I look for structural flaws and irrationality in the market (or with other market participants) and take the other side of their trade. I find it easier to identify others' mistakes than to come up with brilliance in a vacuum. The ideas come from lots of reading of sites like ET or Seeking Alpha, or others. You probably already know that there are many, many bad ideas out there, some of which can be traded against.
I then build a system that models that behavior, keeping it very simple and always building a system around a hypothesis, not randomly changing parameters until some combination works well. Curve fitting is a huge, huge danger that must be avoided.
If you can't explain a plausible case of (1) why it works (2) who is taking the other side of your trade, and (3) what they don't understand you're just heading for trouble IMHO. Try explaining these things to your dad (or anyone else who will hear you out). If you can do this (and really believe it) there's a better chance that you'll stick with it.
Taking your Yahoo seasonality example, start with a theory about others' behavior, like a tax effect, or portfolio manager window dressing at the end of quarters, or whatever, *then* build a model to test that belief and trade the other side of it. If you "data mine", you're more likely to find a spurious pattern.
Keep in mind that I differ from most others on this thread in that I'm not day trading, not trading futures, etc...
I tell you what works for me, perhaps it works for you.
Study charts, all kinds of charts, static, moving, old, does not matter but mostly naked charts. Don't let crap distract you, I won't define what crap is, to avoid the crap defenders
Try to notice the following:
A P, V pattern that always works, requiring a small risk to attempt it, and with a potential reward that's at least 60x the required risk.
If you got that, see if the same holds true for multiple timeframes, if that holds, now you got one master pattern, the ONE needed tool for your toolset. Google "the pattern"; it has been available for a long time.
Begin searching for this pattern in all reasonable instruments. First manually, in the future, if possible, mechanically.
Once you find it, trade it with minimum cash.
Make sure you stick to the risk/reward principles of what you original found, if there is no discipline, eventually there will be no trader.
Now you can start working on your execution skills.
Bollocks, sorry. There is no "fitting to your personality" - this is papering over cracks and making excuses for your weaknesses. Fact - you can create better risk adjusted returns day trading futures than you can trying to hold positions for 2 days to 2 months. The objective is to make a million a year.
Someone who finds day trading tedious will be unlikely to put in the effort required to get to 1 million a year, whereas if they love speculating or investing then they might put in enough effort to make 1 million a year (or a lot more).
People rarely succeed at difficult endeavours without being passionately interested in them.
you can maybe start with stocks with short term trading for several days with a profit objective. learn the markets & develope a gameplan . you have to build a solid foundation
Once you are profitable & know you can do this full time then it warrants jumping in with both feet
if you make money trading short term you may not want to daytrade
some traders make more money short term trading then they ever would daytrading . pro/cons to both time frames
You making 200k per year now so their is no rush to jeopardise your income to see if daytrading is for you or not especially with your high expectations
It comes down to learning & knowing you can make money consistently from trading . trading is a tough businsess to be in. it's a emotional rollercoaster that you ride everyday
Most would take your 200k income not to trade. keep that in mind
Someone who finds day trading tedious will be unlikely to put in the effort required to get to 1 million a year, whereas if they love speculating or investing then they might put in enough effort to make 1 million a year (or a lot more).
People rarely succeed at difficult endeavours without being passionately interested in them.
It would not occur to me to trade, or follow any other profession for that matter, if I did not have an interest.
This is not the same as being passionate about something, but committing to doing something brings with it the duty to do what is required, to the extent it is required - regardless of our thoughts on whether it is easy or hard, and regardless of whether we might say we have done enough when our results prove otherwise.
If you find investigation, research, problem solving, and execution tedious you would be well advised to do something else. If you are in trading you ought to make yourself rich as soon as you can. This is doing what needs to be done the most effective way you can - not messing about with self imposed fetishes, or not putting in the effort because you find it tedious.
In short, those who claim they wish to be traders but are secretly unwilling to do the work will never get there. Was there a time when most people lived their own lives to suit themselves, chose professions due to their own interest and talents (not so they could live someone elses life, make the neighbours envious or the family proud, because the media told them it was glamorous, or because they were too insecure to go it alone), and took personal pleasure in finishing what they started and performing all tasks to the absolute best of their ability? These traits seem to be the exception rather than the rule in modern times.
TL;DR - why isn't it the "norm" that we are mostly all mature and self aware enough that when one of us proposes entering a profession, others do not think to caution that we need to make sure we will put effort in, and perhaps maybe there might be a way ("investing" or non-day trading) to get the results with less work.
Do we tell aspiring doctors that actually the profession of healing is a lot of hard work, and maybe it would be better done in a country where there are less medical regulations (ie you can practice without being licensed or accredited) with worse tools and technology than you would find in the west, and if you kill a few poor patients along the way it shouldn't matter because you are unlikely to be sued or prevented from working further.
Yet nobody balks when we tell an aspiring trader that perhaps a different "style" might suit them if they are lazy, they can use less money and risk so they can carry on badly for longer, and with affordable consequences for never going anywhere.
I tell you what works for me, perhaps it works for you.
Study charts, all kinds of charts, static, moving, old, does not matter but mostly naked charts. Don't let crap distract you, I won't define what crap is, to avoid the crap defenders
Try to notice the following:
A P, V pattern that always works, requiring a small risk to attempt it, and with a potential reward that's at least 60x the required risk.
If you got that, see if the same holds true for multiple timeframes, if that holds, now you got one master pattern, the ONE needed tool for your toolset. Google "the pattern"; it has been available for a long time.
Begin searching for this pattern in all reasonable instruments. First manually, in the future, if possible, mechanically.
Once you find it, trade it with minimum cash.
Make sure you stick to the risk/reward principles of what you original found, if there is no discipline, eventually there will be no trader.
Now you can start working on your execution skills.
Stop here; you are now very rich.
Paddler says: No, not yet and not guaranteed. Frankly, it is just the first baby step towards the right direction in one's journey to be rich and helpful. If as you said, I would be rich in the first year instead of spending years to figure out. This is an objective opinion for those who are interested. Of course, I owe most of my trading success to you.
