You won't get rich daytrading - my story

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tradermike, I suspect we are talking/thinking about two different things.

In your post you mention, "the avg guy with an online acct" while I on the other hand presume (perhaps a bit naively!) that a person who is trading intraday has the following minimums:

1] edat execution
2] realtime datafeed/charting
3] skilled technical analysis
4] disciplined money management
5] psychological discipline
6] trading plan
7] sufficient capital (20k+)

The "the avg guy with an online acct" has no business trading intraday or swing trading for that matter!

So yes, then I agree with you, if your avg Joe opens a Schwab account and plans to "daytrade" on the side (like breaks at his regular job) he is asking to be hurt real bad.

I would like for there to be a study where they track people who are starting out and follow ONLY those that have the minimums I outlined above. Lets then see how they do.

I would bet that at a minimum they would not blow out.


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just wanted to add something after seeing P2's post above.

I totally agree with his statement of a 'sweet spot' in the mkts in terms of predictability/manageability

Read "The Psychology of Finance " by Tvede where he basically dissects the markets from a pure math point of view and presents it as deterministic chaos with feed back loops.

In any case trading is not about predicting. It is about reacting.

 
Hitman said "I personally find day trading a lot less stressful than swing trading, because I like instant feedback from the market."

That is how I used to think. I had to know immediately if a trade I bought would give me a profit or not. So I would buy stocks and sell them the next day to get a point only to see them go double or triple in the next few months. I then realized that I made money, but knowhere what I could have. The deal was that I had to get that short term satisfaction and had to learn that that desire was making me miss out on the profits that I could be making.
 
snipertrader said:

"Sounds to me like you should be a fund manager. Why are you wasting your time with a newsletter? Do you really think the average person on this board can follow and manage 30 positions? Do you think they have the capital to do so? "

Actually I am going to open up a small fund. Anyone can follow 10 stocks on a daily chart. It is not that difficult or time consuming. And there is no reason someone couldn't have a small account and divide it up into 5-10 posititions.


 
"I would like for there to be a study where they track people who are starting out and follow ONLY those that have the minimums I outlined above. Lets then see how they do.

I would bet that at a minimum they would not blow out. "

Well, there have been studies done about daytraders and they do blow up more than others. I recall the Wall Street Journal doing an article on daytrading firms several months ago. Seems like the daytrading firms always have to get new recruits to replace those blown out and the number of traders in them has been dwindling during the bear market.

My guess is that all of the LVL II's, monitors, and super software give most daytraders a false sense of superiority. The new technology is not enough to overcome the psychological obstacles that any trader will face. Nothing has changed since Jesse Livermore traded in the old bucket shops.
 
praetorian said:

"I disagree about the time frame comment. The shorter your timeframe is, the better your odds of success are. There is a sweet spot so to speak. I can't predict the next tick. No one can. I can't predict where it will be 30 or 90 seconds from now. As time goes out, I can say with some certainty where it will be, and where it will move to. As the move continues, I can predict less and less where it will be over the next 30 minute period. As the future gets more blurry, I scale out or exit completely. No one can see many days into the future. There are too many opportunities for news to affect the market. I definately think that the shorter your timeframe, the better your odds are. "

Well successful trading and investing is not about predicting each tick of a stock. It is not about predicting what direction the market will take over the next 5 minutes, a day, or even a year. It is about entering low risk/high reward positions, managing your risk, and letting the assets in your account grow through compounded interest.

Let me put things this way. My grandfather faught in World War II in the fifth army that was commanded by General George Patton the greatest military genius of all time. The death rate Patton's army was 1/2% which is a testament to that fact. Patton won battle after battle not by predicting where the enemy would move and be most vulnerable, but mobilizing his resources and smashing them through brutal massive attacks.

What I am getting at is this. It sounds to me like you are saying that there is a timeframe where you can predict what a stock will move in the next few minutes. But anything longer than that you can't. So you just do short term trading. Part of what you are saying - although you might not realize this - is that the stock is making you money. And you only know when it will do that for you in a short term time frame.

But the stock is not making you money. You are making the money by applying a strategy to the market that works for you. In my book when I enter the battlefield of the market I want to do like Patton does and use the most resources possible. In trading that is your strategy and the best strategy that has worked for me is managing a portfolio of positions. Why be like a pee shooter and make a couple thousand a week and worry that I'm not predicting things correctly, when I can make bigger money managing a group of positions and letting them do the work for me. That's my view.

"The second part is in reference to Gary Smith. I think he has been more influencial to my success in trading than any other person. (If anyone does not have a subscription to thestreet.com/realmoney.com, you are not really interested in trading.) His main points are not to swing for fences. His basic strategy is to make 5% per trade, and not risk more than 5% of his account. You'd be surprised, but all those 2-4% up days really add up fast when it's compounded. I don't think I've had a day where I made more than 10% so far this year, but I'm up almost 150% so far. (the miracle of compounding) "

Smith is good. Glad that you have done well in the market! That's great. See, even though Smith uses a different time frame than I do we share many of the same principles. We both use risk managment. We both look at similar chart patterns. But we have different time frames. I bought OPTN at 18 the other day and plan to watch it go to 30, where he listed it in his column the other day, but would just get a 1-2 point profit in it and run hoping to find another good stock. He has to work so much more and worry about the market and every tick of it. Where I can buy my positions and go play golf or do whatever.

 
So you think daytrading isn't for the average joe? is that what this whole thread is about?

Or,


Is it about you extolling the virtues of YOUR successful strategy and herding all the average joes towards your newsletter?
 
Thread is about my post and my story. Not about the website. I haven't mentioned it. Others have as a way to try to quickly dismiss my points. What did you think of my story and experiences daytrading?
 
tradermike,

There have been no studies as the one I suggested. Risk of ruin is basically nil if you are implementing sound money management (lets say 1/2% risk on trade). To blow out would require that you make a massive amount of incorrect trades, one after the other! The fact that these poor guys are blowing out proves that they are not using mm.

I don't want to belabour the point but it simply comes to preparation.

If you aren't prepared and committed to trading intraday. You will fail. Just as you will fail at any endeavour without such vital prerequisites.

It seems we are continuing to talk about two different sets of people.



 
Originally posted by tradermike
Thread is about my post and my story. Not about the website. I haven't mentioned it. Others have as a way to try to quickly dismiss my points. What did you think of my story and experiences daytrading?
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dude, you did mention it.. and then you edited your post.. and you still have an "email me at tradermike@timingwallstreet.com" plug at the bottom of your post..

i for one agree with Sniper_Trader1 and limbo.. you are shamelessly hyping your website..

trading is a business, not an investment vehicle.. its the difference between a car dealer and an antique/rare car collector.. the car dealer is making small gains on many vehicles, while the collector holds the asset and lets it appreciate.. yes, the dealer has to show up for work.. so what, big deal.. yes, the collector will make more money on each investment than the dealer makes on each sale.. big deal, they are not trying to accomplish the same thing.

as far as your story and experiences daytrading.. how is that relevant to anyone who wants to become a daytrader? you "tried" trading and didnt make it because you didnt control your emotions and allowed yourself to become a "gambler".. sorry man, bummer.. thanks for the additional confirmation that daytrading takes discipline and the ability to control ones emotions.. i sincerely hope investing works out well for you.. i hope your newsletter gets a million subscribers.. but you are fishing for subscribers in the wrong pond..

Originally posted by praetorian2

I disagree about the time frame comment. The shorter your timeframe is, the better your odds of success are.. ..There are too many opportunities for news to affect the market. I definately think that the shorter your timeframe, the better your odds are.

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well said praetorian2

good trading..

-qwik



 
Yes - it does look like we are talking about different groups. I'm talking about the average daytrader - and statistics show that the average daytrader blows up - while you are talking about the 2-5% the manage to make money.

One day a movie will be made about the Internut trader who made money in the stock market only to lose it all when the bubble popped. The story would have to be a cross between Sinclair's literary masterpiece Babbitt and Steve Martin's The Jerk. The latter a cold fisted drama about a man who makes a fortune inventing an opti-grab assessory for eyeglasses only to lose it all to lawsuits. A movie that brings tears to my eyes everytime I see Martin's character lose his fortune and a favorite of Bill Gate's because it teaches the lesson of how the government and litigation can stifle the creative energies of capitalism.
 
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