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A Failed Trader's Triumphant Return To Day Trading
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A Failed Trader's Triumphant Return To Day Trading

  #1 (permalink)
Trading Apprentice
Dallas
 
Futures Experience: Advanced
Platform: TD Ameritrade
Favorite Futures: options
 
Posts: 5 since Jan 2014
Thanks: 0 given, 6 received

A Failed Trader's Triumphant Return To Day Trading

Hello Everyone,
I am a recovering failed day trader who has blown up my account numerous times in the past. On a positive note, so has Jesse Livermore, so maybe there is hope for me yet.

My Financial Background: Life & Health, Series 7, 66, 55, 24 licensed in the past. Stockbroker/Risk Analyst at TD Ameritrade for around a year and a half where I learned a lot. 401k Retirement Specialist at Fidelity, Sales Manager at MetLife, brief job working at a start up institutional trading desk. Got out the industry around 5 years ago to pursue a different career path/passion in the videography business.

What/How I Traded In The Past: Calls/Puts on the DIA's/QQQQ's. Calls/Puts on breaking news after pouring over the newswires. Tried to find pivot points on charts where a stock was oversold or overbought and go against the trend to find a reversal.

How I Went Wrong In The Past: Pattern Day Trading rules made it impossible to properly trade stocks or options. I never had $25k to meet the minimum. I found myself holding things overnight that I would have sold. Or not trading when I would have liked to have traded. It forced me to always look for that big score instead of smaller more consistent trading wins. Would buy a call at a point I thought the stock or index would finally recover after a big slide down and it would go sideways or further down. I tried to trade on hot news and would pour over the newswires and volume leaders data for breaking news I could trade on and be one of the first ones in but the newswires were full of so much non-market data that it was hard to get to the good data quick enough and read/act on it. I discovered that a lot of the best news isn't released during market hours but before the open or after the close when you can't trade on it. And I never was one to trade a stock that already gapped up on open because I felt there was too much risk there and I had missed the opportunity.

One thing that stands out the most from reading Reminiscences of a Stock Operator recently is that an instrument may go up or down and you might not know why for days, weeks, even months later so why worry about it. This really has stood out in my mind because I've always been preoccupied with the why and it has constantly lost me money. I always tried to outsmart the market, be ahead of it or early in, when I should have went with the trend. After reading that and absorbing it, I heard an interview of another famous trader where he said, all he's trying to do is get the scraps of the institutional traders and ride their coat tails. I think that's always been my problem, I need to focus more on price/action and volume and go with the trend and stop trying to predict direction but rather check the signs on whether or not a trend will continue or not.

Worst Trade/Biggest Loss: I put 100% of my $5,000 trading account on Bank of America (BAC) puts. Their earnings happened to be coming out on option expiration day. I purchased and held it a few days prior and held it overnight going into it. I anticipated they would report poor earnings just like the rest of the sector at the time had already done. They ended up reporting poor earnings but the market makers in it basically traded it flat on option expiration right at the strike. I never saw anything like it before, it closed right at the strike wiping everyone in the calls and puts out regardless of what the news said or the stock chart said. From other option traders, they said it was common and I should have known better. I followed it a few days after to see if it would ever finally gap down significantly and it never did. I later realized it just wasn't a good stock to daytrade, it was very slow moving and didn't quite have the volume or swings to make good money on. If I had paper traded it long enough beforehand and got familiar with the instrument, I would have learned this.

New Strategy:
1. Get back into the trading mindset/get organized: I'm currently reading Reminiscences of a Stock Operator which has sat on my book shelf for years. It's really getting me excited again about trading. I'm researching info on this forum as well and trying to learn from the mistakes of others. All this is getting my excitement level up again for trading. I need to estimate costs on what I need to pay to educate myself properly and fine tune my overall strategy.
2. Paper trade with a Simulator until I develop a system that works: I'm reading that Ninja Trader has a great sim program for paper trading. I plan to keep at it until I find a trading strategy/system that works best for me.
3. Setup a journal system to properly track paper trading progress and mistakes: I have never kept a trading journal, I plan to start one with my paper trading. So I need to figure out the best approach to this, what to monitor and document, etc.
4. Learn everything I can about futures trading: I plan to pick one or two instruments and focus on them specifically. Study their behavior, what effects their movement, etc. I'm leaning towards futures because there is no pattern daytrading rules from what I hear and I can meet the capital requirements to get started.
5. Learn everything I can from more experienced successful traders: I plan to sign up for an elite account on this forum on my next paycheck to watch all the webinars I can. And join a few newsletters/websites from top traders to see what info I can gain from them and implement in my simulator tests. I also need to read up again on trading books as certain info is starting to make sense that didn't in the past.
5. Once confident in a tested/proven system, begin trading: When I go live with real cash, I plan to start trading with small size and not looking for the big score, but rather small consistent victories that average out to long term profitability. My goal is to stay in it long enough to learn as much as possible without blowing out my account again. Once I establish results that work, then and only then add on size.


Hopefully I can give back over time to this great community of traders.


Last edited by pyrotrader; January 6th, 2014 at 04:27 PM.
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  #2 (permalink)
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  #3 (permalink)
Trading Apprentice
Sherman Oaks, CA / USA
 
Futures Experience: Intermediate
Platform: Rithmic / OEC
Broker/Data: Cannon Trading Company / Ninja Trader/Rithmic, E-Futures trading platform
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kpab702's Avatar
 
Posts: 46 since Dec 2013
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Thank you for the input


Your story sounds a lot like many day traders I know including myself. I think what has really helped me is keeping a journal of the trades I make, what kind of trading days I have experienced in these unforgiving markets and keeping a profit and loss target in my book. Keeping journal entries about my experiences in the futures markets have helped me learn and hopefully be more successful when it comes to day trading. I also have a helpful broker who is always willing to help me with my trading strategies.


pyrotrader View Post
Hello Everyone,
I am a recovering failed day trader who has blown up my account numerous times in the past. On a positive note, so has Jesse Livermore, so maybe there is hope for me yet.

My Financial Background: Life & Health, Series 7, 66, 55, 24 licensed in the past. Stockbroker/Risk Analyst at TD Ameritrade for around a year and a half where I learned a lot. 401k Retirement Specialist at Fidelity, Sales Manager at MetLife, brief job working at a start up institutional trading desk. Got out the industry around 5 years ago to pursue a different career path/passion in the videography business.

What/How I Traded In The Past: Calls/Puts on the DIA's/QQQQ's. Calls/Puts on breaking news after pouring over the newswires. Tried to find pivot points on charts where a stock was oversold or overbought and go against the trend to find a reversal.

How I Went Wrong In The Past: Pattern Day Trading rules made it impossible to properly trade stocks or options. I never had $25k to meet the minimum. I found myself holding things overnight that I would have sold. Or not trading when I would have liked to have traded. It forced me to always look for that big score instead of smaller more consistent trading wins. Would buy a call at a point I thought the stock or index would finally recover after a big slide down and it would go sideways or further down. I tried to trade on hot news and would pour over the newswires and volume leaders data for breaking news I could trade on and be one of the first ones in but the newswires were full of so much non-market data that it was hard to get to the good data quick enough and read/act on it. I discovered that a lot of the best news isn't released during market hours but before the open or after the close when you can't trade on it. And I never was one to trade a stock that already gapped up on open because I felt there was too much risk there and I had missed the opportunity.

On thing that stands out the most from reading Reminiscences of a Stock Operator recently is that an instrument may go up or down and you might not know why for days, weeks, even months later so why worry about it. This really has stood out in my mind because I've always been preoccupied with the why and it has constantly lost me money. I always tried to outsmart the market, be ahead of it or early in, when I should have went with the trend. After reading that and absorbing it, I heard an interview of another famous trader where he said, all he's trying to do is get the scraps of the institutional traders and ride their coat tails. I think that's always been my problem, I need to focus more on price/action and volume and go with the trend and stop trying to predict direction but rather check the signs on whether or not a trend will continue or not.

Worst Trade/Biggest Loss: I put 100% of my $5,000 trading account on Bank of America (BAC) puts. Their earnings happened to be coming out on option expiration day. I purchased and held it a few days prior and held it overnight going into it. I anticipated they would report poor earnings just like the rest of the sector at the time had already done. They ended up reporting poor earnings but the market makers in it basically traded it flat on option expiration right at the strike. I never saw anything like it before, it closed right at the strike wiping everyone in the calls and puts out regardless of what the news said or the stock chart said. From other option traders, they said it was common and I should have known better. I followed it a few days after to see if it would ever finally gap down significantly and it never did. I later realized it just wasn't a good stock to daytrade, it was very slow moving and didn't quite have the volume or swings to make good money on. If I had paper traded it long enough beforehand and got familiar with the instrument, I would have learned this.

New Strategy:
1. Get back into the trading mindset/get organized: I'm currently reading Reminiscences of a Stock Operator which has sat on my book shelf for years. It's really getting me excited again about trading. I'm researching info on this forum as well and trying to learn from the mistakes of others. All this is getting my excitement level up again for trading. I need to estimate costs on what I need to pay to educate myself properly and fine tune my overall strategy.
2. Paper trade with a Simulator until I develop a system that works: I'm reading that Ninja Trader has a great sim program for paper trading. I plan to keep at it until I find a trading strategy/system that works best for me.
3. Setup a journal system to properly track paper trading progress and mistakes: I have never kept a trading journal, I plan to start one with my paper trading. So I need to figure out the best approach to this, what to monitor and document, etc.
4. Learn everything I can about futures trading: I plan to pick one or two instruments and focus on them specifically. Study their behavior, what effects their movement, etc. I'm leaning towards futures because there is no pattern daytrading rules from what I hear and I can meet the capital requirements to get started.
5. Learn everything I can from more experienced successful traders: I plan to sign up for an elite account on this forum on my next paycheck to watch all the webinars I can. And join a few newsletters/websites from top traders to see what info I can gain from them and implement in my simulator tests. I also need to read up again on trading books as certain info is starting to make sense that didn't in the past.
5. Once confident in a tested/proven system, begin trading: When I go live with real cash, I plan to start trading with small size and not looking for the big score, but rather small consistent victories that average out to long term profitability. My goal is to stay in it long enough to learn as much as possible without blowing out my account again. Once I establish results that work, then and only then add on size.


Hopefully I can give back over time to this great community of traders.


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  #4 (permalink)
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Futures Experience: Beginner
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Croni's Avatar
 
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Wow, I'd never risk $5'000 in one trade... isn't that way too high? I trade ES futures and maybe risk $200 per trade. I want to be able to lose'n'learn a few times...

Chris

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  #5 (permalink)
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Croni View Post
Wow, I'd never risk $5'000 in one trade... isn't that way too high? I trade ES futures and maybe risk $200 per trade. I want to be able to lose'n'learn a few times...

Chris

The dollar amount is not relevant. Only the percentage.

Mike

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  #6 (permalink)
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Sugerland, TX/USA
 
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Platform: NinjaTrader
Favorite Futures: ES, CL
 
Posts: 13 since Jan 2014
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pyrotrader View Post
Hello Everyone,
I am a recovering failed day trader who has blown up my account numerous times in the past. On a positive note, so has Jesse Livermore, so maybe there is hope for me yet.

My Financial Background: Life & Health, Series 7, 66, 55, 24 licensed in the past. Stockbroker/Risk Analyst at TD Ameritrade for around a year and a half where I learned a lot. 401k Retirement Specialist at Fidelity, Sales Manager at MetLife, brief job working at a start up institutional trading desk. Got out the industry around 5 years ago to pursue a different career path/passion in the videography business.

What/How I Traded In The Past: Calls/Puts on the DIA's/QQQQ's. Calls/Puts on breaking news after pouring over the newswires. Tried to find pivot points on charts where a stock was oversold or overbought and go against the trend to find a reversal.

How I Went Wrong In The Past: Pattern Day Trading rules made it impossible to properly trade stocks or options. I never had $25k to meet the minimum. I found myself holding things overnight that I would have sold. Or not trading when I would have liked to have traded. It forced me to always look for that big score instead of smaller more consistent trading wins. Would buy a call at a point I thought the stock or index would finally recover after a big slide down and it would go sideways or further down. I tried to trade on hot news and would pour over the newswires and volume leaders data for breaking news I could trade on and be one of the first ones in but the newswires were full of so much non-market data that it was hard to get to the good data quick enough and read/act on it. I discovered that a lot of the best news isn't released during market hours but before the open or after the close when you can't trade on it. And I never was one to trade a stock that already gapped up on open because I felt there was too much risk there and I had missed the opportunity.

One thing that stands out the most from reading Reminiscences of a Stock Operator recently is that an instrument may go up or down and you might not know why for days, weeks, even months later so why worry about it. This really has stood out in my mind because I've always been preoccupied with the why and it has constantly lost me money. I always tried to outsmart the market, be ahead of it or early in, when I should have went with the trend. After reading that and absorbing it, I heard an interview of another famous trader where he said, all he's trying to do is get the scraps of the institutional traders and ride their coat tails. I think that's always been my problem, I need to focus more on price/action and volume and go with the trend and stop trying to predict direction but rather check the signs on whether or not a trend will continue or not.

Worst Trade/Biggest Loss: I put 100% of my $5,000 trading account on Bank of America (BAC) puts. Their earnings happened to be coming out on option expiration day. I purchased and held it a few days prior and held it overnight going into it. I anticipated they would report poor earnings just like the rest of the sector at the time had already done. They ended up reporting poor earnings but the market makers in it basically traded it flat on option expiration right at the strike. I never saw anything like it before, it closed right at the strike wiping everyone in the calls and puts out regardless of what the news said or the stock chart said. From other option traders, they said it was common and I should have known better. I followed it a few days after to see if it would ever finally gap down significantly and it never did. I later realized it just wasn't a good stock to daytrade, it was very slow moving and didn't quite have the volume or swings to make good money on. If I had paper traded it long enough beforehand and got familiar with the instrument, I would have learned this.

New Strategy:
1. Get back into the trading mindset/get organized: I'm currently reading Reminiscences of a Stock Operator which has sat on my book shelf for years. It's really getting me excited again about trading. I'm researching info on this forum as well and trying to learn from the mistakes of others. All this is getting my excitement level up again for trading. I need to estimate costs on what I need to pay to educate myself properly and fine tune my overall strategy.
2. Paper trade with a Simulator until I develop a system that works: I'm reading that Ninja Trader has a great sim program for paper trading. I plan to keep at it until I find a trading strategy/system that works best for me.
3. Setup a journal system to properly track paper trading progress and mistakes: I have never kept a trading journal, I plan to start one with my paper trading. So I need to figure out the best approach to this, what to monitor and document, etc.
4. Learn everything I can about futures trading: I plan to pick one or two instruments and focus on them specifically. Study their behavior, what effects their movement, etc. I'm leaning towards futures because there is no pattern daytrading rules from what I hear and I can meet the capital requirements to get started.
5. Learn everything I can from more experienced successful traders: I plan to sign up for an elite account on this forum on my next paycheck to watch all the webinars I can. And join a few newsletters/websites from top traders to see what info I can gain from them and implement in my simulator tests. I also need to read up again on trading books as certain info is starting to make sense that didn't in the past.
5. Once confident in a tested/proven system, begin trading: When I go live with real cash, I plan to start trading with small size and not looking for the big score, but rather small consistent victories that average out to long term profitability. My goal is to stay in it long enough to learn as much as possible without blowing out my account again. Once I establish results that work, then and only then add on size.


Hopefully I can give back over time to this great community of traders.

Been there before...trading is hard... I wish you the best!!

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  #7 (permalink)
Trading Apprentice
Somerville, MA USA
 
Futures Experience: Advanced
Platform: Ninja and t4
Favorite Futures: CL, GC
 
Posts: 12 since Mar 2013
Thanks: 0 given, 10 received

Been there, it's rough. However, I can't imagine a more rewarding career.

Take it slowly. One "correct" step at a time. In the immortal words of Vince Lombardi "Practice does not make perfect. Only perfect practice makes perfect."

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