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Newbie here. I have a few quick questions for those who are more experienced. I tried day trading back in 2011 but quickly blew out an account because I had no clue what I was doing. Ever since I pretty much stuck to buy and hold (for the most part). Over the years I've had some single one-off trades here and there which in total made money, but I wouldn't be confident in that approach in the long term since they were just discretionary trades.
FWIW - Over the years I've continued to read about trading and worked at a few buy-side firms (studied finance in university) so my knowledge or interest never went away. I just can't seem to see how this could realistically work out.
I would appreciate any thoughts/insight into the questions below.
1. For those of you who day trade, how do you find an edge?
2. How would you recommend trying to find an edge?
3. Do you day trade compared to swing trading, because you find there is more of an edge there?
4. On average do you make money everyday trading?
5. How realistic would it be to net $200k in trading profits per year? What account size would be required to do this?
6. How realistic would it be to trade for a living and have your trading profits be your sole source of income?
7. Do you compare your results to buy and hold? Why or who not?
Thanks!
Can you help answer these questions from other members on NexusFi?
I'm not trying to be rude or ignorant here with my response but in all fairness the answers to your questions reside within yourself. While I don't day trade nor trade for a living(truck driver by profession), I have been trading for a long time and understand that you have to find the answers to your questions by some deep soul searching.
Reading books and getting other traders perspectives is fine but ultimately it's your life and your money at stake. Some other trader's risk appetite might not work for you or your account size. It's easy to get caught up in the hysteria of trading for a living after watching the latest You Tube trading phenom, but what does that have to do with you and your trading. I struggled with this for many years, wanting to trade full time. Unfortunately I lacked the courage, conviction, discipline, strategy and fortitude that it takes to take the leap. Not to mention, the capital. I realized this myself and my trading improved because of it.
Only you can come up with a realistic figure on trading for a living. Only you know what your cost of living expenses are. Don't forget, life changes. Marriage, children, mortgages, car bills, repair bills, vacation's, etc, etc. You have to be able to define down to the penny what it would take, and please be realistic. You want to make 200k a year in profits. What kind of account size do you think you would need to achieve that? Do you really think that you can start with 10k, 50k or even 100k? Without even being able to define your own edge, strategy or trading style? On a 1 million dollar account, your 200k profits would represent a 20% return per year. Can you achieve that kind of return every year? Can you start with 1 million dollars?(You Tube phenom's aside)
Believe me, I'm not trying to discourage you. I'm just encouraging you to sit down and write down the answers to your questions yourself.
1 &2. You are asking others how to find an edge, which means you don't have one or are still searching for one.
3. You have not even defined what type of trader you want to be
4. "Crystal ball theory"
5 &6. These two only you can define for your own life
7. Comparing day traders results to buy and hold is apples and oranges. You have to be able to compare your results to what YOU deem is acceptable for your life.
Again, don't mistake my responses for rudeness. I want you to succeed. I'm sure you will get day traders responding here that you can achieve all your goals by starting with just $5000 because they were able to do it. There is a chance that you would be able to do it also, but you still need to have the answers to your questions written on your own heart and mind.
A swing trader is a trader that will trade long or short regardless of the overall long term trend of the market, so a day trader could be considered a swing trader. I think it is best to have a mentor to learn how to trade.
In general usage, at least in futures, a "day trader" opens and closes all positions within the same exchange day. (For CME index futures, the day begins at 5:00 PM Chicago time and closes the next afternoon for an hour period at 4:00 PM. There is a break for Sat/Sunday, and the new week begins Sunday at afternoon 5:00 PM.)
Holding within the same-day timeframe means that the trader is not subject to CME margin requirements, and only has to put up as much margin as their broker requires for day trades, which can be much lower. If you hold over the day's close, you are required to post exchange margin.
the distinction that people usually make is that a "swing trader" generally holds for periods longer than a day (although a swing trader can close sooner, of course.) It's more a matter of the time period (and hopefully the size of the price movement) that counts, not whether you go long or short.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
Actually, it's not that big a deal. The only thing that has a definite meaning is "day trading," because, (1) it's got the word "day" in it , and (2) there is a real difference in the margin requirement, which I went into perhaps a little more than was needed. But day-trading has to be short-term, or it will go outside the "day" part, and that will have margin consequences.
Sometimes very short-term traders will even refer to their longer day trades as "swing" trades, just to distinguish them from their really short-term ones. When you get down to it, these terms are imprecise and relative, but usually a "swing" is regarded as a longer move. But both day trades and swing trades are shorter than the long-term trend (also a relative term, of course.)
So I'm not saying your book is wrong. It's just that the time dimension does come in, especially in terms of a strict "day" trade, which does have a definite meaning.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
Going to change the questions around to bring some continuity to them.
3. Do you day trade compared to swing trading, because you find there is more of an edge there? Personally it has to do with wether I am going to spend the day watching the screen. Some days traders just want a couple of ticks and leave for he day. When I day trade I am looking for the big move of the day to pick up on emini a grand to two for the day. most days.
5. How realistic would it be to net $200k in trading profits per year? What account size would be required to do this? One emini will net close to that figure and two will do it easily. Day and three if swing trading. Swing trading for me is about a trade a week. Day trading is every day, shop term trading is 10 days. to a month, long term is everything beyond that.
4. On average do you make money everyday trading? Day trading yes. Swing trading is holding through the ups and downs so somedays go against you, but. in the week you collect.
6. How realistic would it be to trade for a living and have your trading profits be your sole source of income? Depends on how long it takes one to find their niche. I know traders it took one day, and others like me struggled for a year. In fact I could tell others the trade, but my problem is I could not follow my own advice.
1. For those of you who day trade, how do you find an edge? I use Elliott Wave Principles so I use trend lines, and wave patterns. One can use simple consolidation points and take a day trade off that support or resistance point.
2. How would you recommend trying to find an edge? For me it is simple determine turn point take a trade and hold till it fails or reaches destination.
7. Do you compare your results to buy and hold? Why or who not? No, I do keep track of trades won or lost, amount lost on a trade, and how many trades are winning to let record. If one has swing trades that make larger profit they can afford to lose more or lose more trades. Scalping trades where one is looking to just make fifty bucks cannot afford to have very large losses, nor may losing trades. It is better to profit on one tick, then lose on two. Small profit is better than a lost in scalping. Trading since the late eighties. Sillywaves
These questions are very much going to change as you get more experienced in the market. Eg this one: 6. How realistic would it be to trade for a living and have your trading profits be your sole source of income? Anyone that makes money trading is going to diversify. Maybe they are going to get some rental properties or perhaps they have other businesses they might be a silent partner. There are so many other ways to make money once your trading has started producing profits. Look at the fund traders - all of them are not trading their own individual accounts, they go down other avenues ... so anyone tells you that trading is their only way they make a living would be lying or stupid.
, and (2) there is a real difference in the margin requirement, which I went into perhaps a little more than was needed. But day-trading has to be short-term, or it will go outside the "day" part, and that will have margin consequences.