Hmmmm.... I never noticed. But I do now. In the business of setting up new lambs for the houses. W D Gann wrote a book called "Truth of the Stock Tape" If anyone is still a daytrader after that book, I feel sorry for them. What is Level2 other than a modern day ticker tape? I knew I needed to change when I calculated my taxes for 2000. I a LOT of money on commissions. I don't know, but I almost certain that swingtrading is more profitable than daytrading over time. That's just my two cents.
Some of you sound like a members of the general public in your stereotypes about daytrading. That word has a stigma attached to it as a result of the late 90's and the popular press it received. But it's a stereotype that is all wrong. If you are a professional trader, then trading is trading, no matter what the product or time frame. Once you know what you are doing and have all the psychological demons whipped, you could make money trading anything, you just have to be able to read the market and recognize risk and opportunity. Why do I daytrade? Because right now it's the lowest risk, most consistent way to earn an income for my situation and personality. I've had one down day since December 13th and I come in fresh every day and find opportunity everyday. Yes, I pay over 100 grand a year in commissions, but I don't care because the only thing that matters is the bottom line. As a swing trader, are you moving millions of dollars a day in inventory? Compare apples to apples and keep things in perspective. This doesn't mean that I'll only daytrade. I'm setting up an account to swing commodities right now and I'm working on strategies for longer term stocks and options positions. If you are held back by stereotypes and are closed minded to 'how things are' then you are the one missing out and aren't operating as a true 'professional'.
I agree totally with you that once you find a system that truly works for you, any time frame will do. I can daytrade as effectively now as I swing trade, but for me it was about the freedom that swing trading provides. If you spend 100K on commission, I assume that you are much larger trader than I. But as a percentage of your profits, isn't the cost of doing business higher the more you churn your account? And isn't cost containment essential to the continuing growth of any business, trading included? Just curious.
The freedom of swing trading is a big plus. I only swing traded for a year and liked being done by 10:00 every day. That's an intangable and each person has to decide how much it's worth to them. But when people talk about percent return on capital, net cents per share traded, average win size, etc it's lost on me because the only thing that matters is the bottom line. If at the end of the year I grossed a million dollars and paid 900,000 in commissions, and had the shittiest net cents per share traded stats in my firm, the bottom line is still that I made a hundred grand. And if all the other trading methods wouldn't have made that much for me, then I took the best trading path. If the guy next to me made 100,000 gross and only paid out 10% in commissions and nailed every trade he made, I still beat him. Of couse, if you take bad set ups and churn needlessly, then those are areas where you could improve. And containing costs and being efficient are essential in any business, trading definitely included. Nothing saying you can't strive to be an efficient, high volume, high commission paying daytrader. Just remember that the only thing that counts is THE BOTTOM LINE.
I think for most day traders, $100,000 in commissions would be absurd. You'd better be making $500K per year for that. With today's discount brokers, I bet it is 25% of that for most regular ol' small traders. I do know of a few traders that have made the "wrong commission plan" mistake - either they used a flat rate $10 or $15 per trade while trying to trade small and often (100 to 500 shares) - or they use a per share like IB or TS and then trade 5000 at a time. Either one will crush you in costs. Also giving up the herky-jerky in/out trading and learning to trade off of S/R, with trend, etc. has cut my commissions by over 50% and my gains are bigger. But for the first 6 months I was on the wrong plan. What a rookie I was/am. Now I mostly daytrade ES - I rarely spend over $100 daily in commish, usually much less. With the additional leverage and tax benefits of futures, my costs should be waaayyyyyyy lower this year. Good Luck Tuesday!!!
Absurd? Do the math, 1 million shares a month, .8 cents/ share =$96,000 a year in commissions. Seems pretty average to me.
Swing Trading requires a leap of faith ( holding overnights) and is really short term investing not trading. You are either an investor or a Trader. Trading is Trading and the only thing that is trading is DayTrading. Investing or Trading?
Lescor I agree w/ most of your posts however, there are a lot of people in trading or in any other profession for that matter where the bottom line isn't the bottom line. I think a lot of people especially with other responsibilites would rather be up 70K watching the screens 3 hours a day than make 100K plugged in every minute with a piss pot next to their desk. Traders with kids who get sick means they have to stay home, traders with an elderly parent they have to visit twice a week. Even something as trivial as a trader who has a bad back can't really be an effective DT. So for a lot of sometimes real life stuff gets in the way ...
I would say 50000 shares a day is very average for most equties traders. The above average professional makes about 1.3 cents per share for every penny spent in commissions, so getting the commission reduced to .08 or lower is a big deal. So, 1M shares a a month is about 13K in profits minus 8K in comm a month is 5K a month take home. nitro