Is Daytrading Right For You?

[Soultrader]

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 in without really understanding what day trading is all about.

You may have had some experience investing in the stock market. Now you want to consider trading. Index futures, forex, and tech stocks are among the favorites with day traders. Do you really know what it takes to be a full-time trader?

The Attraction

Most people are tired of their current jobs and looking to find financial independence. Why do you think "Rich Dad, Poor Dad" made millions?

Here are the perks associated with day trading:

• Independence: There are no obligation to anybody but yourself. You do not have to deal with customers, clients, or even your boss. You pick your own working hours and wake up whenever you feel like it. Time is very flexible.
• Financial Independence: If you are considered a profitable trader, you are most likely not concerned about paying rent the next month. True, traders do go bust. But once you learn how to trade you can make money almost anytime you want.
• Mobility: You are able to work from anywhere in the world as long as you have a computer with an internet connection. You can place orders on the phone as well but I do not recommend it when day trading. Alot can happen in a matter of seconds.

Some things to consider

Like any other job, there are certain things you may have trouble facing. Do you like to work in an environment full of people? Then day trading may not be for you. Many day traders work from their home and are faced with isolation. There are trading rooms and facilities that you can go to but this is limited on where you live. Day traders also spend a considerable amount of time staring at their computers. You may actually sit there for 3 hours before you make one trade that lasts 15 minutes. It is similar to going to a Mike Tyson fight. Waiting for 2 hours and watching for 15 seconds.

Day trading may not be for you. It requires quick fingers and an aggressive personality. If you like to spend time analyzing before making a decision you might want to consider swing or position trading. Market analysis must be done prior to the opening. Hesitation in day trading can be costly.

My Daily Routine

Take a quick glance at my daily routine and if it suits you day trading may be right for you. I wake up approx 1-2 hours before the opening to go over my charts. I spend this time to analyze and devise a trading plan. I will never trade the markets blindly. Having a plan is a must. From 9:30am eastern to 11:00am eastern, I have my eyes glued to the markets and my computer. I am looking for 1-3 good setups. From 11:15am to 2:00pm eastern I will usually spend time doing some work on my website, writing articles, planning new business', and grabbing some food. From 2:00pm to 5:00pm eastern, I am back to trading looking for any good afternoon opportunities. The markets close at 5:00pm and I spend another 2-3 hours studying my trades, analyzing market action, and trying to learn anything new. I will never sleep without learning at least one new thing each day.

I tend to be a night owl and a workaholic so I spend most of the time after the close working on different projects. My only break is on every Friday or Saturday night when I do go out and party hard. Sunday... I am back at the laboratory. In my case a 9-5 job offers less working hours. I tend to work over 12 hours everyday.

This may not sound appealing to some people. But the biggest reason why I love what I do is that I have complete independence. I can choose to do whatever I want to do. Also day trading offers a tremendous feeling of achievement. Everyday is rewarding and you make money based on your results. There is no harsher judge than the markets. If you are trading with a hangover the markets will rip your throat out. If you are prepared with the right mindset, the markets will reward you.

[zash2k500]

I am considering going into day trading, however i am a beginner and do not
know much. Slowly I am reading/studying articles and aquiring knowledge.
However I am an engineering graduate so financial stuff boggles me lol. It
would be an honour if you could help.

- I heard you need large amounts of capital to begin day trading, is this
so? and how much are we talking?, As you can see I am a graduate I am
obviously going to lack finance lol but I am willing to take risks.
- I also read that individual day traders do not stand a chance with the
professionals because the professionals have the software and instant
processing tools, is this true? or is it still possible to "make it" ?
- Do you think day trading/spreadbetting is more of a skill or just
gambling?
- Do you recommend any good trading software, books, articles?
- From you experience Is daytrading highly rewarding?
-I am willing to put in 11-12hours daily to learn the markets and the
business, how long given a person of average IQ would it take to "master"
the fundamentals from your experience?

I am just like you, during my degree I studyed/worked a straight 12 hours
daily and rested one day. I have the determination and drive just need the
direction.

Many thanks your help is greatly appreciated, Keep up the outstanding work at traderslaboratory!

Zashuka

[keymoo]

Zashuska,

I am new to trading myself, I only started in September of 2006. I already wiped one account and 50% of the next one. Trading is not easy.

I was a database designer/developer for financial organisations for ten years. I was very successful and recognised in my field and even published a book. I was very well paid. I'd like to address some of your questions because I myself was lured to trading with the idea of financial independence, no boss, no commuting to work, not tied down to one physical location. With my old job I was tied to London, UK because that is where the money and the good work is. With trading I can live on a mountain in Switzerland or a village in England, an island in the Carribean, wherever I choose as long as I have internet.

I would personally recommend you paper trade for a few months and get profitable in that account. Once profitable in your paper account (demo account). Trade 1 contract if you like futures and be profitable with that for a few months. Don't increase your size.

Learn all you can about money management and risk - this will wipe your account if you don't. I'm telling you from experience. This is very important.

New traders to the markets are fresh blood for the pros to feed on. Where do you think their profits come from? New traders like you and me. Don't underestimate how good the pros are in the markets. They are very good - you better be prepared and have done your home work before trading your first contract.

This site is a great one for learning. I also like tradethemarkets.com and there are lots of book recommendations here on this site.

day trading for me so far has been heartache, stress, adrenaline, frustration, elation, joy, depression and anger. It is a mixed bag of emotions, you better get prepared for an emotional roller coaster when putting your hard earned cash into some other trader's pocket.

I've been doing this six months and I still am next to clueless. You do not need to be exceptionally intelligent. The biggest things you need are iron discipline, a methodical approach, controlled emotions and lots of cash. It may take you say 1-2 years to master the trade, I'd say but it can very enormously from one individual to the next. It may take you 2 months, I've heard some people say it didn't really "click" with them for ten years. I'm not consistently profitable yet and I've been at this six months.

I wish you the best of luck. Decide if this is what you really want to do and then throw your heart and soul into it for a year. I'm sure you will then be able to make as much money as you want as long as you can keep control of your emotions. I, myself work 10-12 hours a day, sometimes more, doing my statistics, studying charts, back testing, looking for new setups, reading books, articles, web sites, trading videos, etc. I do love it though, and who knows, one of these days I may be able to breakeven, and then I can take the next step and start to become profitable.

[dalby]

imo, if u want to daytrade (and i do this) u must

1) master yourself
2) master your emotions
3) have a business plan
4) understand risk. i suggest any book on game theory, to start
5) be able to multitask and synthesize various pieces of info quickly
6) be able to admit you are wrong
7) have a methodology with an edge

[zash2k500]

Thanks dalby and keymoo for your information, it is much appreciated. Dalby do you have a story one can learn from?

I believe keymoo you seem to have a good mindset and I strongly believe that you will definilty do well....just that inner feeling telling me.

I was thinking of the same strategy to do paper account trading for up to 1 year until I master some of the arts. Specialise into 1 type of sector, read books, articles synthesise knowledge. Game theory/Risk management seems very important because everyone agrees with that.

How much would one need to actually begin when entry to markets? Spreadbetting and day trading seem like the same thing to me just that day trading you own the shares instead of betting on them, correct me if i am wrong?. Given this.. a good daytrader should make a good spreadbetter?

Any other usefull advice and case study stories would be helpfull guys,

MANY THANKS KEEP UP THE EXCELLENT WORK!

[dalby]

my story...

i came to daytrading from a contrarian investor perspective. for example, I loaded gold in 98 and 99 when everybody hated it and as a big fan of the graham/buffet approach.

but with futures you can't rely on fundies etc. you gotta use TA (or quant analysis etc.)

i did terribly the first year, then started to get profitable and am now consistently profitable, after learning "with blood".

i've been managing some OPM (other people's money) recently, and also started a trade mentoring business, so I have my hand in this market in several ways.

[zash2k500]

Dalby your story is quite inspiring...

What further detailed advice would you give to newbies such as me? such as books, articles, mindset etc etc ...it would greatly helped, I am an applied information seeker hungry to learn from the best lol.

So it took you 1 year of hard training to get profitable?. I have a friend who is like you, his just come into trading with an investing perspective so he also finds it diffucult to adapt to small term trading.

Thanks for your help, I am wishing you a profitable/abundant future.

[keymoo]

	Quote:	zash2k500
	Thanks dalby and keymoo for your information, it is much appreciated. Dalby do you have a story one can learn from? I believe keymoo you seem to have a good mindset and I strongly believe that you will definilty do well....just that inner feeling telling me. I was thinking of the same strategy to do paper account trading for up to 1 year until I master some of the arts. Specialise into 1 type of sector, read books, articles synthesise knowledge. Game theory/Risk management seems very important because everyone agrees with that. How much would one need to actually begin when entry to markets? Spreadbetting and day trading seem like the same thing to me just that day trading you own the shares instead of betting on them, correct me if i am wrong?. Given this.. a good daytrader should make a good spreadbetter? Any other usefull advice and case study stories would be helpfull guys, MANY THANKS KEEP UP THE EXCELLENT WORK!

Beware of spread betting companies and forex houses. They are a bit like the bucket shops of the early 20th century. They generally (but not always) take the other side of your trade so it is in their interest to make you fail. They have various unscrupulous techniques to do this. The futures market and the stock exchange are heavily regulated and is my preferred approach. I chose futures because of the leverage, liquidity and it suitable my personality.

To trade 1 contract in the futures market you would need no less than $10k.

[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

[keymoo]

Great post Knytt. I am inclined to agree with you, but for a total newb to the markets I think a period of time in a paper account would be wise so that they can get used to the platforms, the charts, learn the setups. After that period of time, then trade 1 contract or 100 shares.