Failure to understand risk/reward and why you're losing as a trader.

SunTrader · Jan 11, 2025

volpri said:
Funny.... funny LOL You are really clear and to the point today aren't you? But there is a difference between clarity and correctness. Or am I incorrect in that statement? Or are you incorrect in your statement? Has day trading or scalping made some very wealthy. If not, why is it even done? If investing has turned out bad in economic downturns for investors and it is not the best way to utilize capital in the financial markets (my opinion) then why is it used as a means to increase one's capital?

I gotta stop. There may be no end to this.

EW traders: make a killing this year in the markets!

Long-term and swing traders: Make a killing this year in the markets!

Scalpers: make a killing this year in the market!

May all of us have good luck this year. ALL of US: It is unlikely but potentially correct mathematically or could be anyway even if not probable.
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Nothing to do with what you have posted so yes stop.

And I always try to be clear, concise and to the point. Of course sometimes I fail in that regard.

SunTrader · Jan 11, 2025

doubledoubledoublecup said:
That's the most fked up thing about trading. You can lose money when you are right because of risk management.
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Why is that fked up?

wxytrader · Jan 11, 2025

Frederick Foresight said:
If he really believed in EW (pronounced "Ewww!" with a grimace) then he would have more confidence in his entries, and therefore consider leveraging to some extent to capitalize on that timing.
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Why wouldn't I leverage an etf?? It just happens automatically in a margin account lol.

ironchef · Jan 11, 2025

Laissez Faire said:
Exactly. And it was the same way for me.

The beauty of it is that my results improved dramatically without any change at all in my methodology. I simply started to really tighten up my entry criteria (reasonably sized stops which are not increased) AND run my trades all the way to target which would always be a minimum of 2R.

That's my hope with this thread. That something may click for somebody and they realize why they're currently failing and how it's possible they may even become successful with what they already know with just a few adjustments.

Prior to this, I could see the larger moves and where the market was going, but I was too focused on securing profits, playing it safe with a breakeven stop or securing a green day. The problem was of course that with all my tiny profits regardless of how long my winning streak was - I was not in a robust place to handle a drawdown. In a sense, big wins may be the best risk mangement.

I feel there's a prevailing view that day trading is about nailing down very small moves, but it really doesn't have to be that way. For me, this process started with separate conversations with two traders who claimed to be taking home day trades to the tune of 100 points on ES.

That blew my mind at the time - a few years ago by now. How on earth can you hold a day trade for 100 points through all those oscillations and counter-moves? What if your small profit goes back to breakeven, right?

Anyway, it's been a long process. One of these fine gentlemen actually offered to review my trades and one of the first thing he commented on was that although many were profitable I was getting out of them for a small profit after seconds or moving my stop to breakeven way too quickly. While also taking full losses. Essentially, my expectancy was negative.

Why? I'm not sure, but I definitely think there was fear involved. Fear of what exactly? Completely irrational, but I guess I was fearing that open profit would turn into a loss.

Anyway, his main message was that I needed to move away from the lower time frames and focus on the larger moves/trends on the 60-minute time frame. The gist of his system was trend following using the 60/15/5-minute timeframes. Of course, there's a bit more to it than that, but that was the gist of it.

Eventually, I think I realized that in order to have a fighting chance at this I really needed to bring home some medium/big winners as my current play had a negative expectancy.
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Great post and a great thread.

Your comments apply to most day traders but there are a few outliers on ET, like @volpri and @VSTscalper, who "figured out" how to consistently capture small profits day in day out. I said "figured out" because there are no verifiable data to validate the claims. I tested both and they seemed credible. However, 6 months in sim and 3 weeks of live trades is really not validation by any means.

One of those black swan like drawdowns may be coming at me. Only time will tell. Based on your experience, and the majority opinions, I should start working towards higher R:R?

What you wrote reminds me of writing naked options: Picking up pennies in front of a steamroller. Traders there spend a lot of their efforts devising risk management schemes to avoid the inevitable steamroller rollover. But even Nobel winning economists got rollover (LTCM).

volpri · Jan 11, 2025

SunTrader said:
Nothing to do with what you have posted so yes stop.

And I always try to be clear, concise and to the point. Of course sometimes I fail in that regard.
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OKKKK you are very clear. As clear as a sunny day in FL. BTY did you see the blue angels? bye. LOL

Laissez Faire · Jan 11, 2025

volpri said:
I guess maybe you think I am mentoring. I am just showing people in my journal techniques that I use and have used in scalping. I think I have abundantly made it clear many times that I am doing this for entertainment. I am not advising or telling anyone to trade the way I do. I do sometimes present ideas and concepts that clash with the norms of the trading world. But I am not telling anyone to trade this way. They can practice on a SIM and see if they like it and if it is entertaining.
Talking about day trading and scalping is just that..talking and discussing. It is not mean't to raise people's ire.
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But that's literally what you're doing in your own thread and all over ET. You literally have over 30 posts in this single thread advocating your methodology and approach. And there are no doubt multiple people following you and trying to learn from you thinking it will make them rich.

When I say day trading is a dumb idea for most people you counter saying it's not - if you know how to do it. The obvious implication being that you do. Yet, you won't say anything about your results.

Why won't you say anything about your results, then?

With great power comes great responsibility.

Either you're (very) profitable from your day trading operations or you're a net loser. You owe it to your followers to be truthful. Day trading a few micros for entertainment is very different from serious and profitable trading which is the goal most people have in mind.

volpri · Jan 11, 2025

Apparently WXY only believes in going long. No shorting. Bye wxy.

Frederick Foresight · Jan 11, 2025

wxytrader said:
Why wouldn't I leverage an etf?? It just happens automatically in a margin account lol.
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wxytrader said:
Don't leverage! lol....that's the problem. You guys are underfunded, so being forced to leverage up to make a decent profit. You are sitting ducks for the MMs.
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taowave · Jan 11, 2025

Lol...what took you so long???

Number one rule of ET club..

Don't feed the trolls...

volpri said:
bye
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wxytrader · Jan 11, 2025

I'm talking about the 100:1 leveraging found in forex and futures lol...not the 2:1 or 3:1 you might get from your broker on SPY. The stocks I'm trading right now have no margin allowance...all cash.