What is the threshold to be considered a successful day trader?

MrMuppet said:
You have 50k in your account and you look to grind out 10-20k each month, withdraw and do the same thing again next month.
50k gives you 200k buyingpower for stocks and plenty of margin if you trade futures so 500-1000$ day are easily achievable when you're good.
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What if you don't withdraw (or only withdraw a small amount) but keep compounding it?
 
Bugsy said:
That's not a formula. That could work one year. Fail the next 2. Work the next 3. Fail the next 3. Could a person build a career on those results? A formula measures success against criteria.

Value and growth investors utilize financial history (balance sheets, income, cash flow) utilizing formulas to measure intrinsic value for future success because the formula has a high probability of returning consistant sustainable results over the average of time. Same with poker players. Same with businesses across industry. There are verifiable and measurable ways consistant with high probability of success.

When does one conclude it is skill and not sheer variance. What is the formula. How many trades over how long a time period with what percentage profitability? Sports betting has 55% to 70% profitability over X number of bets. Poker 5BB for every 100 hands over 100,000 hands to ensure it is skill and not variance. Just because it has not been mentioned, or has not manifested, does not mean it cannot be. It just means it has not yet been quantified.

Actually, in typing this reply I'd almost think sports betting may be the closest formula. They use signals and models and choose based on the most likely outcome. They deem 3000 sports bets, with 52.38% (to overcome the juice) profitability, the minimum needed to consider it skill vs sheer variance. However, with sports betting you win 1X your amount or Lose 1X your amount and pay juice on the bet (akin to moneymaker spreads). In trading you may risk 1% to win 1% to 2% or more depending on your strategy.

I would say it is fair to count an entry as one trade and an exit as a different trade. Both require skill in and of themselves, even if it's a stop out, because correctly setting your stop is just as important. If a person traded 2 round trip trades a day (4 trades total) whether in the same stock or multiple, 5 days a week that would equate to roughly 1,000 a year. So roughly 3 years of trading 2 stocks a day with a profitability of

X = Final Value
W = Expenses (taxes, spread, commissions, margin interest etc)
Y = Win Profit
Z = Loss Profit

Y - Z - W = +X after 3,000 trades (minimum) verifies skill and not luck

This is a rough formula and I suck at math so I may have written it wrong or there may be a more appropriate way of stating it. Obviously there are many who trade far more frequently, but the formula would still hold the same.
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There are at least a couple of ways to look at how to make a living:

1. You work a job, make $20-$30 an hour, work 40 hours a week.

2. You sell real estates, make a few sales a year, after expenses in some cities in Southern Cal you make $100K a year.

If your approach in trading is #2, most months you lose a little money but make it big a few times a year. Few people trades this way.
 
wiesman02 said:
My version of success is consistency each day. Being able to hit my daily target in ES 4 out of 5 days per week, and one marginal loser each week. As a scalper, I'm looking for a smoother profit curve.
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Curious.

What's your daily target?
 
Laissez Faire said:
Really? Care to explain that?
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Sure. IMO, this is the number 1 noob trap anyways for people who are just looking at charts.

Trading does not scale indefinitely. It's pretty easy to turn 1k into 10k because you can trade illiquid trash that's really inefficient.
But turning going beyond 1m profit per year is way harder.
5k per day is about 1m per year. Now think about how you need to trade in order to make 5k/day. You cannot trade low floaters or micro caps anymore because the liquidity is not there. You need to get into midcaps with decent float and volume and this is were the sharks are.

Now you mastered these assets, but getting in and out of even AAPL with 50k shares per clip is difficult, so at a certain point there just isn't enough liquidity for exploiting short term moves. The larger you trade, the less trades you get...so you have to lengthen your timeframe or just plateu.

And now the monkeys will chime in saying WhY DonT YuO jUsT tRAdE the ES oR CL? Well good luck competing with the 1%ers...if you're good enough, you probably wont ask questions here on ET.
 
MrMuppet said:
Sure. IMO, this is the number 1 noob trap anyways for people who are just looking at charts.

Trading does not scale indefinitely. It's pretty easy to turn 1k into 10k because you can trade illiquid trash that's really inefficient.
But turning going beyond 1m profit per year is way harder.
5k per day is about 1m per year. Now think about how you need to trade in order to make 5k/day. You cannot trade low floaters or micro caps anymore because the liquidity is not there. You need to get into midcaps with decent float and volume and this is were the sharks are.

Now you mastered these assets, but getting in and out of even AAPL with 50k shares per clip is difficult, so at a certain point there just isn't enough liquidity for exploiting short term moves. The larger you trade, the less trades you get...so you have to lengthen your timeframe or just plateu.

And now the monkeys will chime in saying WhY DonT YuO jUsT tRAdE the ES oR CL? Well good luck competing with the 1%ers...if you're good enough, you probably wont ask questions here on ET.
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I'm one of those monkeys. :)

Are you then saying that it's easier to trade/profit on AAPL or stocks in general compared to index futures? If so - care to elaborate on that one?

It's a statement I've heard in the past and the answers been mixed - coming from people who have experience both with futures and stocks.
 
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