Looking at the 40 year returns of the s&p 500 ... what type of preformance should day traders use as a measuring stick?

If you don't bet, you can't win.

ES Jedi 

Looking at the 40 year returns of the s&p 500 ... what type of preformance should day traders use as a measuring stick? Attachment 338489 If you don't bet, you can't win.

I would think that day trading requires a lot more work than buy and hold the SP500. Maybe the extra work should mean the day trader should always beat the SP500 by a wide margin, like 10% better every year.
This is true unless the day trader just likes trading a lot and does it for free or is willing to pay to trade like I do.

I think if you’re a highly skilled day trader, like truly elite, years of experience, a pro who can make money each day in the markets, 2% a day is attainable. And that might be on the conservative end.

If you have a $100,000 account you can comfortably trade 10 contracts. At that size there’s definitely room to make 40 points in the ES. Depending on how you scale out and if it’s a big quick move you could make a lot more on just one trade.

Every day there is at least one trade in ES that is THE trade, and it’ll get you that 2% or more if you catch it.

Pariah Carey 

I think if you’re a highly skilled day trader, like truly elite, years of experience, a pro who can make money each day in the markets, 2% a day is attainable. And that might be on the conservative end. If you have a $100,000 account you can comfortably trade 10 contracts. At that size there’s definitely room to make 40 points in the ES. Depending on how you scale out and if it’s a big quick move you could make a lot more on just one trade. Every day there is at least one trade in ES that is THE trade, and it’ll get you that 2% or more if you catch it.

That sounds pretty good. You have been here 10 yrs and you rate yourself advanced. What kind of returns are you actually achieving?

"Thousands of traders entertain the idea that in some way the market momentarily indicates its own immediate future; that these indications are accurately recorded on the tape ; therefore he who can interpret what is imprinted on the narrow paper ribbon has within his reach unlimited wealth.

It seems to me that such an opinion is fully warranted for it is well known that many of the most successful traders and operators of the present day began operations by successful Tape Reading, trading in fractional lots of stock with a capital of only a few hundred dollars.

Speaking of Joe Manning, one of the shrewdest and most successful of all the traders on the floor of the New York Stock Exchange, a friend of mine once said:

"Joe and I used to trade in ten share lots together. He was an ordinary trader, just as I am. We used to hang over the same ticker."

The speaker was, at the time he made the remark, still trading in ten-share lots, while I happened to know that Joe's bank balance—his active working capital—amounted to $100,000, and that this represents but a part of the fortune built on his ability to interpret the language of the tape.

Why was one of these men able to amass a fortune, while the other never acquired more than a few thousand dollars at the same pursuit? Their chances were equal at the start so far as capital and opportunity go. The millions were there waiting to be won by either or both.

The answer seems to be in the peculiar mental qualifications, highly potent in the successful trader, but unpossessed by the other. There is, of course, a small element of luck in every case, but pure luck could not be so sustained in Manning's case as to carry him through operations covering a term of years."

From "Studies in Tape Reading (1910)" by Rollo Tape (Richard D. Wyckoff)

deaddog 

That sounds pretty good. You have been here 10 yrs and you rate yourself advanced. What kind of returns are you actually achieving?

Not that much lol. I’m still a novice at day trading as I point out in my journal. I traded longer time frames before that.

Miesto 

"Thousands of traders entertain the idea that in some way the market momentarily indicates its own immediate future; that these indications are accurately recorded on the tape ; therefore he who can interpret what is imprinted on the narrow paper ribbon has within his reach unlimited wealth. It seems to me that such an opinion is fully warranted for it is well known that many of the most successful traders and operators of the present day began operations by successful Tape Reading, trading in fractional lots of stock with a capital of only a few hundred dollars. Speaking of Joe Manning, one of the shrewdest and most successful of all the traders on the floor of the New York Stock Exchange, a friend of mine once said: "Joe and I used to trade in ten share lots together. He was an ordinary trader, just as I am. We used to hang over the same ticker." The speaker was, at the time he made the remark, still trading in ten-share lots, while I happened to know that Joe's bank balance—his active working capital—amounted to $100,000, and that this represents but a part of the fortune built on his ability to interpret the language of the tape. Why was one of these men able to amass a fortune, while the other never acquired more than a few thousand dollars at the same pursuit? Their chances were equal at the start so far as capital and opportunity go. The millions were there waiting to be won by either or both. The answer seems to be in the peculiar mental qualifications, highly potent in the successful trader, but unpossessed by the other. There is, of course, a small element of luck in every case, but pure luck could not be so sustained in Manning's case as to carry him through operations covering a term of years." From "Studies in Tape Reading (1910)" by Rollo Tape (Richard D. Wyckoff)

As I read that I thought, 100,000 isn't that much. Then I got to the end and saw it was written over 100 years ago!! So add a couple zeros to it and yeah, it checks out.

Tape reading, or what is now called chart reading, is a skill just like hitting a golf ball. It can be learned. Some will take to it faster than others but it takes a lot of work, a lot of dedication and commitment to bettering oneself, but we all can become proficient at it.

Pariah Carey 

Tape reading, or what is now called chart reading, is a skill just like hitting a golf ball. It can be learned. Some will take to it faster than others but it takes a lot of work, a lot of dedication and commitment to bettering oneself, but we all can become proficient at it.

And just like hitting a golf ball, although many try, very few actually make a living playing the game.
I really wish there were forward tees I could trade from!!

Pariah Carey 

I think if you’re a highly skilled day trader, like truly elite, years of experience, a pro who can make money each day in the markets, 2% a day is attainable.

Pariah Carey 

If you have a $100,000 account you can comfortably trade 10 contracts.

I have almost no experience at all, while you are Advanced, but both the statements above absolutely astonish me: neither correlates at all with anything I have seen/read/heard elsewhere, or the experience of either of the people I know who trade successfully for a living (there are only 2 of them, admittedly!). I really find these statements amazing. I would trade a fraction of that, from a $100k account, and I have never heard of anyone making 2% per day on average (apart from maybe self-promoters on their own Youtube channels and sales pages, i.e. marketers!).

I respectfully offer you the observation that if your income averaged out at 2% per day, even if you compounded only once per month, after 3 years your $100,000 account, trading for only 10 months of each year for 20 days each month, would be worth nearly $2.5 Billion. I hope you will excuse my suggestion that somehow it lacks credibility.

mariafp 

I have almost no experience at all, while you are Advanced, but both the statements above absolutely astonish me: neither correlates at all with anything I have seen/read/heard elsewhere, or the experience of either of the people I know who trade successfully for a living (there are only 2 of them, admittedly!). I really find these statements amazing. I would trade a fraction of that, from a $100k account, and I have never heard of anyone making 2% per day on average (apart from maybe self-promoters on their own Youtube channels and sales pages, i.e. marketers!). I respectfully offer you the observation that if your income averaged out at 2% per day, even if you compounded only once per month, after 3 years your $100,000 account, trading for only 10 months of each year for 20 days each month, would be worth nearly $2.5 Billion. I hope you will excuse my suggestion that somehow it lacks credibility.

It's absolutely possible to trade with an edge while risking less than $150 per contract, per trade, and less than $100 on some trades. I'm talking about ES which is the only instrument I trade. So with a 100,000 account you could trade 10 contracts and cap risk at around 1% of account size per trade.

The 2% a day returns is simply my opinion and purely speculative; I don't have any evidence that it happens but I would not be surprised if some out there are doing it. And I stress that this kind of performance would be reserved only for the very best of the best traders in the world. You'd have to have a near-perfect win rate (and I do believe that 90% win rates are possible) and some outsized scores to make up for the occasional loss and days where you don't make as much.

Again much of it depends on how you manage your stop and scaling out, but each day there are multiple opportunities to catch 4-10 point moves in ES, so if you've got 10 contracts at your disposal I think it checks out.

Your compounding numbers are interesting (and I assume accurate) but I don't know how many people would have the discipline to keep trading day after day like that after achieving fabulous wealth. Me, I'd probably quit way before that lol. But some wouldn't. Some people just want to have more money than everybody else. But it's probably a lot harder to trade 1,000 contracts on a $10 million account than 10 contracts on $100,000.

But...in both business and the markets, billionaires can be made overnight. Look at all the startups that get bought or go public. Boom. Owners are instantly worth billions after years of scuffling.

I used the example of a $100,000 account because I think that's a reasonable, realistic amount that a competent day trader could use to make a living. (Not 2% a day, just a living.) And 2% a day with 1 contract on a $10,000 account....I don't know. Really hard. You have virtually no room for error. Maybe could do it with 5 contracts on 50,000 but that too is hard. You need to have the power of scaling out and runners to do the heavy lifting.

Edit: Let me add this. If you're not familiar with a journal here called The Scalper's Journey, check it out. It was some years ago. I don't know what exactly was his account size, but he was trading like three crude oil contracts and making pretty much $1,000 a day. But just three contracts, his account was probably way under 100k. He basically turned the crude oil futures market into his own ATM. He was the real deal, and those were some outsized returns.