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Throwing in the towel.


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Throwing in the towel.

  #1 (permalink)
Rich Independence
NY NJ
 
Posts: 15 since Jun 2014
Thanks Given: 41
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This is going to be a long read so brace yourself.

Lost again today in trading. The end of my trading career is coming to a close. I got mixed feelings on this. On the one hand, my dream of trading and making a fortune is slipping. On the other, the bleeding of money, and most importantly time, is going to stop.

A little background of myself. I began trading on and off for over a decade. I initially started trading after having some success playing poker around 2003, which was around the poker boom. During that time I read some materials over the internet that trading and poker were somewhat similar and after poker started getting more harder due to the stiffer competition, and being generally burnt out from playing, I decided to focus on trading.

During this time I had many different jobs in sales, customer service and tech support. I wanted to succeed in those occupations, but I would end up getting fired eventually. So I would rationalize to myself that trading was the one and only way to get away from the working world. I would read every thing under the sun in regards to trading. Even after all those years, I still wasn't capable of making money in trading.

It's not the end of the world. It's the end of a dream of potential riches. It's a bittersweet moment.

I'm in the process of accepting my circumstances for what they are. I cannot control the outcomes of what happens going forward but what I can control to some extent how I react to those outcomes.

Not going to lie but I am wrecked emotionally.

Now it's time to aggressively look for a new opportunity in terms of a new occupation, a new revenue stream.

There comes a point in time where enough is enough. I think I had had enough now.

There's is a reason why over 90% fail and I'm part of that majority. I'm in the process of accepting that reality and coming to the realization that it's okay.

Coming to accept that business and business related activities like trading is not for me. I gave myself enough time to attempt to make it.

You generally never hear stories of those who didn't make it. You constantly hear stories of those that made it, those who went through tremendous struggles and came out on top, but you never hear stories of those who went through similar struggles and ultimately failing.

We all like to think we're that special person in this world that is different from everyone else.

Acceptance is hard but acceptance is needed to stay sane in my opinion.

I wouldn't wish what I went through on my worst enemy. I gave trading my all and it left me financially in ruins, with no friends to speak of and no personal relationships in my mid 30's.

I hope those who are still trading, and not succeeding, eventually make it. Let me live vicariously through your success.

I'm just here to share a story that not everything is sunshine and rainbows. Reality is harsh, there is only few a who can succeed in this game and kudos to them.

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  #3 (permalink)
 
rleplae's Avatar
 rleplae 
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What was your edge to start with ?
What edge (if any) did you build in 10 years ?

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  #4 (permalink)
Rich Independence
NY NJ
 
Posts: 15 since Jun 2014
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rleplae View Post
What was your edge to start with ?
What edge (if any) did you build in 10 years ?

My "edge" was support and resistance, opening range, volume profile, average true range, overnight range, trend and price action. I traded the Emini S&P. My downfall was the lack of cash. A string of losers shut me out. I traded knowing full well I needed to be lucky initially to make it due to the lack of cash.

Regardless I may or may not trade more for a swing trade, I just won't trade for income (Day trading).

Luckily I have a part time job, but I'm currently in the process of finding a job that pays more than minimum wage.

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  #5 (permalink)
 Itchymoku 
Philadelphia
 
Experience: None
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There needs to be a lot of things working well in your life to trade for a living. Even if you know what you're doing and have the money there can still be problems. For me one of my main hurdles is simply I'm not a morning person and have very low energy sitting in front of the computer. When I lose I need to wait for the market to re-calibrate, which can take hours or days. So there's a lot of time just waiting around. Sometimes i go back to sleep there goes my day.

On every instrument there's going to be some days where you simply should stay out of the market. It's going to disregard every support and resistance line then go into a chop and/or won't move. It'll kick and reverse etc. If you see yourself taking more than a loss or two on any given day it's best to just turn off the live trading for that day completely. If you don't have the ability to do that then it's not necessarily your trading that's the problem, but impulse control. Impulse trading is the downfall of most traders even if it's not even part of their plan, it'll make them hesitant to even try again.

IF you lose and try to make up for those losing trades you'll be more eager to find patterns in a market that's not conducive. It should be the opposite.

R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
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  #6 (permalink)
Rich Independence
NY NJ
 
Posts: 15 since Jun 2014
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Itchymoku View Post
There needs to be a lot of things working well in your life to trade for a living. Even if you know what you're doing and have the money there can still be problems. For me one of my main hurdles is simply I'm not a morning person and have very low energy sitting in front of the computer. When I lose I need to wait for the market to re-calibrate, which can take hours or days. So there's a lot of time just waiting around. Sometimes i go back to sleep there goes my day.

On every instrument there's going to be some days where you simply should stay out of the market. It's going to disregard every support and resistance line then go into a chop and/or won't move. It'll kick and reverse etc. If you see yourself taking more than a loss or two on any given day it's best to just turn off the live trading for that day completely. If you don't have the ability to do that then it's not necessarily your trading that's the problem, but impulse control. Impulse trading is the downfall of most traders even if it's not even part of their plan, it'll make them hesitant to even try again.

IF you lose and try to make up for those losing trades you'll be more eager to find patterns in a market that's not conducive. It should be the opposite.

I'm not going to lie, it was the lack of impulse control, in addition to the lack of cash, that definitely precipitated my downfall. Thanks for sharing your input. At this point my main goal is to create some income through other means besides trading.

My primary goal over a decade ago was to day trade for a living as my sole source of income. The whole idea started as a way to create massive amounts of income "fast". I initially played poker for the very exact reason.

I never played poker and traded because I loved doing them. I only did them strictly because of the potential of making massive amounts of money, nothing more nothing less.

As those that trade know, there are no shortcuts. Nothing comes "fast", at least for the majority.

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  #7 (permalink)
 grausch 
Luxembourg, Luxembourg
 
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Rich Independence View Post
My "edge" was support and resistance, opening range, volume profile, average true range, overnight range, trend and price action. I traded the Emini S&P. My downfall was the lack of cash. A string of losers shut me out. I traded knowing full well I needed to be lucky initially to make it due to the lack of cash.

Regardless I may or may not trade more for a swing trade, I just won't trade for income (Day trading).

Luckily I have a part time job, but I'm currently in the process of finding a job that pays more than minimum wage.

This post is not aimed at you specifically, but merely my observations on some day traders I know.

I always found it odd that these traders wanted to day trade because it allowed them to quit their jobs - I would think that someone would choose to day trade because they wanted to trade and not because they did not like their jobs.

What invariably happened is that these day traders got chained to their desks (same as a regular job), but instead of working 40 hours a week, they ended up working 60 - 80 hours a week. They needed to trade during trading hours and then do research and analyse trades thereafter. Researching on weekends is just part of the game.

What they don't seem to realise is that they have swapped one job for another, except in this case they don't earn a salary. However, speaking to them you realise that their preferred income stream would be similar to a salary, i.e. they want to earn money every day and then compound it into infinity. The problem with this type of thinking is that most trading does not work that way - long term equity curves of traders who have not blown up can be quite erratic with sometimes very big drawdowns.

I get the feeling that these guys thought they were playing poker or blackjack where they could win over time with their edge, but in reality they were playing slots. Their desire for a "job"-like income stream blinded them to that fact and they just kept on putting in more coins to keep on playing the game believing that their "edge" would sooner or later allow them to recoup their losses.

That covers a lot about how people view the transition from a normal job to day trading, i.e. consistent income with monthly paychecks whereas in reality this may not be the case.

I always found it way too risky to make such a transition. Firstly, there is no guarantee I would make money, and secondly, I could blow up my account tomorrow and not place my financial position in jeopardy - it would hurt a lot, but I would survive. At the same time, it is possible to earn a salary, buy some choice stocks (not using leverage nor options) and still have 100% growth p.a. in the right conditions. Buying stocks like AAPL, BIDU, LULU and several others coming out of bear markets would have returned 1000%+ if held long enough.

The above stocks are cherry-picked examples, but they are all stocks that I held at certain points in time. Bagging a 100% winner can pay for quite a few 5% losers. Biggest reason why it is so difficult to get these winners, is the paycheck mentality people have to investing / trading.

@Rich Independence - I never day traded, but I traded a lot of leveraged strategies in my life trying to make short term gains (swing trading). I did have exceptional periods - I had one 1,000% year - but in hindsight I would have been much better off sticking to certain key stocks using no leverage and making my gains from large moves. It frees up time to focus on other things, it is less stressful, it allows better capital growth (no need to draw money from an account), it scales much better than short-term scalping and the risk of ruin is much lower.

That does not mean that it is the correct approach for everyone, but a lot of people assume that stocks only return what the S&P returns (~4% p.a. since 2000) and therefore don't think of it as a viable method for making money. Yet, if you cut your losses short and really let the winners run with a concentrated portfolio (4-8 stocks) the gains can be extremely impressive. Best of all is that it takes me 5 minutes a day to trade this way and I save a ton on commissions if I only make 1 trade a month or every 2 months. Of course I needed to let go of the paycheck mentality which makes daytrading / swing trading so alluring...

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  #8 (permalink)
Rich Independence
NY NJ
 
Posts: 15 since Jun 2014
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@grausch Thanks for sharing your thoughts. I can't speak for all day traders, but the reason I chose day trading and specifically picked the Emini SP500 was the scalability of the product.

My thought process was if I can make approximately $500-1000 per month on 1 contract, I can make $25,000-50,000 on 50 contracts with the same strategy. This very thought gave me the motivation to attempt day trading.

What I realized however is day trading seems great in theory if it works out, but if it doesn't, not only did I lose the money, but more importantly, time spent looking at lines on a screen with absolutely nothing to show for it.

The one thing I can say now is not living with any regrets. I gave day trading a shot, it just didn't work out for me.

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  #9 (permalink)
 grausch 
Luxembourg, Luxembourg
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Stocks
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Rich Independence View Post
@grausch Thanks for sharing your thoughts. I can't speak for all day traders, but the reason I chose day trading and specifically picked the Emini SP500 was the scalability of the product.

My thought process was if I can make approximately $500-1000 per month on 1 contract, I can make $25,000-50,000 on 50 contracts with the same strategy. This very thought gave me the motivation to attempt day trading.

What I realized however is day trading seems great in theory if it works out, but if it doesn't, not only did I lose the money, but more importantly, time spent looking at lines on a screen with absolutely nothing to show for it.

The one thing I can say now is not living with any regrets. I gave day trading a shot, it just didn't work out for me.

You're welcome. Sounds like you were viewing the markets / your trading as providing you with a steady paycheck, but I may be mistaken. I always like pointing out Mark Minervini's performance in the 1997 Trading Championship. He was only up 8% at the end of Q3, but won the competition with a total return of 155% - all of his gains came from the last quarter.

I'll admit to being very frustrated with my equity performance middle of last year, trying to daytrade CL and losing 25% of my capital over a 3 month period. Would have been up 5% for the year if I did not trade CL which is not great by any means. Some of the Scalping guys made decent money while I was a net loser, so some traders definitely make it work. However, I found it quite time-consuming, difficult & stressful compared to the longer-term approach. Was also a good wake-up call to focus on that which I find easier.

Volume of the ES is actually quite good while the same can not be said for all stocks. When I mention that my style of trading scales better I am also referring to the granularity of the contract. It is quite easy to buy 1 additional stock and thus get my exposure to the exact level I want with stocks, but the jump from 1 to 2 contract on ES is quite a big jump. With stocks you can mange your exposure much better as the account size varies, whereas with futures it only becomes easier when you trade in larger size.

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  #10 (permalink)
 
DarkPoolTrading's Avatar
 DarkPoolTrading   is a Vendor
 
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@grausch has made some good points which I would like to expand on. To provide some context, I day traded full time for about 4 years while also swing trading. Over time I started day trading less and swing trading more to the point where I now swing trade stocks and options exclusively, full time.

You don't necessarily need to give up your dream of trading completely. Focus on getting a job and then when you feel the time is right and you have built up your capital reserves, start considering swing trading or investing while continuing to have a steady job.

There are several benefits to swing trading (or longer term investing):
  • Less stressful: You have days/weeks to let things play out instead of minutes
  • Incredibly strategic: Building and constantly managing a profitable portfolio is hugely strategic. You begin to care less about individual trades and more about overall portfolio management. It starts to be very rewarding when you see your strategy play out. Personally I get more satisfaction and mental stimulation from managing a 25-30 stock portfolio that is constantly changing as apposed to focusing on a single day trade that is closed a few minutes/hours later.
  • Less noise: A lot of what happens intraday is just noise. Traders buying/selling for investments and swing trades don't care about 'important' levels created intraday. Personally I find trading longer time frames much easier.
  • Time: You can spend as much or as little time swing trading as you want. You can do as little as 1 hour a week or several hours every day. If you enjoy the process of watching the market and looking for opportunity, you can certainly spend several hours a day even if you're a swing trader. This gives you the freedom to have a day job and scale up the amount of time you spend swing trading however you feel is appropriate.

The markets are always here waiting. You may find more success in the future if you play from a position of strength, ie: have a full time job and only trade with capital you can afford to lose. You may be able to put yourself in a position to trade full time after you have first proven that you can do it part time.

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