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especially the E-Micro currency and E-Micro gold. I used day trade ES and paid way too much commission. In reality day trading is a losing game. You will end up loosing money from your emotion, then loosing from paying fees to the broker. Solution. Create your own automated strategy and let the bot trade 24/7. Just monitor it once day to make sure the bot is working as expected.
I'm now trading 2 accounts on the E-micro and I don't stare at chart all day or care about the news..... Turn on the bot and just go live your life !
You make good points on swing trading. But in the spectrum of trading styles day trading is the only one that has the potential to provide a "income like" stream of returns. Seems that was the OP's goal. A successful day trader can make money be it $100 or $500 or $1000 a day depending on capital almost like clockwork. For an established day trader making $100 on a futures contract is like child's play.
As you extend the trading time period it inevitably becomes more and more like investing. Nothing wrong with that but generally speaking the returns become more erratic and the per trade risk increases with higher time frames. That is why you do not see longer term traders with 100% annual returns but in day trading 100% annual returns are definitely in the realm of possibility.
Some more thoughts on DAY trading with 6 sexy rules:
Out of my journal(s) here that are present 5+ years here on fio
I just can recommend to
1) Start your own open fio or even personal journal
2) Find out in a statistic which WEEKdays are bringing WINS
3) Omit all "weak" days of a week and concentrate ONLY on winner days
4) Omit all RISK days with anouncements etc.
5) Follow your system thoroughly
6) Repeat those great winners
With all that you skip noise, low volume days, risky entries etc. etc.
Note your best day of the year as well as the best week of the year.
and then REPEAT!
All your experience will reduce future screen time.
MEANS: having more time for a second job/hobby that makes you HAPPY.
Lack of cash definitely affects trading because a whole lot more emphasis is placed on preserving what you have. This will interfere with your selection process making you more cautious about the trades you take. Because you're more cautious any loss taken will be felt more personally because you worked even harder anticipating the trade. This will then exasperate the negativity of a normal loss and make you even more cautious on the next trade. It's a feedback cycle that will run amok if there's no guidelines for the frequency you place trades, both your aptitude to even take a trade and how spread out they are.
R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
I get what you're saying and in theory I agree with your comments - a skilled day trader should be able to get nice consistent returns that would allow him to live off his gains. In practice, I have never seen those types of returns unless there was fraud involved. Now, my scope relates mostly to the fund world and I do not see accounts of small retail investors, except for myfxbook which used to be a gold-mine of information - most of the equity curves with the nice and smooth returns tended to blow up sooner or later and then just got deleted from the website. The guys who stuck around had equity curves resembling a more typical return profile, i.e. up and down with drawdowns that increased as risk increased.
The guys on the Scalping thread might have different returns, but I have not seen (or requested) their equity curves.
The only food for thought I will leave here is that if someone needs consistent gains does this not imply that the account is undercapitalised?
I think you vastly underestimate the returns that are possible with equities. We could both find examples to prove either of our points - Dan Zanger and Mark Minervini show what can be done with swing trading. You could argue that the market was different then, but the same applies for guys like Tom Baldwin, etc.
Regarding risk per trade, it is just one metric. If I risk 5% per trade, but I only make one trade a month, the total one-month risk to my closed equity is less than someone who risks .5% per trade, but places 1 trade a day. Of course the market could gap past my stops which is much less likely if someone only daytrades, but that is also just one metric.
The real benefit of swing trading stocks is that it can be done part-time while someone still has a full-time job. That reduces the pressure to make money from the markets on a consistent basis, which can lead to not being impacted by emotional issues like revenge trading as much as someone who must make money to have food on the table. It also allows someone to save money from a job and increase capital that way. It is usually more efficient to grow a small account through capital contributions and small accounts get hurt in a very disproportionate way if you need to withdraw money from them - try running a simulation in excel where you have your opening balance for the month, calculate your expected return for the month (based on past performance) and then withdraw living expenses. Now, add in one or two bad months of lets say 10% losses and see if the account can actually recover.
Swing trading is merely an approach I adopted which gives me a decent chance at growing my money while reducing my risk of ruin to the absolute minimum. Other folks might prefer different approaches, I just don't have a lot of back-up options should I quit my job to trade full time.
Stop looking at trading like a get rich quick scheme. You will not get massively wealthy until you are consistent and even then you may not. Trading well is a slow grind. Day to day averaging a win. That's why the failure rate is so high, too much gambling mentality. Be patient, find an edge and trade only this setups. Good trading is boring, monotonous and consistent. Just like good poker.
I feel for you. I’ve been where you are now and felt similarly. I feel a lot of us on here have, most don’t talk about it. I’ve experienced the cycle of heavy losses when I started 8 years ago. I struggled heavily to transfer what I read and learned to charts in real-time. For me, the holy grail was meeting my wife. She was fully supportive of my trading. She became my auditor and kept the losses and gains in check. We also made the deal trading came secondary to my career. After some big winners(had some amazing years that made me think what I was doing was right, but in reality I was just buying in a bull market), and bigger losers I came to the collusion my ADHD and its effect on my impulsivity was part of the issue with staring at charts for hours. At that point, I spent close to a year coding what I had learned into a fully automated system. Since I’ve been automated I've had positive returns, less screen time, and an overall better quality of life. Just my 2 cents.
My advice to you would be to find a career that you love and go down that road. If you ever end up trading again ensure you’re controlling your maximum total loss for the day/week/month/year, and someone is auditing that for you.
I'm still in the process of finding a full time job. Thankfully I currently have a part time job keeping me afloat.
My day trading day's are over but I'm going to switch over to swing trading. I'm currently swing trading forex at the moment with the few funds that I do have (under a 1000 atm).
Because I live a minimalist lifestyle due to my current circumstances as well as learning that "items" are not what makes me happy, when I get additional income, I'll be able to pay off some of my debt as well as put some into savings and some into a trading account.
I intend to figure swing trading out. I just won't day trade.
Might as well make some use of the trading experience I've gained over the years and apply them to swing trading.
Tough question to answer. To me, an edge in trading is the sum total of what you do that beats the monkey throwing darts at a dart board. In other words, an edge is the result or effect of best practices not something that can be defined as easily as your question implies.