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Why not day trading?
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Why not day trading?

  #1 (permalink)
Elite Member
Thionville France
 
Futures Experience: Beginner
Platform: MetaTrader
Favorite Futures: Stocks
 
Posts: 10 since Apr 2012
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Why not day trading?

Hello,

I am new to trading. I have started off a couple of months ago day trading.

My initial objective is to learn and understand. I have started with a modest sum (1100€) and for the moment trade on the CAC40 in France.

Why? - because the brokerage fees that I have are .99€ per transaction.

My 2nd objective is to consistently make money (nothing new there I guess). I figure a couple of winning trades of 0.5% per day and that make about 10% per month.

My 3rd objective is to give up the day job and trade for a living. If I can't achieve that then just supplementing the salary will do.

Obviously I won't succeed on 1100€ ! My intention is to learn, consistently make money and then ramp up the investment amount.

My question (finally) is why should I not day trade? I have read a number of posts saying new trader should not day trade. The risk seems to me to be more manageable - ok the potential profits seem smaller, but then the losses are smaller too. As a beginning trader, if you have the time, it seems a good place to learn about price action?

In my 2 months so far I have learnt (the hard way):

- the value of stops - instead of hoping the market will turn.
- buying at or near the bottom and not at a new high - sounds obvious but I have learnt to resist the urge to jump in when it is too late and just wait for the next entry signal..
- about fear - even though I limit my exposure to a few euros I am scared! I am trying to get used to this so it becomes less of an issue - but it is not easy.

In closing, bearing in mind that I still get nervous risking a few euros - I think I am better off day trading rather than losing sleep by still being exposed overnight.

I was down 120€ but I have recently started to eat into that loss and am now down 95€. I took a couple of weeks pause to stop and review and watch.

SO am I daft?

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  #2 (permalink)
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  #3 (permalink)
Site Administrator
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You may be interested in this webinar:
Webinar: Where to start as a trader? (Part I: Instruments and Brokers)

And also there are a couple hundred of the most commonly asked questions, and a pretty clear picture of where most people go wrong, here:
https://futures.io/elite-circle/11125-ask-any-trading-question.html

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

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1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
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4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
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  #4 (permalink)
Elite Member
Thionville France
 
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Big Mike View Post
You may be interested in this webinar:
Webinar: Where to start as a trader? (Part I: Instruments and Brokers)

And also there are a couple hundred of the most commonly asked questions, and a pretty clear picture of where most people go wrong, here:
https://futures.io/elite-circle/11125-ask-any-trading-question.html

Mike

mmm... thanks for the reply Big Mike. I have signed up for the elite access and started reading though the thread. I haven't found a summary yet and I will try to keep reading until the end

The videos are interesting but is there any way to download them for offlivne viewing? My android tablet does not seem to like the videos and can't play them in a browser.

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  #5 (permalink)
CL Assassin
Near Dallas, Texas, US
 
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rsksmiles View Post
mmm... thanks for the reply Big Mike. I have signed up for the elite access and started reading though the thread. I haven't found a summary yet and I will try to keep reading until the end

The videos are interesting but is there any way to download them for offlivne viewing? My android tablet does not seem to like the videos and can't play them in a browser.

@rsksmiles , You might try the YouTube channel:
Where to start as a trader? (Part I: Instruments and Brokers) - YouTube

Gary

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  #6 (permalink)
Trading Apprentice
Frankfurt
 
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Posts: 3 since Nov 2011
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Thanks, good advice!

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  #7 (permalink)
Elite Member
Luxembourg
 
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Posts: 482 since Apr 2012
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Hello new trader and welcome to the forum.


I don't really know actually if I shall congratulate you for making this choice, or try and steer you away instead :-) but I guess you have already discovered by now how tough on the psychic this business could get and you decide to stay and give it a try.

I am definitely not entitled to give lessons or critics whatsoever, but I thought I would quickly share with you some tips that I believe could be helpful, or at least would highlight some keywords for you to carefully research and study.

Trading for me consists basically of two major skills:
1. Money Management skills
2. Trading skills

You shall of course combine the two if you are to become successful and consistent over time, one alone is unfortunately not enough. You can find a lot of books, webinars and articles written for each of the above topics. Some are better than others, but I really encourage you to deeply research anything you can get your hand on and absorb and learn as much as possible.

Understand that doing this on your very own without any support is very tough as you have to discover virtually everything by yourself, and many never do
But it is doable, many traders have done it in the past, including on this forum, so you can definitely do it too!


My personal recommendation would be to open a SIM account first, and paper trade for a while before you start using your real money. In the meanwhile, you accumulate your savings and build yourself a capital worth trading...

I don't intend to discourage you at all, but the current trading capital that you mention doesn't allow you to trade properly. Your maximum risk amount with such a capital is just too small to be practical in real markets, plus commissions alone would eat in most of your returns.

Being undercapitalized is unfortunately one of the major reasons why many traders fail, yet this is why we come to this solution in the first place... But trust me on this, the small capital would inevitably push you to take larger risks than you can digest, and this is a big No No in the trading world (as you will come to discover by studying proper money management strategies).

My feeling is that if you cannot be profitable paper trading, then you will not be profitable trading in the real markets.
Paper trading is an excellent way to practice trading. Once you are consistently profitable paper trading over a period of time and you feel ready for the real markets, then try trading in the real markets.

The key to properly using paper trading effectively is to be sure you are consistently profitable; you will feel it when you are! If you do not feel it, then you are not ready to trade the real markets. Wait until you are ready...
Do not deceive yourself here, this is very important!


There is no amateur trading league. Every market you will trade is made up of expert traders. Whenever you enter a market, you are entering a championship arena where to win you must be one of the best in the arena.
Your skills have to be top notch before you enter the markets. To become top notch, you will need to practice, practice, and practice some more until your skills are at the championship level.

Sorry, but that is the way it really is!

Remember that you are alone in this business against the entire world. You are fighting against J. P. Morgan, Goldman Sachs, Morgan Stanley, Mario Draghi, Ben Bernanke, ECB, insurance companies, hedge funds, independent professional traders, portfolio managers, and even members from this very same futures.io (formerly BMT) forum you are questioning for help.
Shocking isn't it?

But these are really the guys you are trying to steal the money from, for each gain you make somebody else on this planet has to incur an equal loss. So you'd better be really prepared


Finally, you will learn with time that this is more of a psychological game than anything else. In the end it sums up to trading human emotions more than the financial vehicles themselves. Read as much as possible on psychology in trading, and emotions in trading, it will come very handy. On advise on this, never listen to media, TV, radios, newspapers, or communications and recommendations from big financial institutions. OR IF YOU DO, SIMPLY DO THE OPPOSITE OF WHAT THEY SAY!

I hope you were patient enough to read my entire thread; and if so I can only wish you good luck and propose you contact me for whatever help you might need. I would be more than happy to help and guide and share my experience and what I know about these evil markets.

Have a wonderful weekend

Cheers
Fadi

Successful people will do what unsuccessful people won't or can't do!
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  #8 (permalink)
Fortitudo et Honor
Austin, TX
 
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If you're just starting and you already have an expectation of earning 10%/month, I would say that you've already fell into one of the biggest pitfalls of losing traders.

120% (return, not yield) is possible, but not only uncommon, but rare.

You should really abandon any return expectations to start, and simply focus on not burning your account to the ground.

"An amateur trader asks, how much can I make....a professional trader asks...how much can I lose?"

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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  #9 (permalink)
Trading Apprentice
Milwaukee, Wisconsin, U.S.
 
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Posts: 14 since Jun 2012
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daytrading vs. position trading

one disadvantage of daytrading: exposure to price spikes caused by large buy or sell orders that may hit the market during the day, and that may go against the chart trend temporarily

but one advantage of daytraing: no exposure to overnight news events

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  #10 (permalink)
Elite Member
Thionville France
 
Futures Experience: Beginner
Platform: MetaTrader
Favorite Futures: Stocks
 
Posts: 10 since Apr 2012
Thanks: 1 given, 0 received


Thanks Gents for all your feedback.


ucanttrade View Post
but one advantage of daytrading: no exposure to overnight news events

This helps me sleep at night -Once I bought at the close and made a profit selling at the morning spike - but god was I scared over night !


Fadi View Post
But these are really the guys you are trying to steal the money from, for each gain you make somebody else on this planet has to incur an equal loss. So you'd better be really prepared

Its okay I won't take it personally !


Fadi View Post
Have a wonderful weekend

Thanks for your welcome and take care!

When I started out reading books about trading I read alot about the indicators (searching for the holy grail), alot about money management (sort of understanding it) and only skimming the psychology aspects (I am a tough guy ).

I appreciate all of your comments and accept them all without hesitation. However:

- I started by paper trading for about 6 weeks (not long or long enough I know) and found that I was correctly predicting the price action direction 80% of the time.

- I have chosen a couple of stocks which I follow and try to learn how they behave. The stocks have large daily ranges which I see as good for a day trader to "steal" someone else's money. I can see multliple occasions on a bull day when I can make 0.5% and this is what has led me to aim for 10% per month. If you all say that is overly ambitious then I bow to your greater experience (I am NOT being sarcastic).

- I have started and now paused my trading and have returned to paper trading to improve my trading skills. My losses came about from poor money management (no or poorly placed stops, bad entry points and hope).

- I agree totally I am not going to get rich trading with 1000€ but along time ago I learnt that if I can crawl along a scaffolding pipe 1m off the ground I can do it 50m off the ground - simple psychology. Okay I have lost 90€ but in doing so I have learnt more than any training course could teach me about myself. Probably the best 90€ I have ever spent.
-- Greed (having set and achieved my 0.3% objective - a number of time the market reversed on me and I made a loss)
-- Fear (I am only putting at risk 5€ each time and I am getting scared! I suffer from vertigo but I overcome my fear of heights by sheer iron will and want to adapt that to master my fear of losing.
It sounds a little pretentious to quote but sun tzu spoke about "know yourself and you know your enemy".

- I am currently signed up with what I consider is a cheap broker. But with the cheap broker comes poor tools. Their web site for order entry is horrendous - I have lost money due to their order entry system. Their TA tools are buggy. So as an aside I am developing my own tools (groan) I am sneaking a live feed (not a stream) from a website and trying to pump it into NT. I am also developing an app to place the trades through the broker myself rather than through their poor data entry page.

If my objectives are overly ambitious to start with then I will just adapt them! I am not proud!

I look forward to doing "business" with you all.


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