* Making profits through day trading? *

[Captain Haddock]

Hi all, was reading this and thought it might stimulate some debate...


According to an article in the NYTimes (Do Diligence (RR) (8/1/99)) day trading has exceptionally high "washout rates" and "regulators who have examined the books of day-trading firms say that more than 9 out of 10 traders wind up losing money. Because most of these people disappear quietly when their cash runs out, few who replace them in the trading rooms know about them or their failures."

from http://www.investorhome.com/daytrade/profits.htm


So, IF becoming a day trader IS viable, what characteristics are needed? As the article says, intelligence isn't a factor - many clever people can't make the grade.

Thoughts? :)

[shasta]

Hi all, was reading this and thought it might stimulate some debate...



from http://www.investorhome.com/daytrade/profits.htm


So, IF becoming a day trader IS viable, what characteristics are needed? As the article says, intelligence isn't a factor - many clever people can't make the grade.

Thoughts? :)

A well tested system & a ruthless discipline to stick to it.

You would have to have a software charting program i'd imagine, so knowing how to read charts would be essential!

[Steve]

The key is money management. It's funny how many 'clever' people overlook that... :)

[AMR]

1. A system with an edge
2. Money management
3. Psychology - A faith in your system and not panicking because you know that this drawdown is part of your plan.

Take a read of the books by Brett Steenbarger. I'm going through them right now and wow they are good.

[Captain Haddock]

I wonder how long it has taken for the successful traders to 'make it'. Surely you'd whittle down your capital pretty fast over a long period of losses. I guess that's the issue here...

[AMR]

Well this guy has lost for 8 years straight...

http://www.elitetrader.com/vb/showthread.php?threadid=126368&perpage=6&pagenumber=1

[shasta]

I wonder how long it has taken for the successful traders to 'make it'. Surely you'd whittle down your capital pretty fast over a long period of losses. I guess that's the issue here...

Remember every "bull" market brings about more so called "expert traders", who do well & think they can do no wrong.

Many disappear during a bear market when there capital isn't sufficent to trade with & they can't mentally handle seeing a sea of red day after day.

Capital protection is the number 1 rule when trading!

[Captain Haddock]

Well this guy has lost for 8 years straight...

http://www.elitetrader.com/vb/showthread.php?threadid=126368&perpage=6&pagenumber=1

oh man, that makes for grim reading! 43 pages, I might trawl through that tomorow...

[Captain Haddock]

Well this guy has lost for 8 years straight...

http://www.elitetrader.com/vb/showthread.php?threadid=126368&perpage=6&pagenumber=1

further note, found this quote on that link:


It took me 9 years and over 500k in losses to turn profitable. I make over 250k a year now trading equities. My advice, give it a few years. I did.

:eek:

I'm skeptical. Half a mill in losses!? Who can absorb that?!

[Rockhoundnz]

further note, found this quote on that link:



:eek:

I'm skeptical. Half a mill in losses!? Who can absorb that?!

Yeah, that is weird. My question would be this - to lose that amount of money this guy must have increased the number of contracts he was trading at some point. Why would he do that if he wasn't making consistent profits first?

[Rockhoundnz]

1. A system with an edge
2. Money management
3. Psychology - A faith in your system and not panicking because you know that this drawdown is part of your plan.

Take a read of the books by Brett Steenbarger. I'm going through them right now and wow they are good.

Hey AMR - which of Steenbarger's books did you think was better?

[AMR]

I thought the second one (Enhancing trader performance) was much better, more practical and applicable to trading. I'm only halfway through it, so I'll report back later :)

[Halebop]

Not a great fan of the term "Day Trading". It sets you on a path that might not be ideal. If we called it "Active Investing" the "how" instantly widens in scope and probability. While I'll dig around for a quick buck with the best and worst of them, medium term trades are far more profitable me. Picking a strong trend is much easier to do when you aren't requiring a fast screen refresh to achieve a result. There are also some reasonable statistical and practical foundations that demonstrate TA working best in a moderate time frame - say a 12 month view. $200 per day is not a very tough ask, but the mindset of "per day" is the value destroyer. I recently cleared the sort of annual income he desires in a few months shorting a single share (MQG). My only goal was to make money and beat some undemanding benchmarks (interest rates, market indices). If the process was constructed as an amount of money or a daily target the results would have no doubt been much poorer.

[Captain Haddock]

Not a great fan of the term "Day Trading". It sets you on a path that might not be ideal. If we called it "Active Investing" the "how" instantly widens in scope and probability. While I'll dig around for a quick buck with the best and worst of them, medium term trades are far more profitable me. Picking a strong trend is much easier to do when you aren't requiring a fast screen refresh to achieve a result. There are also some reasonable statistical and practical foundations that demonstrate TA working best in a moderate time frame - say a 12 month view. $200 per day is not a very tough ask, but the mindset of "per day" is the value destroyer. I recently cleared the sort of annual income he desires in a few months shorting a single share (MQG). My only goal was to make money and beat some undemanding benchmarks (interest rates, market indices). If the process was constructed as an amount of money or a daily target the results would have no doubt been much poorer.
good points ^

Is trading your main source of income?

[Halebop]

good points ^

Is trading your main source of income?

Yes, although more broadly Investing is my main source of income. Don't have a fixed modus operandi and am happy to turn a dollar by any ethical means. My methods tend to change by what the markets themselves facilitate (for instance I'm not a big fan of debt but have more recently made money shorting, using a facility that requires debt despite having matching funds available).