UnQ 2011: Will My Day Trading Career Be Cut Short?

U

Unquestionably

UnQ 2011: Foray Into Day Trading - Will My (Day) Trading Career Be Cut Short?

Time will tell.


Background:

Fed up with 4.8 years of swing trading making no better returns than working a McJob.

Method:

1. Use a handful of the best daily chart swing trading setups only!

2. Try to find Their equivalent in intraday charts.

3. Any setup spanning less than two days is invalid or viewed with extra caution/scrutiny. (Hold period is 1-5 days; usually 1-2 days).

4. Starting capital base: Real money only; approx $13k.


Observation:

Week of Feb. 14, 2011:

-54.58 (Incorrect setup/lack of discipline in entry)
40.02 (Incorrect exit: Should have held 2 days longer for 5% gain)
-48.98 (Incorrect setup/lack of discipline in entry)
-41.48 (Incorrect setup/lack of discipline in entry)
-19.98 (Incorrect exit: Should have held 1 hr longer for 10% gain )
-65.98 (Incorrect setup/lack of discipline in entry)

Weekly net loss: ($190.98)

Overall, I took too many setups that didn't conform to "the plan". What the heck was I thinking when I clicked on "buy"???? Have to work on the desperately-wanting-to-make-some-money-to-feel-good-about-myself part!

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Cumulative equity curve:

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Quote from gotta_trade:

How did you make that chart? Is that in excel?
More...

Yes, I find excel not only handy in making charts, but the data become handy during tax reporting season when you need to double-check against the spreadsheet.
 
I lost you. I excel at the 1 to 3 day swings and that IS swing trading to me. 1 to 5 day trade is the true swing trading.

A day trade is closed out in 1 day or less. What are you trying to trade?

I want to point out this style of trading 1 to 5 day swings, which is my own favorite style -- has a limit on scaling/profitability. Any method that holds over more then a day will be exposed to significant tail risk over the long run. It can still be more profitable then day trading though.

I can prove it too. If you have backtesting software go back and peak into the future to pick out profitable 2-3 swings and check out the max drawdowns. You will find you can't really effectively use stops on this style. I don't mean to say this isn't a great style as I think it is and can be one of the most profitable. However, one can't leverage it to the extent that one can a true day trade.

True day trading is typically means trying to pick out on an INTRADAY swing or a 1 day movement. (perhaps a bit over with futures -- to avoid the "shake outs" -- however you will lose the intraday margin if you hold after 4:15).

Day trading tends to work better in markets with large swings. There are many styles of day trading. But, I would say most day trading methods uhm give up maximum profitability in return for consistency and higher win ratios.

Look at this, if you can call a 20 point move with 55% certainty then maybe you could call a 5 point move with 70% certainty. That is really the logic of day trading. Of course, there are many consequences that derive from such decisions.
 
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