True, although day-trading attracts so many snake-oil salesmen its almost impossible to find a good mentor/class amongst all the "Give me 2000 bucks and I'll tell ya how to get rich quick" noise !
What approach should one take when starting day trading?
- Thread starter JonathanAV95
- Start date
True, although day-trading attracts so many snake-oil salesmen its almost impossible to find a good mentor/class amongst all the "Give me 2000 bucks and I'll tell ya how to get rich quick" noise !
Robert Morse
Sponsor
Yes, you have to speak to others that went through this. I'm only talking about quickly learning the basics.
I agree.
Don't daytrade stocks. Look at other, more liquid markets, which are far more widely daytraded.
I put a list of them in this post: What are the top books for new forex traders to read? (Ignore the fact that that thread happened to be about forex - as I mentioned there, I don't trade spot forex anyway and I would have given exactly the same recommendations for other trading, too.)
Good luck!
As day trading is to place short term traders to increase compounding and longer term trades use capital to generate wealth and/or income, what most people do is learn using mid to long term timeframes (hourly/daily) and then when successful move to shorter timeframes.
Here's the fundamental problem, they are different strategies. Technically it should work, but the world is not just technical, you also have human emotion and greed. When you want to day trade you are wanting to generate above average returns, and everyone wants a piece of your pie.
So, you have a few options: find a way around the problem which will takes years or more; pay your way through but will need high levels of capital; or find someone who will 'lease' you the knowledge, they're not going to do it for free. Everyone in the public domain will use the first, the second you're on your own, and the third are word of mouth.
The smart option, keep your day job and trade 240mn and 1d for capital appreciation. If you are determined to do the daytrading, you need to ask yourself the simple question, why. It is more effort, more stressful, and there are a lot of pitfalls to navigate, do you have the time, energy and psychology. The shorter the timeframe the more the complexity of the environment moves to the extremes of the normal distribution.
Get yourself a real money micro lot forex account try the different timeframes, forex is brutal but it will fast track your basic understanding of how the markets work, the mobile apps are fairly advanced. From there you can work out asset classes such as futures or stocks, timeframes for your lifestyle, income or capital appreciation, and strategy.
Here's the fundamental problem, they are different strategies. Technically it should work, but the world is not just technical, you also have human emotion and greed. When you want to day trade you are wanting to generate above average returns, and everyone wants a piece of your pie.
So, you have a few options: find a way around the problem which will takes years or more; pay your way through but will need high levels of capital; or find someone who will 'lease' you the knowledge, they're not going to do it for free. Everyone in the public domain will use the first, the second you're on your own, and the third are word of mouth.
The smart option, keep your day job and trade 240mn and 1d for capital appreciation. If you are determined to do the daytrading, you need to ask yourself the simple question, why. It is more effort, more stressful, and there are a lot of pitfalls to navigate, do you have the time, energy and psychology. The shorter the timeframe the more the complexity of the environment moves to the extremes of the normal distribution.
Get yourself a real money micro lot forex account try the different timeframes, forex is brutal but it will fast track your basic understanding of how the markets work, the mobile apps are fairly advanced. From there you can work out asset classes such as futures or stocks, timeframes for your lifestyle, income or capital appreciation, and strategy.
Although you may utilize their concepts, trading is not like typical science or engineering, at least not like 80% do science and engineering in practice, that is, copy someone else and claim ownership of truth. In trading there's no absolute truths to lean on, at best it's smoke and mirrors and you hope to catch the direction of the wind and just stay out of the hurricane. Trading is not even like most businesses. although you should treat it as one, as there's no concrete materials, goods, products or services to market, markup and sell. You may say it's a little bit of both, but most of all it's about managing uncertainty. And it so happens this is exactly the blindspot of most of education, on the job training and any other structured human activity.
As for daytrading, this may seem low-risk and managable from the outside, However, in terms of actual risks and costs, it's the direct opposite. First of all you need much more funds than longer-term trading, and you need to do everything possible to minimize costs. Then you need to make sure you've got enough liquidity and that erratic market behaviour won't kill you. Leverage may sound fancy, but comes with contractual limitations, that you may want to avoid/minimize as far as possible too. Then there's the psychology, stress and time limitations etc. This is for the 0.1% or less to succeed in, really. Are you 1 in a thousand? Maybe in some areas, but perhaps not in trading, at least not without extensive experience and some previous successes to lean on. In fact, the shorter the timeframe, the more perfect you need to plan and execute, which is far from likely to be consistent enough if just beginning to explore this world.
Your path may be different and maybe you're a prodigy, but longer timeframe is challenge enough for me at least, so would recommend to start there, risk little and don't quit your dayjob.
Perhaps you should list the reasons WHY you're so interested in daytrading in particular?
UPDATE:
If DAY-trading USD2500, you're pretty much guaranteed to blow up by death of thousand cuts though. May not be the best experience if one wants to learn how to succeed. Could be nice just to get some "cheap" execution experience though. 2500 may be used for very long-term trades though, and could even win albeit slowly and depending on some luck/good timing.
As for daytrading, this may seem low-risk and managable from the outside, However, in terms of actual risks and costs, it's the direct opposite. First of all you need much more funds than longer-term trading, and you need to do everything possible to minimize costs. Then you need to make sure you've got enough liquidity and that erratic market behaviour won't kill you. Leverage may sound fancy, but comes with contractual limitations, that you may want to avoid/minimize as far as possible too. Then there's the psychology, stress and time limitations etc. This is for the 0.1% or less to succeed in, really. Are you 1 in a thousand? Maybe in some areas, but perhaps not in trading, at least not without extensive experience and some previous successes to lean on. In fact, the shorter the timeframe, the more perfect you need to plan and execute, which is far from likely to be consistent enough if just beginning to explore this world.
Your path may be different and maybe you're a prodigy, but longer timeframe is challenge enough for me at least, so would recommend to start there, risk little and don't quit your dayjob.
Perhaps you should list the reasons WHY you're so interested in daytrading in particular?
UPDATE:
If DAY-trading USD2500, you're pretty much guaranteed to blow up by death of thousand cuts though. May not be the best experience if one wants to learn how to succeed. Could be nice just to get some "cheap" execution experience though. 2500 may be used for very long-term trades though, and could even win albeit slowly and depending on some luck/good timing.
Last edited:
The trouble with starting with a four figure account is that you get drawn into the evil world of leverage that has killed so many.
A larger account means no/less leverage means you are genuinely risking only 1–2% of your account on any one trade.
I am not "assuming", I am going with my own experiences, when I was n brokerage the average new account opened had to have min of $30k as margins on big S&P was $20-25k, by inexperienced trader was four months till they were either wiped out or greatly reduced and these where times you had to call in your orders, now cause of speed of internet, low margin requirement for a much weakened ES bet it is faster and mostly same outcomes. Whereas those who traded on longer term where still open after a year.
What I am stressing is the enormous about of knowledge anyone has to gain for trading charts and your ability to memorize, I doubt there is a great deal who have photo memory running around. Do you think long term trading is harder than day trading? I believe it is the same, I believe if someone put a chart in front of you, took of right margin so you couldn't see the price or even now what market it is, you be able to chart it, place where your trade would come in as a day trader, charts are charts regardless of timeframes, except for gaps. Many flock to day trading cause exchanges have made it much easier to trade with greatly reduced margins, exchanges make some big fees each day on Indexes, Energies, Financials, in the 80-90s you need huge money to day trade so you were more well financed and people at home didn't take 20-100 trades a day.
Have you ever taken you system for day trading and applied to long term to see how it does on stocks? The signals I use to scalp is part of signals I use for long term stock trading, only difference if I don't get out as quickly as in day trading than trading weekly/daily stocks. I know some of the reasons why people don't do longer term, they see it as boring, they are under capitalized, they get an idea from reading from others taking anything over night is so risky, and yet when I add up all the risk taken trading any market as day trading, it has always been the most risk for possible profits.
I think learning slower and prove to oneself with longer term, traders have better chance of surviving, plus you can have a job to go to as well. All the people who give this full time and then some for 3-5 years of not working really hurts them and families future for chance at what they think is a dream to do. It is fricking hard to learn to trade period and you put all the components together and remember in seconds. And I only go by my experiences and assume nothing.
Its still the same dollar amount though. If you lose 2 ES points, it may be 1% of a 10k account, or only 0.1% of a 100k account, but its still $100 that you lost.
Obviously with a bigger account, you have more chances to get it right, but if what gets you down is how much money you lost in a day, then account size won't take much of the sting away.
Forget mobile... you need to be sitting there and focused. Most advice on here will be useless. People might give you bits and pieces, but until you put all the pieces together, you will be losing. Since nobody is going to help enough by giving you many pieces, most of the info given will be insufficient to actually help. (if not down right wrong and dangerous)
Saying all that, the biggest thing you need to get into your head is the statistical nature of this game. You aren't going to find the holy grail that gets you 90% win rates. The best looking trades will fail, and the worst looking ones will succeed. What I mean by fail or succeed is that they will either hit a stop or profit target, and you never know which will happen.
Since one of two things will happen, when you're starting out, always shoot for one of these 2 things happening. ie. You take a trade and let it either hit your stop or target. When you start fiddling with it after you entered, you will be doing more harm than good. You may think that you can prevent a bigger loss by getting out early if its not looking good, but many times it might turn around and be a winner before it hits the stop and becomes a loser. Likewise, if you get out too soon before hitting your profit because you're too scared to lose what you have, this will affect your overall winnings. You're looking to count your wins and losses after 20 trades, 30 trades, 50 trades. The very next trade doesn't matter, its just one of many. If you find you are losing every trade, consider that you just need to do the opposite.
After doing a bunch of trades, it should become pretty apparent if your stop is too tight (ie. it always gets hit), or your profit is too far away (ie. it never hits), and then you just need to figure out a better set of parameters. If all you do is start out by taking trades with 1:1 risk to reward ratio, you probably won't make money (since you will lose more than half probably), but you should have some wins in there too to give you encouragement. If you focus on a R:R of 1:2, so you're making twice as much on the trades that win vs. trades that lose, and you manage to get about 50% wins, you're absolutely golden and will be doing better than most.
If you spend any amount of time here at ET, you will learn those who trade, actually call out trades sometimes (or shows trades after the fact), and they have losses. Those who just talk about trading, and sound brilliant, probably don't even trade. Discussions about how to trade without showing trades or examples are pretty much useless. Most members and discussions on here will be useless when it comes to progressing your trading career. You will only learn by doing this yourself. Even if you spend 6 months reading everything you can, and figure out who is legit and who isn't, you still won't be much further along because those legit guys say very, very little about actual trading. Many of the legit guys are now barely posting, and only reading, or not posting about trading. But once again, unless they say they will let you follow their trades so you can watch and learn (which they won't), then most help will be not that beneficial for you.
Everyone says the best way to learn is to start with a mentor, but you will probably have more luck of making it in Hollywood than finding a mentor who is himself profitable and willing to help. So if you haven't clued in yet, what I'm saying is you're on your own, but knowing this can save you quite a bit of time.
