Daytrader Paradox

Discussion in 'Psychology' started by sunggong, Aug 8, 2006.

  1. When I first started reading about successful daytraders through these forums and through books, one thing I noticed was that these folks do not like to wait general.

    Most of them get in and out fast, mostly within minutes if not seconds. Many of them claim that they do not have the PATIENCE to buy and hold for a while. Instead, these folks want instant gratification/excitement and quick $$$.

    I certainly do not like to buy and hold. I find long-term swing/position trading to be rather boring as a result. That's one of the many reasons why I became a daytrader.

    However, in these 4 months I've been trading, I found that the PATIENCE is one of the most important attributes any successful daytrader must have.

    Once you develop your system, you need to be disciplined and patient enough to wait for the right moment when your system prompts you to buy and sell.

    One of the key reasons most daytraders fail is partly because of their PATIENCE. They simply do not want to wait around and wait for the right moment to execute their system for high probability winning trades.

    They think they can pick the top/bottom and make some quick bucks, and their "trigger happy" fingers gladly let them buy/sell short shares at ease. Of course, often times these "impulsive" trades turn out to be a bad choice.

    Also, once the trader is in the position (either long or short), IMPATIENT daytrader often exit too quickly, minimizing their profit potential, even though their system may warrant them to stay in longer.

    This obviously does not really apply to quick scalpers that trades hundres of times per day, but guys like me that trade only a handful a day, this has been a key component of my late success. I have dramatically cut down on the number of trades (I definitely think I was overtrading, just too much churning sometimes.), and my win rate has been over 85% lately.

    Being patient enough to wait for the right setup and promptly executing my system when the moment arrives (this include promptly cutting my losses if the trade goes against my system) has been a valuable learning experience for me. I still have some ways to go to better control my emotions, but I'm on my way.
  2. very nice post

    i agree, patient is realllly important once you get your system down
  3. Cheese


    A wrong impression.

    Sure, to be patient if required .. but also to be quick if required. Entering/exiting & reversing is a function of the upmoves & downmoves happening in front of your eyes (eg YM).
  4. TA4ME


    I'm a new day trader too. I want to jump in and out all the time. I win a lot...not like I get a lot of % because I get out too quick. I see a set-up and get in and out fast. I shorted SU today at 11:22 for an example. I bailed at 11:25. I could have waited for a couple hours and made a lot more money. Once I was out it's hard to get back in because the set-up is gone. I've found the same problems as you (the thread starter). Scalping seems too stressful and one bad trade really hurts when trading this fast. I also like to quit while I'm ahead. I don't seem to have the patience to go all day. If I quit while ahead that day, I can't lose. I think this goal is important as well.
  5. I think patience is an important edge, particularly when taking profits, for all styles of trading, including long-term ones.
  6. billp



    1 question please. I suspect that you have a pretty tight stop loss ie your entry point is very important. Am I right? Thks
  7. My personal opinion is scalping is a loser's game in the long run. I daytrade throughout the day but probably scalp once or twice a day for little gains really just to keep my juice going.

    But to try and make a living out of it, I tried it and it's very difficult and stressful - albeit, not impossible.

  8. There are so many different ways to trade that is seems pointless to me to say what does and doesnt work. It may not work for you but I can almost guarantee that there is someone out there who does it.
  9. Cheese



    I have a detailed predictive trading model which sets up each day ahead. I have mentioned this occasionally but it is not part of the world of amateur trading. However while it would be a very lengthy effort to research, discover, assemble and test such model it is still not beyond one individual to do this for a given market (eg YM).

    To answer your exact point, tight stops can be deadly. It may only take a few tight stoplosses per day to take all or more of the benefit from a nicely executed entry into and exit from a main move in your days trading.
  10. I have a very difficult time taking profits. I hold winners until I'm able to absolutely convince myself that its time to get out. This is often hard to do as my judgement always reverts to superficial analysis like "this is one of many trades, hold out for your anticipated price", or "can I determine that right now, without doubt, this is all the market is offering me?".

    My analysis of price movement isn't always correct, that "unsuredness" or "fudge factor" associated with anaylsis is what constantly provides the challenge for me, it is also my greatest enemy when my discipline falters.

    In my trading, the battle exists in trying to be "perfect" in my execution wherein this ideal simply does not exist.
    #10     Aug 9, 2006