This is my first time posting on ET...so please humor me if I seem out of place. I'll give you guys my history so that you can advice my dumba$$. I've been trading diligently for about 2 years now. Diligently = I wake up early enough to watch and trade the market from 8:30 CT - 9:30am (1 hour during open). Then I go to work and monitor market and my trades when I can. I get home about 7:30pm, eat and learn about the markets, next day plays, read forums, forecast, etc. until I go to sleep around 11:30pm. Again, I've been doing this for 2 years now. So rest assured, I care about trading. I put plenty of time towards it and am very committed to it. YET, I have not had a winning year. And that's why I am here....to seek advice from you. I first started with stocks original to do buy and hold strategies....what a joke that was....It created the most losses for me. I don't think that it's a bad way to invest, but I don't have enough capital for that to be my style currently. In fact, that may never be my style since I find it too slow and boring. So I quickly went over to options. Again, I failed miserably. I was completely clueless and strictly "gambling". BUT, I did find people on forums that claimed to be consistently making money, so I was hooked. I saw that it CAN be done, with the style I prefer (low capital, exciting, and of course great rewards). That's where my 2 years started. I have learned a lot through that time, just the tip of the iceberg, but still a lot of information. There are a few reasons why I think I am failing, but would like if you guys can tell if these are just excuses or actual reasons for failure. I think my reasons for failure are: 1) Not enough time to learn or trade with a full-time job, 2) Not able to watch the market fully because I'm at work at that time, 3) Not enough capital to ride the ups/downs, 4) No friends that I can talk "shop" with, 5) No mentors, 6) No idea how to code scripts to get some sort of an edge or backtest 7) Haven't found specific strategy that consistently works 60% of the time 8) No smart enough for this business 9) I don't paper-trade because it kills my "drive"/motivation to beat the market 10) Seeking pleasure in trading rather than doing boring strategies that let time win for you 11) *Please add more* Currently, I'm trading/scalping weeklies for intraday moves because I cannot seem to get multi-day moves right. Also, multi-day moves require more capital and greater skill. So I scalp intraday, but as mentioned, the full-time job prevents successful scalping because of daily time constraints (can only trading 1 hr in morning). Any suggestions would be much appreciated especially from traders that have traded on the side with a full time job. PS: I have considered futures/forex due to outside of works hour trading, but I'm not sold on it yet because it seems that all the action happens during work hours anyway. However, I haven't given this much thought, maybe I should?
"There are a few reasons why I think I am failing, but would like if you guys can tell if these are just excuses or actual reasons for failure. I think my reasons for failure are: 1) Not enough time to learn or trade with a full-time job, 2) Not able to watch the market fully because I'm at work at that time, 3) Not enough capital to ride the ups/downs, 4) No friends that I can talk "shop" with, 5) No mentors, 6) No idea how to code scripts to get some sort of an edge or backtest 7) Haven't found specific strategy that consistently works 60% of the time 8) No smart enough for this business 9) I don't paper-trade because it kills my "drive"/motivation to beat the market 10) Seeking pleasure in trading rather than doing boring strategies that let time win for you 11) *Please add more*" I'll take them one at a time 1) not a good excuse. If your job is all consuming then possible, however if "just" a job, 8hrs a day gives you at least 6-8 hrs of study and time to trade. 2) can be a problem but like many active traders will tell you there is definitely "lulls" in the market and its not necessary to watch it all day...every day... 3) The MOST VALID reason for failure....you have to trade small and make a lot of trades thus you need significant capital. 4&5...you don't need friends or mentors..you can find plenty of traders on line in these and other forums that have similar problems and stories..I've been helped by people I've never met nor will ever meet. None of my friends or family trade and while it can get lonely isn't a deal breaker. 6) is nice but not necessary...can be profitable without it. 7) well..NO strategy will work for all markets all the time. You need multiple strats and know which ones will work for which market...more research, knowledge and time. 8) may be valid 9) not necessary 10) possible Basically it takes ....Capital...Smarts..Time, Practice and patience... most of all discipline.
Excuses. Sorry. The central problem is that you have no plan. Your preferred "style" is important only insofar as your plan is tailored to accommodate it. But the market really couldn't care less what your preferences are. It's up to you to determine what the market's demands are and then determine what you're going to do to satisfy them. If you have no idea how to put a plan together, this is a good starting point:
http://www.elitetrader.com/vb/showthread.php?threadid=280146 Check out this link above. This guy started with $5000 to reached $52000 last year by swing/position play on options. Even though he didnât post the whole yearâs plays, but I tend to trust him as he is not out there to solicit anything, but just to show how a winning strategy/system can do. By swing/position play, you donât have to stare at the screen and watch the market all day long like those full time traders; by option play especially using vertical spread or other similar strategy, you effectively limit your risk as the max risk is in place, so you donât have to be too nervous or anxious. Finally you donât need big capital as he started with only $5000. I believe he is going to have another fabulous return this year and his performance beats a lot of so called guru at ET here (1000% return in a year). I bet he has a very simple yet effective strategy.
This is a perfect example of why so many on forums like this fail, chasing after mirages over greener grass. You have no evidence whatsoever that any of this is true. But even if it were, it would be irrelevant. The OP needs to pursue his own studies, formulate his own hypotheses, develop his own trading strategy. What anyone else does or doesn't do has absolutely nothing to do with his success or failure. Whether or not he succeeds is entirely up to him. Pursuing leprechauns in hopes of getting that pot of gold just isn't going to do it, no matter how legit the leprechaun appears to be.
Thanks for the response. Some things I'd like to say and ask regarding your response: 1) An 8 hr job is actually much longer than 8 hrs. Roughly I do 1 hr commute, 1 hr getting ready, 1 hr lunch...makes it a 11 hr endeavour. But I understand your point. 2) I trade Options on equities only. And it's very difficult to put trailing stops due to whipsaws. How do people go about trading w/o watching? Any suggestions for me? 3) How much would you consider is a good amount of capital to trade options? Of course, I understand that the type of trades you make determine the amount of capital needed, but let's just say that I want to make $3000 per month. 6) Do trade with or without scripting/coding? As for the rest of it, I will take note of it, thanks.
This is an extraordinary example of success (lets say it is true for a moment, because nobody could validate except himself), and probably most of people would fail to reach this kind of level of return even after 5, 10 or 20 years of trading. I pointed this out because this story is relevant in a couple points to the OP problems: can't watch/trade market full time, small capital. I cited this because I wanted to show the OP that there is very successful example out there that full time trading is not required. Of course, everyone has to try his best and find his own way to a wining system, but the guy in the link probably found out his system quite different from a lot of banal preaching at ET.
I trade weekly Options on equities. My strategy is to play the first hour in the morning with high beta stocks. I just (primitively i.e no indicators) watch the price pop, if it does pop, I quickly jump on the early morning trend and try to collect $1 - $2 move. If it reverses, I cut losses. By this time, I usually have to get ready to go to work anyway. I don't leave positions open unless I "feel" that the price will continue on the trend. I know that there should be no emotion behind the trade, but I haven't found any quantitative reason to stay/leave a trade, at least not yet, so I just leave it up to gut feeling and pattern of move. Typically I lose money because I bought the option when it was over-priced i.e. market had already anticipated or saw the move and over-priced the option. So over time...theta decay, bad strike price, market reversal, etc. all chip away at the profits. However, currently I haven't found a good filter/screener/methodolgy to find options/stocks that will be "popping" in the near future and getting in them before the pop. The whole prediction strategy, doesn't work too well for me because 1) My predicting skills are not that good 2) It's too risky to predict a move to happen within a week 3) Option pricing based on forecasting will kill reward vs risk ratio due to the volatile nature of the high beta stocks I play. Are you able to successfully predict stock moves in the near future? I'd like to learn how if you can share. Thanks.
Thanks for the honest opinion. Yes, I think they are excuses too, but I wanted to get confirmation so that I'm not in a constant state of delusion. There was a point in the two years where I didn't have a plan, but at this point, I don't know if that is necessarily true. In my previous post, I laid out my basic strategy/plan. However, I don't think I have a very "good" plan due to my constraints and perhaps that's my reason for failing. Most of my plan is catered around my lifestyle (full-time job limitations) and personal preference for trading (I don't want it to be a "job"). Can you tell me specifically where I need to improve my plan. It may be in the pdf you sent. I will read it soon. Also, do you also trade part-time? Any suggestions/directions for part-time trader like myself?