simply by increase size. There is liquidity risk involved buddy. There is a limit to how big you can get in standard stock market day trading.

The billionaires in the game are the big money investors who buy and hold, capturing 10+% moves, and exit when there is enough liquidity to exit without missing outs.

Your vision is flawed. Do you think HFT would work better if they increased size 50x???? No, they calculate the most efficient size for their strategy.

They need to get filled man.

That being, sure there are opportunities where you can get mega huge and succeed in a day trade. Maybe a company buy out....

I mean, it takes capital to risk $300 million on a day trade lol. Are you nuts? Why risk $300 million on a day trade? There are higher quality trades out there for that amount of money. Day trading is its own arena, and its players know what size they can use efficiently. You obviously are not in the stock day trading game.

You don't understand the concept of liquidity risk.

If you have a strategy that risks 25 cents on a 5000 share position, there is liquidity present to get you out of the trade once your stop is triggered, even then you will probably have some slippage. If you risk 25 cents on a 1,500,000 position, you are not going to only lose 25 cents, I promise you that. And how do you intend to accumulate 1,500,000 shares at a price when only 10,000 shares are present at that price???

You have absolutely no idea what you are talking about.

Not sure what you trade or on what time frame, but its no wonder why you have issues with day trading.

If the market is so efficient, how have I been able to take trades where I capitalized on its inefficiencies? Truth is, every day in the market is different. Events create change. Price reacts to change. How can it be perfect with people competing for performance? Some people are WRONG. The incorrect people generate profits for the correct side.

Backtested strategies do NOT perfectly price the market. There is NO backtested strategy for nuclear fallout in Japan. There is no algorithm that knows how to trade the U.S. default. Rather, there are algorithms that know how to react to sudden price movement in accordance to past behavior. If you think probabilities make a pefect market, you are sorely mistaken.

How was the flash crash perfect?

There are inefficiencies all over the stock market. Perhaps you don't know because you only trade the E-MINI????

I'll say it again, the losers pay off the winners.

----------------------
You are right that even guys who beat the market can still suffer from commissions. You have to develop a way to beat the market so efficiently that you also beat commissions. However, to do this you only need to change your trading methodology, not your understanding of market behavior.

------------------------
I just don't see how you can say it is impossible when many people make a living from day trading, holding no overnight positions. Sounds like you have some personal resentment towards it. I WONDER WHY.

 

[baggerlord]

I have found success at some stuff that has similiar failure rates to trading. I have found that the bulk of the failures were not prepared for the challenge at hand.

The people that know what they are up against and are commited to achieving success, the failure rate is very low.

Most people are just dumb or weak or quitters. Thats just life IMO.

Edit to add: And the real big one is the failures are usually looking for a shortcut to hard work and experience. They want a magic solution to get them to their desired end state overnight with little work.

 

[traitor786]

if i had millions to invest i dont think i could pop it in to one stock as just the buying process will increase the price or offset sellers to buyers ratios. (liquidity)

with that type of money it would be smarter to use your same strategy in a daily chart instead of a minute chart.then you maybe able to dilute the investment a bit over some time.

trading more then one stock at a time would just distract you causing more risk

with that type of money i would hire a professional to sit and analyze a company you feel strongly about and make a report along with answers to all your questions. this would be based on fundamentals, management growth strategy and on your part a good technical buying and selling strategy, in the event you will have to sell you will have some time and know that the long term out look is positive so even if you go through a slump your ok.

Maybe open a prop firm with only good traders and focus on taking in 10-20% of gains rather then take anyone and focus on fees. this would separate your funds over different stocks.

also if you have 300 million send me over 1 million, i swear ill give it back after doubling it.... form my laptop on the beach !

 

[atlTrader666]

Quote from ksmetana:

uhhhhhh......

Guys in my office pull 1k+ 8/10 days. Maybe one -1000 day a month. Losing days are like -500 or break even. Not sure where you are getting your info.

The 90% of traders who fail pay off the guys who figure it out. To say it is impossible is to be misinformed.

Then, you are very wrong about the billionaire potential of day trading. A successful day trading strategy does not have unlimited potential if you expontentially increase size. It is not a guarantee that strategies that pull in 200k a year would pull in 200 million simply by increase size. There is liquidity risk involved buddy. There is a limit to how big you can get in standard stock market day trading.

The billionaires in the game are the big money investors who buy and hold, capturing 10+% moves, and exit when there is enough liquidity to exit without missing outs.

Your vision is flawed. Do you think HFT would work better if they increased size 50x???? No, they calculate the most efficient size for their strategy.

They need to get filled man.

That being, sure there are opportunities where you can get mega huge and succeed in a day trade. Maybe a company buy out....

I mean, it takes capital to risk $300 million on a day trade lol. Are you nuts? Why risk $300 million on a day trade? There are higher quality trades out there for that amount of money. Day trading is its own arena, and its players know what size they can use efficiently. You obviously are not in the stock day trading game.

You don't understand the concept of liquidity risk.

If you have a strategy that risks 25 cents on a 5000 share position, there is liquidity present to get you out of the trade once your stop is triggered, even then you will probably have some slippage. If you risk 25 cents on a 1,500,000 position, you are not going to only lose 25 cents, I promise you that. And how do you intend to accumulate 1,500,000 shares at a price when only 10,000 shares are present at that price???

You have absolutely no idea what you are talking about.

Not sure what you trade or on what time frame, but its no wonder why you have issues with day trading.

If the market is so efficient, how have I been able to take trades where I capitalized on its inefficiencies? Truth is, every day in the market is different. Events create change. Price reacts to change. How can it be perfect with people competing for performance? Some people are WRONG. The incorrect people generate profits for the correct side.

Backtested strategies do NOT perfectly price the market. There is NO backtested strategy for nuclear fallout in Japan. There is no algorithm that knows how to trade the U.S. default. Rather, there are algorithms that know how to react to sudden price movement in accordance to past behavior. If you think probabilities make a pefect market, you are sorely mistaken.

How was the flash crash perfect?

There are inefficiencies all over the stock market. Perhaps you don't know because you only trade the E-MINI????

I'll say it again, the losers pay off the winners.

----------------------
You are right that even guys who beat the market can still suffer from commissions. You have to develop a way to beat the market so efficiently that you also beat commissions. However, to do this you only need to change your trading methodology, not your understanding of market behavior.

------------------------
I just don't see how you can say it is impossible when many people make a living from day trading, holding no overnight positions. Sounds like you have some personal resentment towards it. I WONDER WHY.

The stock market is rather scalable to a great degree (except in the pre & after mkt)... Unless you trade super low market cap names, there's plenty of liquidity to increase size substantially. Maybe not from 5,000 shares to 1,500,000 shares, but def enough to raise the P/L. If someone can make 1K everyday during mkt hours I can't see why he couldn't make 10K. Also, 25 cents on what stock? Alcoa or a Rimm? You can gobble 100,000 shares on low betas and obviously you would have to scale into a stock like RIMM, but you probably shouldn't even be traded a stock like RIMM for 25 cents as that's a noise move.

The US stock market is also highly correlated. Thanks to index arbs the correlation is about .80 (S&P 500) which makes it very difficult to be a stock picker. That's why so many guys are trading an entire portfolio of a certain industry, sector, 52 week high list, relative strength with volume, whatever. The point is that you can trade a basket of stocks and put on size

On another note, there's plenty of HFs that trade solely on momentum. I know a lot of SAC guys, and even Steven Cohen, swing trade with size. Sure they scale into positions at certain prices because the real pros don't need to churn their accounts to death. If you trade 100,000 shares a day to make 1k then I hope you're adding liquidity to collect the rebate because the cost of doing business is ridiculous. Being a gross trader will not make well off either.

Shanb, I don't know your situation but I really wish you a lot of luck. I hope you're not at a broker "prop firm" where you had to deposit your own capital. Those firms will kick you to the curb when commissions eat your whole account. Even if your at a real prop firm you can read this post in x amount of months when you're no longer "prop trading". Day trading equities, especially discretionary is a fools game. Academics have studied the data and there's no signs of skill in buy-side day trading... Equities trading is for dinosaurs.

The problem with trading is that skill is tough to measure. You're P/L can be better now then it will be in a few months. Does that make sense when you bust your balls? Ok blame the market then. I'm not saying you can't make money trading equities but I am saying that you def can't make money on a consistent daily, weekly, monthly basis... There aren't good trading opportunities everyday. Guys that trade retail don't have to churn their account everyday. You in a way do. That's why you have to be super selective.

 

[nakachalet]

Quote from atlTrader666:

.... There aren't good trading opportunities everyday....

is it possible that when you as a trader fails to see the opportunity for a good trade during the course of a trading day.... is because....

you are blind.... practically blind to different setups that you are not familiar with....

if and when you are not personally experienced about certain trade setups, it is much better to hush up.... then to say something, then to have to eat your own words almost immediately there after....

you really ought to stay away from making comments on day trading which apparently you are not even qualified to trade.... if day trading setting ups are not profitable everyday.... how do so many of us are still here, poking fun at different comments (like yours, for exmple) and acing like a highly paid guru.... LOL

pray tell me if i am incorrect in my assumption.... that you are a no day trader at all....

at any rate, wishing you happy and profitable whatever you are trading....

 

[ElecEquity]

Quote from atlTrader666:

Yes because the 1% of day traders who actually make money are skilled and that's not what you would expect from chance alone. If day traders consistently made money and you add exponential growth (scale-able strategy) the 1% would be billionaires.

You assume that everyone is capable of scaling or even has the psychology to be able to scale.

To have any edge in the market you need to have great patience and take trades that have good risk-reward. If you think you can trade everyday or consistently in the short-term then you're a jacka$$... otherwise exponential growth would make you the ridiculously rich.

The exponential growth reasoning is ridiculous. Not many trading strategies offer that kind of scalability...especially in the stock market.

Lol for you to think the stock market, especially the US mkt, is inefficient. It's the most liquid mkt in the world, news comes in an instant, there's a bunch of money managers tracking every tick, a bunch or algo arbs taking advantage of any price inefficiencies, HFT, and you think the stock market is inefficient. Is that why even Pareto's law looks generous when applied to the markets you buffoon lol? If you think that you can extract money from the stock market on a daily or consistent enough basis then god bless you. Enjoy your $10,000,000 house, $3,000,000 yacht, $350,000 car, trophy wife, etc.

Btw ElecEquity, I saw your journal and hope that you enjoy your $1k up or down days after trading 100,000 shares. Those commissions, regardless how inexpensive, are not your friends huh? Please advise the OP how to churn his account and consistently beat the market in the short-term.

Glad you checked out the journal...it's kaput b/c it did nothing for my trading. I haven't traded 100k shares in a day in quite some time. I plan on being back there soon however as long as my current performance continues. A lot of my trading style has differed quite a bit. I've cut down my size and I'm actually doing better. After 4+ years of stepping in front of steamrollers to pick up quarters, I go with the trend exclusively...intraday at that. I haven't had a big down day since. Up 13 out of my last 15 days. Those 13 positive days also include 1 day that's been my best day of the year...didn't even break 70k shares that day. That said, a lot of my improvement is attributed to work that is far beyond my style of trading. Anyways, this isn't my journal.

ATL, I don't know his commissions so I can't comment to that respect. The primary reason for my comment is that I believe that he should apply himself with a single-minded focus to succeed. This is not a business where you can put forth a half-hearted effort or have one foot out of the door and expect to succeed. This is a very tough business -- the most difficult thing I've ever done in my life. But what I do know is that if Shanb can manage to make a living from this business, it can be a helluva lot of fun.

Also I know exactly how it feels to be starting off in a business where most people fail. Everyone tells you that you won't succeed. I refuse to ever be one of those people.

 

[ElecEquity]

Quote from ksmetana:


----------------------
You are right that even guys who beat the market can still suffer from commissions. You have to develop a way to beat the market so efficiently that you also beat commissions. However, to do this you only need to change your trading methodology, not your understanding of market behavior.

------------------------
I just don't see how you can say it is impossible when many people make a living from day trading, holding no overnight positions. Sounds like you have some personal resentment towards it. I WONDER WHY.

Dang Kurt. I would've quoted your entire answer, but I don't want to take up too much space. Great answer.

 

[ElecEquity]

Quote from atlTrader666:

The stock market is rather scalable to a great degree (except in the pre & after mkt)... Unless you trade super low market cap names, there's plenty of liquidity to increase size substantially. Maybe not from 5,000 shares to 1,500,000 shares, but def enough to raise the P/L. If someone can make 1K everyday during mkt hours I can't see why he couldn't make 10K. Also, 25 cents on what stock? Alcoa or a Rimm? You can gobble 100,000 shares on low betas and obviously you would have to scale into a stock like RIMM, but you probably shouldn't even be traded a stock like RIMM for 25 cents as that's a noise move.

The US stock market is also highly correlated. Thanks to index arbs the correlation is about .80 (S&P 500) which makes it very difficult to be a stock picker. That's why so many guys are trading an entire portfolio of a certain industry, sector, 52 week high list, relative strength with volume, whatever. The point is that you can trade a basket of stocks and put on size

On another note, there's plenty of HFs that trade solely on momentum. I know a lot of SAC guys, and even Steven Cohen, swing trade with size. Sure they scale into positions at certain prices because the real pros don't need to churn their accounts to death. If you trade 100,000 shares a day to make 1k then I hope you're adding liquidity to collect the rebate because the cost of doing business is ridiculous. Being a gross trader will not make well off either.

Shanb, I don't know your situation but I really wish you a lot of luck. I hope you're not at a broker "prop firm" where you had to deposit your own capital. Those firms will kick you to the curb when commissions eat your whole account. Even if your at a real prop firm you can read this post in x amount of months when you're no longer "prop trading". Day trading equities, especially discretionary is a fools game. Academics have studied the data and there's no signs of skill in buy-side day trading... Equities trading is for dinosaurs.

ATL, I thought you might have had a clue. Clearly you don't. For you to say that a .25 move is noise in RIMM tells me that you have no clue what's going on. There are sooooooo many ways to take money out of the market on an intraday, overnight, or long-term basis. "Noise" is not a matter-of-fact statement unless you're talking about CNBC. That "noisey" .25 move in RIMM you see may be a huge setup for a particular type of trader.

I love open-ended statements from random people about SAC capital and HFT programs. Have you ever created a successful HFT program? Sounds like you must have. If you know so much about what goes on at SAC, why aren't you doing what they do? Because you have no clue.

Academics. Lol. No need to even comment on that. Equities trading is for dinosaurs? Do you have some sort of superiority complex? The product that you trade doesn't make you inherently any better or worse than any other trader. It's a ridiculous statement. Guys like you are why I haven't been back to ET in awhile. It's such a waste of time to have conversations about trading with clueless people that specialize in telling other people what can't be done. Either you're solution-focused or you're not. If you're not, you're probably not a profitable trader.

 

[ElecEquity]

Quote from Shanb:


BTW ElecEquity...your log is great man. Learned alot reading through it!

Glad you found it useful. Hopefully you can learn a lot about what NOT to do.

 

[Shanb]

Quote from ElecEquity:

You assume that everyone is capable of scaling or even has the psychology to be able to scale.



The exponential growth reasoning is ridiculous. Not many trading strategies offer that kind of scalability...especially in the stock market.



Glad you checked out the journal...it's kaput b/c it did nothing for my trading. I haven't traded 100k shares in a day in quite some time. I plan on being back there soon however as long as my current performance continues. A lot of my trading style has differed quite a bit. I've cut down my size and I'm actually doing better. After 4+ years of stepping in front of steamrollers to pick up quarters, I go with the trend exclusively...intraday at that. I haven't had a big down day since. Up 13 out of my last 15 days. Those 13 positive days also include 1 day that's been my best day of the year...didn't even break 70k shares that day. That said, a lot of my improvement is attributed to work that is far beyond my style of trading. Anyways, this isn't my journal.

ATL, I don't know his commissions so I can't comment to that respect. The primary reason for my comment is that I believe that he should apply himself with a single-minded focus to succeed. This is not a business where you can put forth a half-hearted effort or have one foot out of the door and expect to succeed. This is a very tough business -- the most difficult thing I've ever done in my life. But what I do know is that if Shanb can manage to make a living from this business, it can be a helluva lot of fun.

Also I know exactly how it feels to be starting off in a business where most people fail. Everyone tells you that you won't succeed. I refuse to ever be one of those people.

You said that you like to trade intraday trends ElecEquity? I have been doing something similar after the initial open. Just screening strong/weak stocks throughout the day with 1.5-2 relative volume, and that are up/down and have good risk reward(not down/up alot).Along with the above approach I have also have a list of stocks in play(earnings) for the day near key levels that could have follow through. I do look at overall S/R(daily/hourly etc) to see the risk reward of certain trades as well.

So my question for you is, how do you find the stocks you will trade throughout the day? Do you screen throughout the day or have stuff
before the open based off of a longer-term picture?