Thanks Kevin, the info you have given will be put to use, I plan on learning a lot, and devoting some time to researching the market to learn more about it. I tend to be level headed during the sims that I use, and try to make myself think its actually my money, but obviously it's not the same. That's my only worry is, once I do end up putting real money into it, I'll lose my head as at first you usually aren't great. I need to read up though, I'm not very knowledgeable when it comes to futures or forex strategies.
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K-Dog, you were being generous in your 99% assumption, I believe.
Based on the amount of people that try day trading and actually do it for a living, the odds would be laughable. 99% would have to mean that 1 in 100 who try it, really make it (for a sole income living.) Most here would know many individuals who have come and gone in their short time. It is more like 99.9% IMHO. That doesn't mean anyone cannot do it, as it's been mentioned on here many times before. There are a million variables that go into trading with regards to life situation, finances, dedication & persistence towards the craft, etc. Those variables are the difference between the .01 and 99.9.
That is my personal belief, not that it matters from any seriousness, but just as someone who has been around for a mere 7 or so years of day trading.
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I have a bit of a hypothetical for you, (and anyone else who cares to respond).
Do you think the failure rate would be dramatically different if people had better capitalization?
I never believed that capital was the main reason for failure, I think it lies more in the understanding of how capital effects your trading. To me it seems that the people who would willfully trade under capitalized would likely fail regardless of the amount of capital. In a weird way it almost looks like a natural mechanism to keep the people won't be successful from needless loss.
My 2 cents below in an attempt to answer your questions:
Look up the term "leverage" and what it means to day trading the futures market. Should answer your questions on borrowing money and explain how you can buy 1000 barrels of crude oil for less than $2000.
Try to stay away from simulated or demo trading. Definitely not the way to learn for most people (unless extremely disciplined naturally) because it does not allow you to feel the emotions of trading real cash. That in my opinion is the hardest thing to overcome for most while day trading. Probably why ex-armed forces personnel make excellent traders.
No website, guru, mentor etc can teach you, for a fee, how to trade successfully in a consistent manner. Try to stay away from going in that direction. There are traders here at futures.io (formerly BMT) that you can learn from much better than anyone else out there. By chance or through whatever means, you are lucky to have found futures.io (formerly BMT) so early in your trading career.
As you start coming across various ways of trading, be honest with yourself in judging what works and does not work for you. By default, be critical of a method/system you come across and try to find where it fails. Most people are wrong footed when they implicitly believe that a method or system they have been introduced to works.
Lastly, I think you should know who is giving you advice in order to judge how relevant it is to you since you are new here. I have been on this road for 4+ years - day trading futures, both cash and sim. I have identified and confirmed without a doubt that I have a trading methodology (adapted from information shared right here at futures.io (formerly BMT)) that works but I am not yet a consistently profitable trader. Go figure!
to futures.io (formerly BMT)!
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Before journaling try to come up with a trade plan with a few simple set ups, try to start off by being mechanical and disciplined and it will develop as you build your journals. That way you know how much you are risking. From what I've read that's an area you want to improve.
Also don't increase your trade size and risk too much for at least a few months you don't want to blow out your account and in the beginning that's always the danger.
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For example, there's a 24 year old guy who ran a $115 million fund (All-Star Student Entrepreneurs - Sam Barnett - Forbes) in college, and he managed to do that because he had a wealthy classmate who seeded him with $2M and that his dad had about $50M excess cash waiting for him to manage once they were confident of the results from that $2M.
If you didn't have a lucky start, you're not alone. I can't say for sure what you should do, because I don't have the foresight of what finance will be like in 4 years when you're out in the job market. But I can give some general advice on how to get $25,000:
1. You're young and have a bright future. Don't 'day-trade'.
Would you assemble a mobile phone on your own? You probably could, with a SparkFun kit, soldering iron etc. - but you wouldn't.
The same goes for finance: It is an industrialized process. The most efficient way to do it nowadays requires you to set up a conveyor belt, from lawyers, to CPAs, to auditors, to CCO/CFO, CTO, CIO, CEO, to PMs to traders, analysts, researchers, developers, to the services that keep you alive and in stable state of mind (laundry, health, housing, transport, concierge).
Trading is a specialized skill in this entire chain. Just as you're useless on your own even if you became the world's best expert at soldering a wire to a pin, you're actually pretty useless on your own even if you became the world's best trader.
2. It's easier to practice on other people's expense.
It's costly to get good at any skill at your own expense. If you were good at any sport before you went into college, it's probably because your parents paid for it in some way (either indirectly by working to pay for your necessities so you didn't have to work and had time to practice, or by paying directly for your classes/coaching). Such is life.
That's what jobs are for. The fastest way to get to your first $25,000 is to intern for 2 years at any company. There are various internships that open up pathways to a job in the financial ecosystem. Besides your typical BBB IBD/S&T/QR, prop, asset management, there's PE, venture capital, consulting, software development. You'll pick up trading much faster doing any of the above than if you struck it out on your own.
My previous employer paid $10,000 per month to 3rd year S&T interns. You'll take home $25,000 pre-taxed if you worked for them for 2 years.
3. How do you get a job at a top trading firm?
If you don't go to a top 40 college, start out at a mid-tier firm (e.g. Houlihan Lokey, University Venture Fund).
If you go to a decent college, the BBBs (GS, JPM, MS, BofA etc.), PEs (BBH, Bain), asset managers (DE Shaw) etc. will have a campus recruiting program at your college. Send your resume in BOTH the campus recruiting program AND the regular online application. Attend the info sessions and don't ask questions that you know the answer to (e.g. What do you think of quantitative easing/JOBS Act/FATCA/AIFMD?) Also don't tell them how passionate you are about trading, even if it's true. Also don't ask how-legit-is-your-firm questions (What's your AUM?). Also don't ask stupid questions (Isn't "principal investing" == "prop trading"?). Ask what you'll be doing at the job, because that shows you actually care. Spend some time at WSO/Wilmott for more up-to-date advice.
Why online application? You'd be surprised how many unqualified people apply to GS IBD, so you'll easily stand out in the online application. (And by the way, if and when you do get an intern job at GS, you can actually view every job applicant's resume and prove this yourself... it's an open secret that no one bothered fixing this system flaw.) Chances are actually slightly lower with the campus program because your college's pool is more competitive, but you work your chances in parallel and apply to both.
Also, do your research and make wise career decisions. There are a few career black holes that will destroy you and make you give up on finance for life. The black holes move every year, so keep asking around. Some of these depend on your personal preferences: Avoid Bridgewater unless you want to live in Westport, take a bus into campus daily, and have your conversations taped 24/7. Avoid SIG unless you want to be poorly-paid and have a 2 year noncompete on your resume. Avoid Chopper unless you want to be a trainee for 2 years. Some are absolutely unacceptable: a culture of your PM stealing your PnL (and I can give specifics in PM).
4. Why is working at a trading firm is better than working on my own schedule?
Freedom is overrated. I met and befriended many people in the financial industry whom I would gladly walk behind and follow around 100% of the time. Our former Fed Reserve chairman. 3 Nobel laureates. A man who structured a $5 billion injection over 1 weekend with a team of over a hundred guys, just in time for market open. The man who invented the credit default swap. The man who graduated from my college 50 years before me and donated several millions to the construct the building that I spent 50% of my college life in. A 23 year-old girl out of Harvard who was head of trading for a book of over 100,000 contracts per day.
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@bcrew13: Lastly, it doesn't hurt to PM people if you think you can trust what they're saying. I'm always happy to spend time hearing out your problems gratis, especially if you're in college or younger.
Last edited by artemiso; February 21st, 2014 at 04:56 AM.
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i can offer some simple advice.....You want to see if trading can work for you.Take a look at AJs journal.If i recall correctly, AJ traded the m6e in the wee hours of the am(i believe it opens around 3am eastern) while he worked his day job.Whether you decide to simulate or not, you can do so on the m6e without getting destroyed financially.Also, you can still go to school , which is a very good idea, imo.Lastly, you can see if you like trading.
AJ is a big contributor to futures.io (formerly BMT), and has helped many people.Read his journal, and see if it helps.
and find out.......if you would enjoy daytrading.....if so, get ready to work very hard.
One last thing....imho, i would hold off on telling grandpa about daytrading.As was mentioned, there are some big differences between financial advising and daytrading, and in my experience, most people tend to be negative about daytrading...and negativity is something that nobody needs....ever!
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If you don't have all 3 (which is where most retail pikers find themselves), you will almost certainly eventually lose (or fall down). If you have one or two of the three, you have a chance, but eventually you will likely lose.
Think of a casino. It is well capitalized, has good money management (risk controls, table limits, etc), and has an edge.
Think of Joe Gambler from Iowa. He comes to Vegas with limited bankroll, intuition and feel for his so-called edge, and has a tendency to let it all ride.
Take $100 and open an Oanda account. While your account is being approved, paper trade
the Eur / usd , usd / jpy or aud / usd ... just one ... eur / usd is most popular probably and moves most like
the equity index futures
Learn how price looks when it arrives at SR and weakens, signaling reversal .
Japanese Candlesticks are the best for this ... imho , of course.
Later in you trading career, you may wish to reduce noise if you become a trend trader and use range or renko bars ..
You must learn to lose!!
Put your stops at a reasonable level above / below SR (20 / 50 ticks) and NEVER MOVE THEM OUT!
NEVER SCALE IN / ADD TO A LOSER ... this is the quickest way to ruin . .
Learn to take the tight stop losses. Then forget it - next trade please.
Think Pro QB ... 2 INT's ... no worries ... you come back in the the 4th quarter and toss 3 TD's to win.
Never let past performance affect the current trade. PnL is not a factor .
Each trade is it's own game.
OK .. the second you learn how price behaves around SR and you think you have a feel for trend or
leg reversals. Take your $100 account you just opened and trade the nano lots like you have a $1000
You will literally be trading pennies, but believe me, losing $5 still irks when starting, because you were wrong -
you lost. You will feel irritated and feel your skin get hot. This is the feeling you must lose ... Quickly.
I made the big mistake of working in SIM too long. My technique was ready years before my emotions were.
My large drawdown days have always been because of Emotions .. Chasing, adding to losers, predicting
tops and bottoms.... boom... I'm down a $grand.
Learn to win
Learn to lose
Stay even emotionally - constantly marking notes in your journal (review your trades / journal every week )
Don't look for holy grail indicators - the only thing that matters in the markets are support and resistance levels.
Learn how Volume works around these area's. (When you get to futures)
Do not go straight to the futures markets to learn to control your emotions and how to trade. It's foolish.
One key to look for as you start out with the candlesticks is wicks. You will notice large "rejection" wicks
at a level if it is being rejected. Place an order up among these wicks and wait for a retest. It's a good
feeling to instantly be in the money as price reverses and you're on your way. Initially, simply target the
other side of the immediate range you are in. Avoid momentum entries until you are better. Most are
traps to catch the amateurs. Always make sure your limit order is placed with your "back against something"
like major SR... don't diddle in the middle ... wait for the swing edges.
You must learn to examine and place trades based on the larger time frames.
Begin with a daily , hourly and 15 min charts for forex. ... Anything smaller is noise.
Trade with the trend of the daily and hourly - use the 15min for entry only ( the hourly would be better to
make sure your stop is clear of the immediate PA.... learn to stay in trades a while. Let them work ...
and be flat at major news reports for your instrument. Use the Forex factory calendar and just get
flat for all the "red" one's ... you will learn which ones are truly dangerous. You must check the news
reports everyday... this is just part of the job.
Try to keep you Risk / Reward (RR) ratio at least one to two. So... examine the trade. If you need a
twenty tick stop to get clear of the immediate PA edge, you want to make sure there is a viable target
40 ticks away, (range targets are best) ....get it!!??? you must win more than you lose. That way, with
1 : 2 RR, you can lose half your trades and still make money ... THIS IS CRITICAL !!!
OK ... you're on you're way !!!
The two things you must master quickly -
Emotions ( learn to lose and stay cool) (learn to win and stay cool)
Risk ( cut the losers short as soon as price is telling you you're wrong)
Keep the targets tight and logical - not fixed, just across the range you are currently in.
Learn to scale in / out later.
"Life On The Edge of SR"
Last edited by tderrick; February 22nd, 2014 at 11:49 AM.
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