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Can Day Trading be profitable for retail?
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View Poll Results: Can Day Trading be profitable, consistently, for retail traders
Yes 72 72.00%
No 13 13.00%
Can't say 15 15.00%
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Can Day Trading be profitable for retail?

  #51 (permalink)
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Day timeframe...

and trading in general definitely do not work. No success can be found in the financial markets at all. You are all wasting your time. Move on to something that works.

Dan

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  #52 (permalink)
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michaelleemoore View Post
I am a discretionary trader. I trader support/resistance, and take short-term trades at well-known areas such as the D-High, Y-low, VWAP, the daily opening price, etc. I expect short-terms reactions at those places, and my trades are successful at about an 80% rate. I have short targets, tight stops, and trade 3-5 contracts per trade, in general.

I trade in practically the same style as Michael. Basically I trade harmonic rotations around S/R, High, Low, VWAP, previous OHLC, 20 EMA, 800 EMA etc. I also have easily reached daily profit targets which with the exception of occasional debacles I achieve practically daily. The daily targets allow me to have a very smooth equity curve at the sacrifice of greater profits which is fine with me because I rather trade a few hours a day and be done instead of staring at a computer monitor for 6 hours a day. My "expenses" commission etc. " run about 3% of profits

My point is that with a relatively simple strategy, no profiling, no DOM, just some lines on a chart (which did take about 5 years of following the market tick by tick to master) I am able to be consistently profitable strictly day trading.

I just can't wrap my head around the appeal of retail HFT with co-location, exchange seats, 3000 trades a day (I average 5). There are so many simpler ways to make money trading. I guess the promise of automated riches is it.

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  #53 (permalink)
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Trading is not easy. In fact it's actually very very difficult. There's a lot of people that think it is easy, and as they say "a fool and his money are soon parted". You originally asked "Can Day Trading be profitable for retail?". As some people came in and said yes it's possible, your question then morphed into "Can Day Trading be profitable for retail, with not more than 20 trades/Instrument a day, all trades closed before market close, must have poor infrastructure and be paying high commission costs?" The answer to that is yes it's possible, and yes some people do it, but in reality the majority do not. the reality and the dream are very different, that doesn't mean it's impossible. Is Kevin profitable. Yes I believe so. Am I profitable. Yes definitely. Would i consider Kevin or myself to be retail noobs daytrading through a low end broker. Hell No.

Kevin has an "Ask Me Anything" thread on this site. Maybe you should read that. Kevin has lots of people who have taken his class that I think would now describe themselves as successful algo traders. Do they day trade and close every position every night? As Kevin said the style is more swing trading so probably not - so maybe they aren't the people you are looking for. Are they part time traders that has made this work for them though. Most definitely.

So,
Are there part time, under capitalized, generally uneducated, day traders that consistently make money in both bull and bear markets? Maybe, but they are few and far between.
Are there part time traders, that have spent years studying trading and markets, that understand risk, that make a few choice (often swing) trades and consistently make money. Yes I believe so.
Are there full time, work from home traders, that have been trading for years, that make enough money to live off. Yes definitely.

But,
Are there part time, generally uneducated (other than reading a few books) successful surgeons. Probably no, none.
Are there part time. well-educated semi-retired Dr's, that are still successful surgeons. Yes probably.
Are there full time Dr's, who have their own practices, that are very successful surgeons. Yes definitely.

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  #54 (permalink)
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SMCJB View Post
Trading is not easy. In fact it's actually very very difficult. There's a lot of people that think it is easy, and as they say "a fool and his money are soon parted". You originally asked "Can Day Trading be profitable for retail?". As some people came in and said yes it's possible, your question then morphed into "Can Day Trading be profitable for retail, with not more than 20 trades/Instrument a day, all trades closed before market close, must have poor infrastructure and be paying high commission costs?" The answer to that is yes it's possible, and yes some people do it, but in reality the majority do not. the reality and the dream are very different, that doesn't mean it's impossible. Is Kevin profitable. Yes I believe so. Am I profitable. Yes definitely. Would i consider Kevin or myself to be retail noobs daytrading through a low end broker. Hell No.

Kevin has an "Ask Me Anything" thread on this site. Maybe you should read that. Kevin has lots of people who have taken his class that I think would now describe themselves as successful algo traders. Do they day trade and close every position every night? As Kevin said the style is more swing trading so probably not - so maybe they aren't the people you are looking for. Are they part time traders that has made this work for them though. Most definitely.

So,
Are there part time, under capitalized, generally uneducated, day traders that consistently make money in both bull and bear markets? Maybe, but they are few and far between.
Are there part time traders, that have spent years studying trading and markets, that understand risk, that make a few choice (often swing) trades and consistently make money. Yes I believe so.
Are there full time, work from home traders, that have been trading for years, that make enough money to live off. Yes definitely.

But,
Are there part time, generally uneducated (other than reading a few books) successful surgeons. Probably no, none.
Are there part time. well-educated semi-retired Dr's, that are still successful surgeons. Yes probably.
Are there full time Dr's, who have their own practices, that are very successful surgeons. Yes definitely.


I have a box of band-aids, a bottle of Tylenol and webMD. What do you mean I'm not a consistent prolific successful medical doctor!

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  #55 (permalink)
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wldman View Post
and trading in general definitely do not work. No success can be found in the financial markets at all. You are all wasting your time. Move on to something that works.

Dan

Your sarcasm has no value. Show me numbers.

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  #56 (permalink)
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Seahn View Post
I trade in practically the same style as Michael. Basically I trade harmonic rotations around S/R, High, Low, VWAP, previous OHLC, 20 EMA, 800 EMA etc. I also have easily reached daily profit targets which with the exception of occasional debacles I achieve practically daily. The daily targets allow me to have a very smooth equity curve at the sacrifice of greater profits which is fine with me because I rather trade a few hours a day and be done instead of staring at a computer monitor for 6 hours a day. My "expenses" commission etc. " run about 3% of profits

My point is that with a relatively simple strategy, no profiling, no DOM, just some lines on a chart (which did take about 5 years of following the market tick by tick to master) I am able to be consistently profitable strictly day trading.

I just can't wrap my head around the appeal of retail HFT with co-location, exchange seats, 3000 trades a day (I average 5). There are so many simpler ways to make money trading. I guess the promise of automated riches is it.

Well done, @Seahn, great to hear about your success! To the chap who started this thread, the fact that some of us do not post backtested results does not mean we don't make money. My trading can't really be backtested, as each trading decision I make is never based solely on a line(D-high, for instance)/vwap/support-resistance. I'm looking at the larger context, gauging the speed of the current move and also watching for pattern behavior I've learned to recognize over years of observation.

The discussions about backtested results -- and the penchant for believing them over the honest, straightfoward words of folks who actually make a living daytrading -- strike me as so many angels on the head of a pin. Indeed, they sound like echoes in the dark world of someone who finds that his own failings must be mimicked by others. I'd spend less time challenging others about whether they make money and more time watching the market of your choice in hopes of becoming profitable like some of us here who've sinned only by trying to help others. It's hard work, and dissing others who've been successful is a serious waste of time

mlm

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  #57 (permalink)
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There are always many active trading journals on FIO, where traders go to great lengths to report and critique their trading, having accepted the idea that being accountable for results will make them better at their craft. They clearly are being honest, considering that most of the results are not that great.

Almost all of them are not successful, or have only spotty success. Most, frankly, disappear. It is reasonable to assume that most of those who vanish simply do not make it. We are, in fact, told that something like 95% of retail traders eventually fail (which may be a little low, actually.)

But people also show progress, and some who are posting right now have managed to achieve consistent success over time. Some, like @michaelleemoore, no longer post actively, for a variety of reasons (including being pestered for "their secret," even though it was plainly detailed in their journals.)

I have been watching things here for years, and I can say that very, very few of the successes have been by traders who have an automated system that can be backtested. (There certainly have been some.) I can also say that very few have been "discretionary" traders, who are using their knowledge of the market and making human judgments based on their experience, not on mechanical rules. (There also have been some of these.) The obvious reason is that very few things work, but some do.... of both types.

It may appear to be reasonable to require a trader to conform to some particular idea of how they should trade, and so insist on a system that is susceptible to automated testing, but it is not. If a trader can succeed with a different approach, then that is what they should and will use. (They also will not generally regard it as their obligation to prove it to anyone, for some reason....)

Basically, actively reading the trading journals that are out there -- and that have been active in the past -- will show whether success is possible or not, and the verdict basically is, "Yes, but seldom."

And when I say "seldom," it's not like it's unheard-of. It's just seldom.

The issue, by the way, is not special in application to just day trading. I would say that trading within any timeframe is difficult, and there are very few traders (or investors) using any time horizon who will continue to make money. (Longer-term guys may just take longer to fail. ) But there still are those who do.

Only my two cents, but it is a reality that a (fairly small) number of traders do manage to trade well, in many timeframes and with many different methods. These are being documented every day on this forum, and it has been going on for years.

Bob.

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  #58 (permalink)
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jefforey View Post
Your sarcasm has no value. Show me numbers.

the reason trading, however you define it, does not work for you, is you.

There are plenty of commenters here that will engage with some kind of softer unfocused explanation. The vague notion is a non-starter for most people that are making money and don't have something to sell or prove.

You have not seen it or can't identify personally with it, so it is not possible. Displace that false logic. Stop back testing, it is for salespeople or losers. Define the objective parts of your trading. Journal the subjective parts. Know the difference. Study your losers, get better.

Show you the numbers? How? If I type a claim, you will discount it. Statements or tax documents, you'd call those fake too. Get focused and eliminate bad outcomes. That takes a huge commitment and tremendous discipline. Few have what it takes...just like every other high reward profession. Don't whine, nobody cares.

If you want input (some will be great, and some will suck) on your trades, post the trades and supporting logic. If you are searching and honest enough with yourself to admit that, then you will find about a dozen guys that I believe are posting legit trades with supporting comments. Many people with varying degrees of success will overtly or tacitly try to help you with sincerity. That is exactly what the post you called sarcasm was.

Dan

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  #59 (permalink)
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jefforey View Post
My opinion is : No, It cannot be profitable. I have been backtesting, simulating, live testing for the last 5 years and my opinion is that given the commissions, slippage etc retail user cannot be profitable consistently. But if the same strategy is run by a broker (who does not pay commission on his own trades) it will be immensely profitable. Add co-location which further improves the chances of limit order execution and decrease slippage the profit increases further. Add reduced exchange fees (some brokers have this privilege) than profits increase further. What is your opinion? My observations are based on trading es and other index futures like nifty etc.

So you assume if you can't do it nobody can?

And your comment about co-location shows me you have not really traded in the live markets. Yeah slippage and order fill is a real issue, occasionally, but it does not make or break a successful discretionary retail day trader.

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  #60 (permalink)
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jefforey View Post
My opinion is : No, It cannot be profitable. (...) retail user cannot be profitable consistently.

Your conclusion is mostly correct.


jefforey View Post
I agree that there is no incentive. I am just looking for some evidence. Not here to offend anyone. One way would be to post backtesting results done using tick data, I guess.

In fact I can prove you're mostly correct based on live results rather than backtest results.

I have a leaderboard too. I happen to be a market maker for about 2000+ FX accounts. We know how profitable our counterparties are on every single trade since day 1, so this is over a very large sample size.

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While I don't know if the beneficial owners of these accounts are 'retail' or 'institutional', I can distinguish them by account size, and there's a very distinct pattern which is consistent with what you'd expect of retail trading behavior. For example, for all accounts with more than $100,000 cash equity, their trade PnL distribution is almost symmetric, so these accounts are about equally willing to take a $100k loss against us as they are to take a $100k win against us. You'll notice that the orange curve is very asymmetric, meaning that small accounts are willing to take big profits against us but very reluctant to take equally large losses against us i.e. they cut their losses too quickly. This is typical, we see these traders take stop losses much more often.

If you draw a vertical column at $0 gross profit, you'll see how profitable each group generally is when they trade against us:
- For all accounts with less than $100,000 cash equity, they are profitable when they're trading against us for about 21% of the time.
- For all accounts with more than $100,000 cash equity, we become more evenly matched as they make money when they're trading against us for about 50% of the time.

If you consider that most retail traders have less than $100k cash equity, here you have it: most of the retail traders I've encountered consistently lose money.

(Note: Some people may argue that this is unfair. It isn't. I can spread 0.1 pips to a 'retail' trader but 1.0 pips to a more profitable trader, and other market makers are competing for the same flow so I have to give the best possible spread. My decision is maximin optimal for the retail traders because they get to enjoy lower spreads.)


jefforey View Post
Add co-location which further improves the chances of limit order execution and decrease slippage the profit increases further. Add reduced exchange fees (some brokers have this privilege) than profits increase further.

I think you have the causality reversed. The benefits of these are very small to a retail trader. The successful traders find a way to make profit and eventually it becomes sensible for them to make these micro-optimizations to improve their revenue or reduce expenses.

The reason is quite simple really, I agree with @Anagami. Daytrading is like being a stay-home writer, most people lose money and it's not that the system is rigged against stay-home writers, it's just good literature is a very competitive and efficient market.


Last edited by artemiso; February 14th, 2018 at 04:16 PM.
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