Reasonable expectations for Trading

[Evermore2017]

Sure its technically gambling, because money is invested with the object of profit in an enterprise with an uncertain outcome. But do you consider all forms of gambling the same? - say, poker as opposed to the lottery?

For beginners and fish poker is a gamble with EV- like lottery, for guys with the studies and skill poker is EV+++ gambling.
I believe poker skills help me a lot to be a profitable day trader.

 

[tomorton]

For beginners and fish poker is a gamble with EV- like lottery, for guys with the studies and skill poker is EV+++ gambling.
I believe poker skills help me a lot to be a profitable day trader.

So day-trading is not gambling. Though some day-traders are gamblers. Fine by me.

 

[Evermore2017]

In life everything is technically gambling as you need 100% certainty to escape gambling. So death is the only things that is sure and no gamble. All the rest is.

Agree, death and maybe taxes are the only sure things.

 

[punisher]

I'm just calculating capital from a number of trades, against capital from investing. The time it takes to determine, run and exit each trade is excluded but of course this differs between day-trading and long-term trading.

Still, whether its 1 trade/day as I suggested or 10 trades per day, the potential return over a year is greater than that from investing in something like the S&P.

so what is your point?

I did say that your calculations are solid, didn't I?

Here is the problem though: day-trading is a "job" where you use your skill and time. Your capital is simply a tool. It is meaningless what your ROI in day-trading is unless it refers to ROI on your "brain power" or "time devoted). Similarly you don't ask carpenter what is ROI on the hammer or nailer that he bought, do you?

The thread like this one ("what is expected % return in trading") pops up often and there are two kinds of responses. One like yours which fails to acknowledge that in day-trading it is not the capital but skill and time of the trader that produces the results. The other type of answer usually compares to results of big players (funds) failing to notice that investing is not trading and that small speculator can do things that bigger players can't.

 

[fan27]

I'm just calculating capital from a number of trades, against capital from investing. The time it takes to determine, run and exit each trade is excluded but of course this differs between day-trading and long-term trading.

Still, whether its 1 trade/day as I suggested or 10 trades per day, the potential return over a year is greater than that from investing in something like the S&P.

so what is your point?

Let's say I have $100,000 capital to trade and a day job making $100,000 per year. Let's compare day trading vs swing trading/investing.

1. Day trading: I cannot work the day job as I need to be glued to the screens during the day. I need to make a 100% return on my money just to equal what I made at my day job.

2. Swing trading/investing: Continue to work day job and attempt to make a 25% return on trading capital.

Which scenario has better odds of panning out?

 

[tomorton]

I did say that your calculations are solid, didn't I?

Here is the problem though: day-trading is a "job" where you use your skill and time. Your capital is simply a tool. It is meaningless what your ROI in day-trading is unless it refers to ROI on your "brain power" or "time devoted). Similarly you don't ask carpenter what is ROI on the hammer or nailer that he bought, do you?

The thread like this one ("what is expected % return in trading") pops up often and there are two kinds of responses. One like yours which fails to acknowledge that in day-trading it is not the capital but skill and time of the trader that produces the results. The other type of answer usually compares to results of big players (funds) failing to notice that investing is not trading and that small speculator can do things that bigger players can't.

I don't understand what you're trying to tell me or why. In financial terms, ROI on time spent day-trading is only relevant if you have some other way of earning capital during the same time.

 

[tomorton]

Let's say I have $100,000 capital to trade and a day job making $100,000 per year. Let's compare day trading vs swing trading/investing.

1. Day trading: I cannot work the day job as I need to be glued to the screens during the day. I need to make a 100% return on my money just to equal what I made at my day job.

2. Swing trading/investing: Continue to work day job and attempt to make a 25% return on trading capital.

Which scenario has better odds of panning out?

I would not recommend day-trading to anyone, its a mug's game.

 

[punisher]

I don't understand what you're trying to tell me or why. In financial terms, ROI on time spent day-trading is only relevant if you have some other way of earning capital during the same time.

Why? The reason I was telling (not only) you this is that your calculations while mathematically solid are POINTLESS when it comes to day-trading, as I explained earlier exactly why.

There is always something else to do, there is always a choice. Time is the most precious asset you have and should you decide to day-trade you MUST factor that in. In investing, on the other hand, you're devoting very little time if any (if you allow others to manage)

 

[tomorton]

Why? The reason I was telling (not only) you this is that your calculations while mathematically solid are POINTLESS when it comes to day-trading, as I explained earlier exactly why.

There is always something else to do, there is always a choice. Time is the most precious asset you have and should you decide to day-trade you MUST factor that in. In investing, on the other hand, you're devoting very little time if any (if you allow others to manage)

OK, you win, day-trading takes more time than being an investor.

 

[schweiz]

1. Day trading: I cannot work the day job as I need to be glued to the screens during the day. I need to make a 100% return on my money just to equal what I made at my day job.

I live in Europe. When I was started to daytrade, I worked 80%. So every day I was home 1 hour before the opening (trading ES). I traded the full session and when the markets closed it was around 10PM where I live. So I had 80% of my salary, in fact almost 90% as taxes were much lower. And on top of that I had my daytrading profits.

2. Swing trading/investing: Continue to work day job and attempt to make a 25% return on trading capital.

I continued my job for 80% and needed to make only 10% of my salary to compensate a salary loss of 10% by daytrading. All the rest would be additional income.
I also could put close stops as I did never go overnight. I could use much leverage as I was always sitting in front of my screen. Result is now triple digit profits in a good week, double in a weak week. And max drawdown NEVER 30%.

Which scenario has better odds of panning out?

My scenario is the best I think. At least from the choices you gave. You never realized that what I am doing was possible. So you judge on your own (limited) knowledge. And so your conclusion is only valid in specific circumstances, not valid overall in any possible situation.