Let me give you my opinion: Only a few among us are able to get day trading signals out of a very noisy data set. Most of us (me included) will never acquire those skills. However, that does not mean there is no hope for us. Not too long ago I was struggling with my options trading and a wise lady on ET suggested I traded longer time frame options. That advice was priceless and made a world of difference for me. Why don't you do the following back test: Buy and sell SPY at the beginning of the day and at the end of the day; buy and sell SPY at the beginning of the week and at the end of the week; buy and sell SPY at the begging of the month and the end; buy and sell SPY at the beginning of the year and at the end.... Total up the profit for 1 year, 2 year... After factored in commissions & bid/ask spread, you will realize that after a few years, your day trading helped paid your broker's yacht but you are not much richer because by not able to pull trading signals out, your trades are not that different from randomly buying and selling. If you have problem with day trading, try swing trade and you may find it a little easier. Afterwards, you can always go back to day trading if you are one of the chosen few. And, there are just too many smart people trading so you have to take the roads less travelled. Good luck and best wishes.
Most people trade too small timeframes. I daytrade based on a 60 min chart. That's the basis of my system. And it works well. Ticks or even 1 to 15 minute charts are not good as basis. The secret is that the moves are bigger on 60 min then on 5 min, and even in an uptrend you risk to get short signals on 5 min, signals that are fake. There must be enough potential between the high and the low of the moves you see. Went long ES short after the opening and got out about 30 min ago on a take profit. I have my stop at 3 points and my average profit per trade was 85% higher then my stop in january. If you trade small timeframes you can never achieve this average profit per trade, so you need much more winning trades to survive. And closer stops then 3 points risk to be to close to the market.
Good comment MtTrader, Do you use Breakevens with your 3pt stop? If so, when do you move your stop to breakeven? Thanks
May I ask you a question: When you used 60 min charts, did you used 60 min moving average or just consecutive 60 min? Thanks.
I follow mathematical models. When I have a signal I act, no matter where we are. So I don't use breakevens. I have no stats about my losing trades, but my average loss per losing trades is much lower then 3 points (soemwhere between 1-2 points probably). I estimate that 90% of my losing trades never get to the -3 points stop. My stats show that I have to let the system run. It will automatically adapt to the strenght of the market and give me the best profits I can make in the long term. Putting taking profits or break evens damage my returns. I found no way to improve my return by interfering the system. It's all about math.
I did a back test of SPY from Feb 2007 to Feb 2017 on the above. First column is buy and sell once a day 100 shares of SPY, second column is buy and sell once a month, third column is once a year and the forth column is buy and hold. I assumed a round trip commission of $14 (Typical commission) First row is total profit over 10 years for 100 shares of SPY. Second row is commission costs. Third row is total profit of the different trade strategy. First of all, if you trade without commission, day trading was profitable, probably because of the upward bias of SPY. However once commission was subtracted, random day trading was unprofitable. Notice that swing traders had an easier time. Of course no one day trade randomly but for most inexperience day traders (I was one) random trading may not be too far off reality. And, 100 shares of SPY is ~$20,000 unless you go on margins. In my opinion the hurdles are substantial and my hat's off to the professional day traders on ET that can consistently make money month after month, year after year. Best to all.