I've been paper trading for a while now, and swing/long term trading with real money from a Scottrade account for about 1.5 years now, but before I start actually day trading I want to make sure I know as much as I can. I've been reading these forums for a while now, and I've learned a ton, but I have some questions I can't seem to find the answers to. I can't really categorize them, so I'll just start. (I'm talking stocks here) 1. Is it possible to successfully daytrade making only 1 or 2 traders per day? It seems like all the posts I read on here where someone relates a day's experience involve scalping and making 100s of trades per day. I don't want to do that. 1.5 If someone is making 100s of trades per day, if they messed up, wouldn't they be absolutely killed by the wash sale rule? That has got make taxes impossible. 2. When I paper trade I make 1 or sometimes 2 trades per day, trying to get a .20 cent move or so. Is that realistic for live trading? I don't want to scalp or make lots of trades per day. 3. When you guys day trade, do you only trade a particular stock once per month? Say you mess up one day and take a loss... do you not touch that stock again for 30 days to avoid the wash sale rule, or are have most people here made the necessary elections to be exempt from that? 3.1 Or does the wash sale rule not apply to intraday positions? (this probably isn't the case, but I figured I'd ask anyway) 4. What are the rules for shorting on a downtick? Are ETFs the only thing with which you can do this? On what timescale is "a downtick?" 5. Do most day traders use 1 minute charts? Is there anything faster than that? I paper trade with 5 min charts, but that's paper trading... 6. Are level II quotes only necessary for scalping? I don't use them when I paper trade, but like I said, I make like 1 trade a day and hold it from a few min to a few hours. 7. Do most traders trade the same stock day after day? I guess this is kinda related to quetsion 3. 8. Do all prop firms scalp? It seems like everything I've read here about prop firms involves scalping, and like I said, I'm not too keen on that idea. Maybe just cuz I don't know much about it, but I like my 1 or 2 trades a day style better. I think that's it for now. Thanks in advance for any replies.
I day trade futures but some things are universal. 1. No, 1-2 unless with heavy volume would only work with swing or postion trading. To day trade you will be making alot of trades for small moves with volume, it is just that simple. You may want to stay as a swing trader if you can't handle making that many decisions. It is not easy, I am trying to decide after 1 year if day trading futures with a retail account is cut out for me, honestly. 5. I like 5 minute chars for scalping futures, but that is just me. 1 minute charts are just too frantic on my nerves. You can go to real fast 40 tick charts, a tick is a contract traded, that is lightening quick most times, bang bang, you get the idea. 8. I have read alot of the prop threads and some trade stock pairs, some scalp, but I don't believe anyone swing trades at prop. They are killing the volume compared to you and I. They make a few cents per share, I believe correct me someone if I am wrong, with extreme volume, thousands of shares a day.
Why? It's not that I have a problem with making decisions, I just think this would be simpler. What do you mean by "heavy volume?" Is 1000 shares enough? $0.20 per share on 1000 shares is $200. Why wouldn't that work? I know my math is right, so I must be missing something else...
Each day and each stock are different. I use scottrade too, so I speak from experience when I say, paying a 14 dollar commission on each trade kinda kills profit. I never heard this "Wash sale rule" you talk of. Some stocks are bad for any type of trading because of low volume, they are very volatile. As far as profits go, 20 cents is GREAT if your scalping, but if your position trading (holding for a few weeks to a month or more) and you only make .20, either you're a retard or just new to trading. You said you dont want to scalp, so that leaves you with 1. momentum trading (day trading) 2. swing trading (3 days to a week) 3. position trading (2-3 weeks - 2-3 months) (These holding periods are a rough estimate) " 5. Do most day traders use 1 minute charts? Is there anything faster than that? I paper trade with 5 min charts, but that's paper trading..." -- lol, you dont want to scalp, but you want faster than 1 minute charts?...I never heard of anything faster, and I dont know why you'd want anything that fast. " 6. Are level II quotes only necessary for scalping? I don't use them when I paper trade, but like I said, I make like 1 trade a day and hold it from a few min to a few hours." -- Level 2 is good for all kind of intra-day trading, but I dont use it, and it can be very misleading..so I hear. "7. Do most traders trade the same stock day after day? I guess this is kinda related to question 3. " -- I dont know about most, but I'm sure some scalpers like to know a stock inside and out..meaning, they know the MM's, their strategy, how the stock moves from a day to day basis. I personally dont limit myself to ONE stock. I like the challenge of finding new opportunities. "2. When I paper trade I make 1 or sometimes 2 trades per day, trying to get a .20 cent move or so. Is that realistic for live trading? I don't want to scalp or make lots of trades per day." -- .20 is not much unless your trading in 1000 share lots, then thats 200.00 before commission. Even then .20 is meager. Many day traders trade the first 1-2 hrs of the day because thats where the momentum is. So yea, its possible to make 1-2 trades a day if you can make the gains your looking for. I hope this helps some. - Nathan
1000 share volume for the WHOLE day?... look at aapl brcm bidu isrg .......... the volume for these stocks are what you should look for when day trading.
Yeah, that's why I'm just paper trading for intraday stuff now I'd switch to IB or something before I actually started daytrading. If you buy a stock and then sell it for a loss, and then buy it back again within 30 days, you have to do some stuff differently when you file taxes. What about 20 cents over an hour or two? Alright, I guess momentum trading is what I'm interested in. lol, no, I was j/w. So do most trader's screens only update every 1 and 5 minutes then? It'd be cool to have a platform that would let you use like 4 minute candlesticks... that would set you apart from most people I would assume. btw, Scottrade's platform sucks ass (I'm talking regular Scottrade. I haven't used their Elite one). You get candlesticks, volume, and like one MA, and they're not even aesthetically pleasing to look at. That's more along the lines of what I was talking about. Is a 1000 share lot considered big?
Sorry, one more question: Is there a significant difference between stocks on the different markets? Why would someone only trade NYSE stocks but not AMEX, for example?
I think that one should have a goal of atleast 500 per day. 200 just isn't worth it, atleast to me. You have alot of expenses and taxes to consider. I am speaking from my bias as I make 5-10 trades a day in the futures market. When I scale up from my piker 1 lot, I will probably trade 5 lots which is my goal.