Daytrading has made me a millionaire

I've had a number of folks come to my room who had lost more then 100k as they tried to trade. One of the first questions I ask someone like this is..."who are you?"

What patterns do you trade, what's your money management style, how much risk do you take per trade?

Not ONE of these folks could answer these basic questions. Trading is a business, and needs a business plan. It’s amazing how people who probably spend time clipping coupons to save $10 a week at the grocery store are totally willing to expose themselves to several hundred dollars of market risk without any planning or thought.

Daliddleguy, please not only listen to Jem, but also take the time to develop a trade plan. Figure out what your edge is, then go out there and press it in the marketplace.

You might want to rethink your “tick” scalping strategy. As I gained experience I found I made more money as I decreased my trade frequency. Spend more time picking your spots then pulling the trigger. Of all the folks I know who make money as traders, the most active does 10 trades on a big day. The majority do no more then 5, and more often 2-3. I’d strongly suggest you look at some other styles try to capture larger moves. The current market has some nasty air pockets of illiquidity in it, and it only takes one trade that slips 20 cents to ruin a week. By taking pennies your going head on with the MM’s who have so much more info then you, and therefore have you edged out. Also, I bet your stress level will drop dramatically if you broaden your horizons a bit. I saw a great tag here a while back....
“trading is like driving, if it’s exciting, your doing something wrong”

True words

Good luck to you as you figure out who you are as a trader.....

-Bo Yoder

 

I smiled when I read daliddleguys comments on Broadway trading. I too traded there, and though I noticed that you did not overtly criticize them, the things you wrote were right on. They were there to make money, and you knew that and gave it to them.

It sounds to me like your scalping strategy is OK if you are able to make money monthly. You are not far from being able to make a lot more money. See my thoughts on scalping below.

To some people trading 30K shares a day is overtrading, to others it is nothing.

I appreciate you admitting the 300K loss. In 1999 it was a different world, the fact that you have made half of it back is great. Keep up the good work.

Scalping is the bread and butter of the commission houses, they think everyone should scalp, but it only works for a small minority of traders. The houses call it pairs, openings, variation theory, oscillation management, channeling, scaling, hedging,.... actually anything to get you to make more moves. 90% of the time it is simply terminology to get you to trade.

Been there.

 

i know a trader, a real verteran, who did very well. I knew him to have 100k <i>days</i>.

He used to say that, before he learned to trade, he took his 1/2 million starting stake and turned it into 'about 25 grand.'

 

Yeah...sometimes, only having $10,000 to start out with can be a blessing.

 

from 1997 - 1999

lost about 45 K at the following 3 "daytrading shops"

BWAY Trading

Block Trading (out of biz now)
Harbor Sec (out of biz now)

Went to Interactive towards the end
of 1999 ...

turned 10 K into 120 K (yippee) in 2000
doing mostly arbitrage. (this holy grail
ended for me by early 2001)

have been profitable the last 2 years as well

but it is much tougher now as I have
weeks where I make 1-2 K as well as losing
weeks appraching that level.

I still find it easy to lose control and my discipline
so I try really hard to watch my P+L and trade less
than my full account 4/1 size.

maybe I will take a series 7 and try out my luck at
one of the better prop firms if I do not become more
consistent and have less drawdowns by the end of the year

good luck and health in your trading and life

 

"daliddleguy"

First off, thanks for your candid and honest post. It's hard to say you're losing money when it seems all you read are posts about people making money so your honesty is appreciated.

One piece of advice I can give may help you because your history sounds similar to mine when I first started. Take a look at your trading history. Hopefully you're keeping a log of your trades. If not, why the hell not? Seriously, though you need to on a daily basis review every trade that went right and wrong. You have to look at each trade as though you expected every trade to be profitable (that was the intent, right?) The ones that didn't you need to figure out why and see if you can spot any patterns. Are they happening during the lunch period? Are you getting into trades early? Do you seem to get into a trade that your indicators say to enter just to have it drop soon after? Are you holding on to losing trades too long when it drops or not long enough to let it work itself out?

It could be those things, it could be a number of other things. The key is to review your trades and spot the pattern for losing trades. If you have enough history you'll be able to start now. Also keep in mind to study your winning trades as well for patterns. You don't want to just beat yourself up but also figure out what you're doing right.

 

i agree with that 100%. that is why this quote is so great:

"There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!" - Reminiscences of a Stock Operator by Edwin Lefevre

 

>Originally posted by chasinfla
>i know a trader, a real verteran, who did very well. I knew him >to have 100k days.
>
>He used to say that, before he learned to trade, he took his 1/2 >million starting stake and turned it into 'about 25 grand.'

Dear Chasinfla,

when your friend had his 100K days, what did he trade? Stocks? Futures? bonds? Currency?

Thank you.

Raphael

 

Daliddleguy:

It's refreshing to hear some honesty around here. True self-examinations is the only path to lasting change and greatness.

Anyhow, I like to point out the fact that you said you loss about $300K in 1999 - during the BEST RAGING BULL market year we EVER HAD IN HISTORY! Ironically, you are making it back and doing BETTER in today's market, which is the TOUGHEST EVER!

I want to point that out because it says something about real trading skills one acquires over time. A lot of people here(including myself sometimes) bitch about how tough today's market is and wish the good ole days of ragin' '99 where stocks routinely move 5-15pts a day! But I think even if we had those markets again, some(most??) people would STILL LOSE, because if you haven't learned the discipline and the edge of trading then it doesn't matter what kind of markets we have.

Of course, you hear everyone said they made SOOO much $$ during '99. But how many of that $$ did they actually kept???! Probably not much. Where are those daytrading cab drivers, and English teachers now? Luck can only carry so far.

So, there's a glimmer of hope for us all here. The underlying lesson here is that if you master today's tough market, then when the "easy" market comes back in 10-15yrs or whoever knows how when, then it would be easier. As an aside, I don't know when it will come back. But looking back to history, during 60s Go Go years, the Dow peaked '68 and didn't make new highs until '82! And they had the SAME accounting frauds that we are facing now. Hmm...

But the other sombering thing is that maybe when the "easy" market comes back, people would still be scarred and can't hold to big huge moves and benefit it. haha. So, in the end, it's really about YOU! Your discipline. Your edge. Figure it out and you can become a real trading milionaire in ANY TIME period.



trader99