Tell me why I can't grow my account to $1M in 12 years

[jeffbader]

I don't see you mentioning your strategy at all and of course what would be viable is entirely dependent on the strategy.

Crap, I really should've included my strategy in the original post. Here it is (applicable to both long and short plays):

1) I'm on the Pacific Coast. Wake up at 5am, complete my morning routine, begin the process to select FOUR stocks to watch / trade.
2) I'm looking for +/- 2% gappers with news that also have an attractive daily chart. >100k volume premarket with a good price flow, >30M float, >$0.50 ATR, between $10 and $500 price.
3) Indicators: volume, daily and pre-market levels and VWAP (still have more learning on Level 2 before I trust myself with it) - I've lost interest in moving averages and the more "clever" indicators.
4) Charts: 1 min, 5 min and 15 min.
5) I've recently started refraining from trading within the first 15 minutes unless something really jumps out at me.
6) I have a few setups I'm learning, but so far this is my favorite: Wait for the stock to indicate that it has chosen its direction and then wait for an entry near VWAP upon a pull-back.
7) Once an attractive region of entry has been established, I calculate my entry point and share size based on the stop loss and profit target. I always risk a fixed $R per trade, which will be lost if the stop is hit. My nominal profit target in this calculation is always 2R. The R and 2R values both account for commissions. Both the profit target and stop loss are based on technical levels in hopes of minimizing the likelihood of loss and maximizing the likelihood of profit.
8) Enter the full position order (no partials or scaling in) as a limit if I suspect a bounce off or near VWAP, or possibly, and rarely, as a stop if it crossed VWAP and I'm expecting it to come back.
9) Upon entering the position, immediately place the stop-loss order.
10) Once the stock is in profit territory, convert the stop-loss order into a bracket order (or OCO), again for the full position size, no partialling in or out. I have found yet no need to add the complexity of partialling in / out of trades.
11) Depending on the price action and my P/L for the day, I may adjust the profit target on the fly at my discretion after being in the position for a bit. I may also ratchet up the stop at my discretion. I monitor the historical success of my discretionary adjustments. This strategy too often yields greater than 2:1, so I have adopted on-the-fly ratcheting and so far I'm not disappointed with the aggregate results.
12) I make no more than four trades per day and stop entering positions by 12pm EST. It's quite rare that I enter a position after 11am EST. The obligation of my day job helps with this. If my first two trades are winners, I'm done for the day. I may very well stop if only the first trade wins. If I lose the first three in a row, I will only enter a fourth trade if something really attractive shows up, and on that trade I will move my stop to break even as soon as it enters profit, rather than taking a full loss on the fourth trade. I have considered capping the daily loss to three trades, but so far this has proven to work well.
13) Enter every trade into my journal for review.
14) Continue education / trade review during evenings and weekends.

The smaller the company the better chance of finding one, simple because it's harder for the largest guys to trade with volume in these. Then again, so will it be for you quite quickly.

I think this is the heart of my question. Part of the trade-off analysis for me is the actual profit potential. Please note that I'm saying that PART of this pro/con debate is, for me, the potential profit (some others being lifestyle, freedom, fun, challenge, etc). It makes sense to me that we each have our own personal ceilings (psychology, standard of living, life events, etc.), but the market itself contributes to the ceiling as well, from what I've read and from what I've observed with slippage even in my own paltry-sized positions. I have heard people state with great confidence things along the lines of "the liquidity requirements of a given strategy will determine its scalability." So I'm searching for real-life specific examples that demonstrate that phenomenon. For example "Hey Jeff, my strategy is similar to yours and I started hitting my ceiling at about such and such a time / account value / share size, etc. And here's what I found: (cue mind-blowing exposition of an experienced trader describing pitfalls associated with scaling up in volume)."

I'm not going to attempt advising you on DT as I don't have anything resembling enduring success in that, I'm sure there are some ETers who will though; you can usually research people's posting history to figure out what their advice is worth.

Thank you Snuskpelle.

 

[volpri]

Well the reason you may not be able to achieve it in 12 years is because it may take 12 years to learn how. Then you can start. Just examine what you have learned and examine your performance in 6 months. Extrapolate that out 11 years and 6 months. Are you willing TO PAY that sort of price? Notice I did not say you will HAVE to pay that sort of price but are you willing to?

If you are insistent on day trading PM me and I will share what has helped me over the years and where to learn it. I could post it here for all to see but I would risk being laughed to scorn. And my ego is fragile. I have to deal almost daily with the attacks on Mr T and not sure I can handle much more scorn. ROFLMAO

Besides my friend down in Boca Raton will not budge one tiny bit on his comments and positions on Mr T. He calls him tRump. Can you imagine calling the POTUS tRump? How disrespectful!

But I will get the last laugh in Mr T’s landslide win!!

 

[jeffbader]

Welcome. Many of us here on ET at one time or another were like you so it can be done.

Thank you ironchef! That sentiment is refreshing.

became a full time trader ONLY since 2010. Too short a history to prove that I can trade, so take it with a grain of salt:

Wow, you've been trading full-time for 9 years and that's not proof that you can trade? Can you indulge me and elaborate on this? What will it take for you, personally, to achieve before you consider yourself a proven trader?

1. It is very very hard to do. The published strategies don't work.

Agreed.

2. Don't quit your day job unless you don't need it.

Agreed. At this point quitting my job to trade full-time is a pipe-dream. While it seems attractive, and I'm not discounting it as a long-term possibility, I have several things to prove out with trading before I'll consider it a replacement of my day job.

3. Follow your real estate rental plan.

Totally. Real estate is my primary goal. For my personal plan, the stock market appears at this time only to be a vehicle to grow capital for more real estate. However, I'm not ruling out the possibility that trading could some day become more.

4. Follow @dozu888's advice and keep putting money in the stock market.

Without going into too much detail, with real estate being my primary vehicle for retirement, leaving large sums of money sitting in the market is not attractive to me. Essentially, I view real estate as a superior long-term investment in terms of tax shelter, passive income and leverage (growth potential). But I really don't want to derail this forum with a real estate vs. stock market debate. I'm hoping we can just agree to disagree on this one.

5. If you really really are interested in trading, then peel off a small % of your stock market funds to learn how to trade, honing your skill while holding a day job.

I am. And this is essentially what I've done. I've peeled off a chunk of change that I can live without while continuing my day job.

6. But before you do, read up on the market, how it works, take classes on finance, learn to backtest with your strategy to verify. Like engineering, you need to understand the basic of how things work before attempting to solve your engineering problem, otherwise, garbage in garbage out.

I mostly agree with you on this one. However, I'm a firm believer that necessity is the mother of all invention. My personality is just not very motivated unless there's skin in the game.

 

[jeffbader]

What your graph shows is that you lost 10% of your account value in a mere six months. Repeat this nine times and your money is gone. I have the impression that you are overconfident, not just in being profitable with day trading, but even beating regular investments in the fastest growing equity ETF QQQ.
Don’t give up your regular day job. And be more humble.

Don't we all need confidence to overcome any challenge? I do have some confidence still, even though the chart shows that the market's been making me it's b*tch over the last six months. I've failed at many things over the course of my life and, surprisingly, I still beat myself up each time, as if it is always some new fresh feeling. No, I'm not a profitable trader. But working the market is just too interesting / challenging / fun for me to let go of it yet. And the fact that I've been essentially breaking even over the last month is encouraging.

Honestly, you're probably right that I'm overconfident, but I never meant to sound pompous. I only meant to share some of my background as credentials to illustrate that I'm not a total idiot. I just try to be very accurate in my words and I mean no offense. On the contrary I'm very appreciative of your post as a good reminder.

 

[dozu888]

Crap, I really should've included my strategy in the original post. Here it is (applicable to both long and short plays):

1) I'm on the Pacific Coast. Wake up at 5am, complete my morning routine, begin the process to select FOUR stocks to watch / trade.
2) I'm looking for +/- 2% gappers with news that also have an attractive daily chart. >100k volume premarket with a good price flow, >30M float, >$0.50 ATR, between $10 and $500 price.
3) Indicators: volume, daily and pre-market levels and VWAP (still have more learning on Level 2 before I trust myself with it) - I've lost interest in moving averages and the more "clever" indicators.
4) Charts: 1 min, 5 min and 15 min.
5) I've recently started refraining from trading within the first 15 minutes unless something really jumps out at me.
6) I have a few setups I'm learning, but so far this is my favorite: Wait for the stock to indicate that it has chosen its direction and then wait for an entry near VWAP upon a pull-back.
7) Once an attractive region of entry has been established, I calculate my entry point and share size based on the stop loss and profit target. I always risk a fixed $R per trade, which will be lost if the stop is hit. My nominal profit target in this calculation is always 2R. The R and 2R values both account for commissions. Both the profit target and stop loss are based on technical levels in hopes of minimizing the likelihood of loss and maximizing the likelihood of profit.
8) Enter the full position order (no partials or scaling in) as a limit if I suspect a bounce off or near VWAP, or possibly, and rarely, as a stop if it crossed VWAP and I'm expecting it to come back.
9) Upon entering the position, immediately place the stop-loss order.
10) Once the stock is in profit territory, convert the stop-loss order into a bracket order (or OCO), again for the full position size, no partialling in or out. I have found yet no need to add the complexity of partialling in / out of trades.
11) Depending on the price action and my P/L for the day, I may adjust the profit target on the fly at my discretion after being in the position for a bit. I may also ratchet up the stop at my discretion. I monitor the historical success of my discretionary adjustments. This strategy too often yields greater than 2:1, so I have adopted on-the-fly ratcheting and so far I'm not disappointed with the aggregate results.
12) I make no more than four trades per day and stop entering positions by 12pm EST. It's quite rare that I enter a position after 11am EST. The obligation of my day job helps with this. If my first two trades are winners, I'm done for the day. I may very well stop if only the first trade wins. If I lose the first three in a row, I will only enter a fourth trade if something really attractive shows up, and on that trade I will move my stop to break even as soon as it enters profit, rather than taking a full loss on the fourth trade. I have considered capping the daily loss to three trades, but so far this has proven to work well.
13) Enter every trade into my journal for review.
14) Continue education / trade review during evenings and weekends.



I think this is the heart of my question. Part of the trade-off analysis for me is the actual profit potential. Please note that I'm saying that PART of this pro/con debate is, for me, the potential profit (some others being lifestyle, freedom, fun, challenge, etc). It makes sense to me that we each have our own personal ceilings (psychology, standard of living, life events, etc.), but the market itself contributes to the ceiling as well, from what I've read and from what I've observed with slippage even in my own paltry-sized positions. I have heard people state with great confidence things along the lines of "the liquidity requirements of a given strategy will determine its scalability." So I'm searching for real-life specific examples that demonstrate that phenomenon. For example "Hey Jeff, my strategy is similar to yours and I started hitting my ceiling at about such and such a time / account value / share size, etc. And here's what I found: (cue mind-blowing exposition of an experienced trader describing pitfalls associated with scaling up in volume)."



Thank you Snuskpelle.

Well the reason you may not be able to achieve it in 12 years is because it may take 12 years to learn how. Then you can start. Just examine what you have learned and examine your performance in 6 months. Extrapolate that out 11 years and 6 months. Are you willing TO PAY that sort of price? Notice I did not say you will HAVE to pay that sort of price but are you willing to?

If you are insistent on day trading PM me and I will share what has helped me over the years and where to learn it. I could post it here for all to see but I would risk being laughed to scorn. And my ego is fragile. I have to deal almost daily with the attacks on Mr T and not sure I can handle much more scorn. ROFLMAO

Besides my friend down in Boca Raton will not budge one tiny bit on his comments and positions on Mr T. He calls him tRump. Can you imagine calling the POTUS tRump? How disrespectful!

But I will get the last laugh in Mr T’s landslide win!!

the strat looks legit, although like Volpri said it will take long time to get good....

1 thing though - this intraday stuff is very labor intensive... also is the most vulnerable to be affected by ever improving robots.

 

[jeffbader]

Why not keep reinvesting in real estate?

I'd like to use the stock market to grow the capital necessary for subsequent down payments at the fastest rate possible. I'm not proud to admit that I'm not above buying cash flow using an appropriate down payment instead of hunting for months for the perfect real estate deal that essentially affords itself with zero down. Not only am I not convinced that such deals even exist in my area, but the prospect of searching for the perfect real estate deal does not interest me when I can just pay a little extra money, reduce my risk in the process, save time and still end up with a profitable investment.

 

[kj5159]

Don't we all need confidence to overcome any challenge? I do have some confidence still, even though the chart shows that the market's been making me it's b*tch over the last six months. I've failed at many things over the course of my life and, surprisingly, I still beat myself up each time, as if it is always some new fresh feeling. No, I'm not a profitable trader. But working the market is just too interesting / challenging / fun for me to let go of it yet. And the fact that I've been essentially breaking even over the last month is encouraging.

Honestly, you're probably right that I'm overconfident, but I never meant to sound pompous. I only meant to share some of my background as credentials to illustrate that I'm not a total idiot. I just try to be very accurate in my words and I mean no offense. On the contrary I'm very appreciative of your post as a good reminder.

To attempt any new endeavor requires "too much" confidence, by definition you're saying to yourself "I have no idea what I'm doing but it will work in the end because I will learn and grow and make it work."

 

[jeffbader]

Maybe because of his chart?

Can I like this 1M more times???

 

[volpri]

@jeffbader Look you should get it if you stick with it, educate yourself, and learn what you need to learn, practice what you need to practice and be willing to do whatever it takes to be successful at it.

I am different than many, I suppose. Many talk about being humble. I disagree. I think a trader should exude confidence..be abit narsisstic...hate to lose...etc..you will need these characteristics when the market beats up on you. Just going around eating humble pie won’t cut it. You are trying to take money from some of the brightest..quickest..intelligent...gutsy..and brutal people on the face of the earth. You gonna have to be smarter...gutsier..quicker..more brutal..and brighter than at least some of them to make it in this world.

The market IS brutal. You have to be brutal. That is why if I am wrong I HATE it but I admit it, and take my losses then double or triple up and get back quickly what the market took from me. I have no respect for the market and will kick it’s ass every time I can. Sometimes it kicks mine. And it hurts. It certainly has NO respect for me. Actually it doesn’t care, or know, if I am proud, humble, meek, or arrogant.

I use the above as if the market was human. It isn’t but it is created and run by humans.

 

[ironchef]

only the very determined and very lucky few, eventually figure out without a mentor, what this game is truly about.

You don't need to figure it out, just luck, like you said here:

but, on the other hand you can back test with a period of bull run, and no matter how you set the target/stop, you would always make money if you keep enter trades on the long side.

so are you a profitable trader? then you have just confused genius with bull market lol. i.e. you have made money, by being on the correct side of the market,

Better still, instead of backtest, bet with the bull market starting in 2009.

In all seriousness, if you have a very long view, the market has a general up trend, so those betting with the general market will mostly make money, the only question is how much.