Profitable daytrading is possible, at least you got that part right. The effort is very much worth it though. Without complicating it too much I will lay it all down for you. No joke, no rodeo, this is how it works. Work on screen time without risking a cent, this could take anywhere from many months to many years. Just like a college degree, no difference here, only cheaper. Make sure you caliber your setups with different chart sizes to see what's appropriate for your particular personality. Make an effort to detect setups that offer "ok" accuracy and good risk vs reward. For instance, 40% 2:1 R:R is excellent. Anything above that is gravy. Resist the temptation of looking for high accuracy bad risk vs reward setups. Do your mathematical homework to see if you can profit off them over time by taking slippage and commissions into account. Backtest using years of data to confirm your theories. You can do this manually but it's imperative that you do so. Develop a list of the setups that passed the test, don't need much, 3-5 will do as long as they are mathematically sound, profitable over time. Once again, all based in accuracy and risk vs reward. Whenever you are ready, plan the trade, and trade the plan. Do not deviate, use intelligent money management and at all times obey your rules. When everything works out and profitability is constant in the simulator, go cash. Remember that you must be able to acknowledge the setups as they are happening, not after. If you can endure the psychological barrier of sticking to your plan in cash, you made it. Daytrading is not for everyone but some do consider the effort, well worth it. Wrote this without proof reading and very fast so pardon any error in grammar or semantics Anek
I agree with everything execpt the paper trade part Cant really understand your own tolerance for risk until you put real bucks on the table
Until he does not have the screen time and the set ups well documented there is no point in going cash, money will just be lost. As far as risk, that should be determined BEFORE he even places the entry. Discipline in trading holds no prisoners, it mus tbe unbrekable, breaking it is not an option, period. Anek
As you probably know from my other posts - Im a novice (I promoted my self from newbie this week) My own 2 cents - and thats all it is: I have spent the better part of 4 months analysing, testing and mainly reading --- and started trading with real $ YM intraday in January. Mainly working on one setup that has proven profitable. I will continue to trade that one setup and work on the psychology of trading (since the setup is only a setup) while I look around for the next setup that makes sense to me I learned more about discipline and following my own rules in the market volatility last wed than I believe I would have in 3 months of paper trading - even under the same volatility So, like most things--- some folks may benefit from paper trading --- some may not and yes, I am expecting my first string of losses as inevitable to temper novice enthusiasm cheers!
mgabriel, you are on the right way. Stay with what is working, have a few reliable set ups that you can recognize and specialise there. You will not run after the market therewith but it will come to you. If you dont get enough trades or risk/reward is not good enough then either change the time frame or look in other markets. Most people here seemingly think that there is only one market and one needs to master it perfectly which is an impossible task. If you want to make money trading then you have to wait until its YOUR turn.
agreed - I also suspect there are alot of good setups out there --- one simply needs to do the research - understand the mechanics, understand 'why' the setup has a good probabity - then work it in the end Im just a blue collar guy hiding out in a white collar world heheh (saw the post after yours and agree totally!)
Enjoyed reading the string on Daytrading Pofitability. I agree with most of the points, but respectfully take exception to a couple of them. I agree that it takes a tremendous amount of time and dedication to become technically and phychologically proficient. I disagree with the premise that large strings of losers are inevitable in trading, in either number of trades or number of days. When I first started trading, I experienced just that and it challenged my psyche many many times, so much so, that I was close to quitting, beginning to believe making money daytrading was next to impossible. When I moved my trading to futures and focused on one market, the S&P futures index, did this slowly change for me. Today, I trade with close to 70% winners, rarely have more than a couple of back to back losers and have over 70% winning days, with 2 consecutive days being the maximum in a string of losses. This would not be possible if the market were random. It has taken me a long, long time to get here and I paid a very large entry fee. It is possible, but it's not easy getting there.
The first 2 points (the sheer time used will be huge to produce an accurate methodology & you have to overcome the natural barrier in front of the true pyschological fitness you need) are both true enough. Achieving the first 2 points disproves points 3 &4). Points 1 & 2 prevent almost all noobs & wannabes becoming hugely successful. Is there some other in-between level in independent trading where you can scrape along? Apparently so but points 1 & 2 have remained in the way of those getting by and they are way short of properly satisfying points 1 & 2.