Is Daytrading Right For You? - Page 2

09-14-2006, 04:42 PM

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Is Daytrading Right For You?

Many new market participants are lured in by the glamour of daytrading. We hear of great stories of day traders making a sizable income, working only a few hours a day, and playing golf every weekend. With the fancy advertisements of brokers and data vendors, it is easy to get sucked...

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#10 (permalink)

By Anonymous on 03-09-2007, 06:27 AM

Re: Is Daytrading Right For You?

	Quote:	Knyyt
	IMHO, I am probably going to ruffle a few feathers here, but my belief is that papertrading is BS and a waste of time if it is for longer then say a week or two. Why do i believe this? Emotional stabilty. When you have no risk, it simply is not real. People will tend to "reset" their day after something did not work out. Would you really have gotten that fill at that price? Would you really be reading that porn site when you had that 5 contract (or 1000 share) position on? Taken that phone call while a position was on? Trailed that stop so far away or so close? I would agree that it is "good" to eyeball something for a week or two, to try something new, to get a vague idea if this or that is possible, to try out a new piece of software, to see how this indicator setting etc, etc worked. But after that.. it is my belief that its a waste of time. What i like to suggest to newbies, is to put on that trade. Just do not put on that 5 contract order, or that 1000 share order. Do it with 1 contract in a slower market, or 100 shares in a thick stock. Your emotions are on the line for real when you do this. Your alert, and concentrating on this trade. Will you lose money doing this? Yes. Will you make money doing this? Sometimes. What you are doing is learning what is working for you and what is not, and doing it in a way that you will not get into "to much" trouble. Order placements, record keeping, chart methods settings, stop methods, what you feel comfortable with, what problems you have in your head(fear,greed). After about 200 trades, do yourself a truthful review. How are your entries, your exits, are you attentive during the day, or are you easily distracted? Is this what you really want? Are you looking for confirmation in many places, or are you rash? Some food for thought... Someone once said.. "There is no perfect trade, only perfect practice." Knyyt

I'm totally on your side here. Paper trading is a waste of time. That is why I like forex. You can trade a micro account in the real market to test ideas. In some cases, the account can be funded for like 10 bucks. Usually you need about 250.00. The idea is not to get rich on the initial deposit, just something more real than paper trading and less over-whelming than a full size contract while testing out ideas.

And since a chart is a chart is a chart, it doesn't even matter if you ultimately want to trade index futures.

#11 (permalink)

By torero on 03-09-2007, 06:48 AM

Re: Is Daytrading Right For You?

Yes, micro is the best to get started without being emotionally committed. This helps get the routine going and as the trader becomes blaze to the wins and losses, that's when profitability kicks in as he sizes up little by little. The real trick is to take emotions out of the equation (from Casino Royale), so this is the best way to do it.

#12 (permalink)

By Kiwi on 03-09-2007, 07:43 AM

Re: Is Daytrading Right For You?

LOL. Someone should disagree. So its me :p

Paper trading has a number of places in the game of developing, testing, and then trading your edges.

1. Forward testing after you have backtested an edge.
2. Building confidence that an edge works in real time ... leading to small trading to build more confidence and large trading to become rich, rich, rich !!!
3. Building confidence if you have fallen off your edge or your discipline. Too many people keep losing money too long in a bad streak. If the cause is psychological paper trading can be an effective part of recovery; as can rehearsal etc etc.

The common practice of maligning paper trading reflects a lack of understanding of where it can be useful. Like any tool, its up to the artisan to use it well.

Cheers

#13 (permalink)

By torero on 03-09-2007, 07:56 AM

Re: Is Daytrading Right For You?

I agree with kiwi in this case for people who don't trade forex because other markets don't provide small accounts with small risks. Paper trading can save unnecessary headaches and frustrations.

#14 (permalink)

By ducati998 on 03-11-2007, 12:39 AM

Re: Is Daytrading Right For You?

Daytrading is not the place for novice or inexperienced traders to learn their craft.

Daytrading is the most difficult timeframe to be successful in. Novice traders and inexperienced traders should start on at least weekly data based trades and possibly even monthly.

The closer you get to the noise of the market, the more mistakes you will make for the simple reason you will encounter all of the following;

*stop-running
*price manipulation for institutional fills
*liquidity providers
*volume based on derivative hedging
*Fundamental based news that is released intra-day

Until you can trade these in a longer timeframe successfully, what evidence suggests that you can trade these successfully in a compressed intra-day timeframe?

The answer is that only 1/100 will start as a novice within daytrading and actually succeed from the get-go.

Would you perform brain surgery without 5yrs Medical School and 7yrs as a specialist [surgery]?

If your answer is no; what makes you think you can outcompete the specialists out there with 10yrs,20yrs experience?

No qualifications save a $25K stake are required to enter this "profession".
If you enter as a novice, you will lose your money.
Knowledge, Experience, Courage are required prior to the "dream".

jog on
d998

#15 (permalink)

By Kiwi on 03-11-2007, 01:31 AM

What translates down?

Are you convinced that learning to trade weekly timeframes will prepare you to trade 5 minute or lower timeframes?

#16 (permalink)

By ezduzzit on 03-11-2007, 03:35 AM

Re: Is Daytrading Right For You?

Hrrumpff! The swing and position traders I know who thought they were well prepared to trade intraday have usually had their heads handed to them by the market in fairly short order. It's just not quite the same game despite the promotions by many system sellers to the contrary. One man's price action is another man's order flow, if you get the drift. It is not simply a matter of scaling down. The same instrument trades quite differently intraday than it does weekly or monthly. Can some make the transition? Sure.. but experience in one is certainly no assurance of success in the other.

Happy Trading

#17 (permalink)

By ducati998 on 03-11-2007, 12:25 PM

Re: What translates down?

	Quote:	Kiwi
	Are you convinced that learning to trade weekly timeframes will prepare you to trade 5 minute or lower timeframes?

No not at all.
However if you can trade profitably in this [or any higher timeframe] I would place your chances much higher of being successful in the daytrading zone.

If you cannot trade profitably in higher timeframes, why would you expect any different in a lower timeframe?

As markets are fractal in their technical composition, extending the timeframe has the effect of diminishing the effects of noise [noise being volume] that are distracting rather than helpful.

You will also find [in stocks] that price is not a reliable "indicator" at all.
If you use $Flow there will be numerous examples of price falling [rising] while $Flow goes highly positive [negative].

jog on
d998

Last edited by Soultrader; 03-11-2007 at 07:07 PM. Reason: Site requires login details... small edit

#18 (permalink)

By Dr Who on 03-18-2007, 10:41 PM

Re: What translates down?

	Quote:	ducati998
	No not at all. However if you can trade profitably in this [or any higher timeframe] I would place your chances much higher of being successful in the daytrading zone. If you cannot trade profitably in higher timeframes, why would you expect any different in a lower timeframe? As markets are fractal in their technical composition, extending the timeframe has the effect of diminishing the effects of noise [noise being volume] that are distracting rather than helpful. You will also find [in stocks] that price is not a reliable "indicator" at all. If you use $Flow there will be numerous examples of price falling [rising] while $Flow goes highly positive [negative]. jog on d998

Duc,

I agree here. $$flowing opposite to price.

#19 (permalink)

By weiwei on 03-19-2007, 07:11 PM

Re: Is Daytrading Right For You?

From my personal experience, any one new to trading will need to look at trading with a complete approach. In other word conditions that will effect your of trading. Anything what would have a effect to your bottom line should be included. And after you start to list out all the conditons, it can get really complicted.

But this is reality, any one who want to get into trading will need to iron out all these condition before you can be a consistant trader.

Let me present a model on this.

Internal factor: the famous 3M from Dr. Elder
1. Mind
2. Money
3. Method

How about External factor, things that is not directly related to trading, but will have an impact on you.

1.Family issue. Spouse, children and other relatives.
2.Supporting - emotional and finacial
3.others- health, car issue or any another issue that needs your immediate attention.

One live example: One moning phone ring, my wife's friend colleage got into an accident at 7:30 AM Eastern Time, and she wanted my wife to take her to work. But my wife has already left, so out of good well, I offered to help her. I thought this will be fast and easy, and I would have time to get back to my desk before 9:30. But it turned out to be a lot works. Not only I have to help her deal with police, took her to work, I also have to take her to car rental company to get a rental car.

By the time I got back to my desk it is 9:40, ER2 gap up and run up for 6 points. Plus other things from daily chart, condition of this kind do not happen a lot, but when it did it is very good bet that gap will be closed. Meaning $600 in profit per contract.

But since I rushed back, I was not prepared to take this one, so I had to let it get by. Worst yet, got mad at this, I start to took trade that dose not have good bases, and end up losing big that day.

Then at end of month when I look back, that day was the deterministic day for the month. Had I been able to take that setup, I would have a good month. and it end up to be an none-performaning month.

things like this will have big effects on your psychology. I know it had on me. I resent the fact that her call was so perfect, right at day and time the setup happened. Had it been another other day or time, I would have known how to deal with it. And how about all the good trades that I missed during the time that I have this emotion issue.

Worst yet, I can't even talk about this, because I know people would think that you should help her, so what are you complain about. But the frustration is there, I will have to channel it out in some way. It took me long time to recover from this incident.

And guess what, this is just one of those many "unexpected" external conditions that happened.

If you are an individual who would like to get into this trading business, then you must take all these factors into consideration.

Slowly you will progress with better emotion, and with persistance, eventually you will finish all your courses, and graduate from the trading university.

I will talk more about trading in the Internal factors in my next post.

Have a nice Journey.

weiwei

PS: notice that i said progress, because as for me, controling emotion never work for me, but understanding myself and progress out of it has.

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