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The brutal truth of day trading

  • #41
  • Mar 28, 2021 11:02pm Mar 28, 2021 11:02pm
Quoting Shaga
{quote} you can have a profitable EA an fail because of your psych!
Yu can even break your leg laying in the bed...
  • #42
  • Mar 29, 2021 12:04am Mar 29, 2021 12:04am
yeah, you should be aware of your limits
  • #43
  • Edited 12:52am Mar 29, 2021 12:15am | Edited 12:52am
Quoting DojiSan
What about daytraders like Ross (warrior trader)? Ross made over $4,000,000 in 2020 daytrading about 4 hours a day. Check his youtube channel. https://www.youtube.com/user/DaytradeWarrior
just answer this simple question:

shouldn't he be in the top 100 richest person in the world if he were that profitable and consistent?
that wasn't the case was it? he even is not the richest man in his state (Vermont, USA) let alone the richest person in the world.

Let's have a look here I did a bit of research and he turned $583.15 to $1,070,579 from January 2017 to May 2019 with an average monthly return of 147%

And with a simple math calculation if he were to continue trading that account now he should've made $9 Billion by December of 2020.
(fyi, He is from Vermont, USA and Vermont doesn't even have a billionaire.) source

SO WHY BOTHER SELLING COURSES?
WHY BOTHER MAKING A YOUTUBE CHANNEL?
AND WHY THE FREAKING HELL IS HE NOT THE RICHEST PERSON IN THE WORLD AS OF RIGHT NOW?

question everything my dear boy.

source: https://www.warriortrading.com/583-to-1mil/


I'll answer all of your questions with objective approach.
I do believe that some day traders makes a ton of money in a short period of time, but I do not believe that they can last 5 years, hell, even 2 years without going nuts and blow their account except if they have a risk manager that are constantly reminding them to be rational.

a dead guy said it best:
Quote
“The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.” -Jesse Lauriston Livermore
Steps to profitability: Collect data, money management, stay bored
  • #44
  • Mar 29, 2021 12:34am Mar 29, 2021 12:34am
Trading hundreds of EA's is literally impossible here in Australia.

ASIC (our regulartory body) in all their Neanderthal wisdom, have put margins up as of today, and they are through the roof, to the point, that one can barely trade anymore, let alone make a living at it. We have gone from 100/1 or 200/1 to just 20/1 or 30/1. One can barely trade a single market with a single model, that would generate enough return on capital, let alone try to diversify across markets and models. Even without a position, your broker will count towards total margins any pending orders to buy or sell. So you CANNOT have many orders resting acorss multiple markets.

ASIC have DESTROYED the private persons ability to earn a living, or even have any hope of it. They have no understanding that there is a good reason we need 100/1 margins in the forex market, as in % terms they barely move from day to day. BUT...as is often the case in the real world, ASIC have a different set of rules for those with money. If you have a large income already, or you are already relatively wealthy, they let you keep on trading at the old margin rates. Do they think people with high incomes already know how to trade and make a living at it? LOL Their stupdity knows no bounds.

ASIC is our regulatory body. and they must be (also having reguarly shown in the paat as well) that they are the dumbest schmucks on the planet. I think many that work there, must really hate free markets, and when they cannot get a job in private enteprise, they go and work for places like ASIC where they act as Gods, and get off on their ability to control others. Exacting their revenge of those who might be successful or try to be a sucess. But the powerful pay them off to allow them to trade at the old margin rates.

It truly is a toxic world we live in, and the last year has seen that toxicity grow exponentially.
  • #45
  • Mar 29, 2021 1:22am Mar 29, 2021 1:22am
People sell courses either for long and short time frames, it doesn't relate to the title of your topic.
I just want to say that since you can't be successful day trading, it doesn't mean it's not possible or nobody can.
As sir Rockypoint said, probably it's not the personality that best suits you. Day trading requires more (and not less) discipline and patience compared to long time frame or the risk to keep overtrading is very high.
Besides in your arguments, you seems to miss an important part of the markets: it's fractal. It means that you can find the same structure both at 4h time frame and 5min timeframe, the only difference is that at 5min timeframe it's a bit harder to spot.
I mean if you seeing a nice trend on 4h time frame, what stops you to go and get a small slice of that pie on lower time frame and keep an order open just for like 1 hour instead of 2 days? Answer is probably you lack the discipline or the temperament to get in, grab 10-20pips and get out soon.

This said, who cares mate! If you can do nice money trading on daily charts just keep doing it
  • #46
  • Mar 29, 2021 2:54am Mar 29, 2021 2:54am
Quoting RickM
I am hoping you can show me some great results one day
Hi RickM! Hope so too

But my message was...

To be successful in trading you have
1. To be Disciplined
2. To have Patience
3. To follow Rules
4. To use one Strategy and be the master of that strategy

Okay. Let's say I have some rules that I follow to go short for example:

1. Signal candle on 1m TF must be lower than the daily open.
2. It must be in range of 7:00-20:00 broker server time.
3. 1H tf must be red.
....
10. Exit will be at 0.25% custom adr, or on nearest level, or on previous HL.
11. DTP will jump every 0.01 custom adr.
12. DSL will fix profit after 50% reached.
...


All that rules matched today on EU at 02:32, 07:43 and 11:45 and they were executed by EA. What is the purpose to execute them manually? What is the difference?

There are a lot of logical inconsistencies in trading. For example successful traders instead of trading sell courses. People who can earn 10%/mo need a prom firm for funding. Great traders share their holy grail strategies on public forums teaching competitors...

BTW sorry but you are using "robots" in your trading. You are using external data, real-time calculations etc. You just make a decision "manually" as I understand. I agree that it is impossible to run robot and go to sleep. You have to check everything. Even space crafts are not 100% auto, a lot of people check/track its behavior and change/improve if necessary.
Observer effect
  • #47
  • Mar 29, 2021 3:15am Mar 29, 2021 3:15am
Quoting BlackNapkins
You made statement... you did not proof anything
Good reply,, then, let us talk about facts.

I quote, wikipedia:
Quote
Most traders who day trade lose money.[11][12][13]

A 2019 research paper analyzed the performance of individual day traders in the Brazilian equity futures market. Based on trading records from 2012 to 2017, it was concluded that day trading is almost uniformly unprofitable:

We show...
source: https://en.wikipedia.org/wiki/Day_tr...lity_and_risks


Quote
In the average year, about 4,000 day traders are able to predictably profit net of a reasonable accounting for transactions costs.
...
The top 500 day traders (based on prior year ranking) earn gross (net) abnormal returns of 61.3(37.9) bps per day on their day trading portfolio, while the tens of thousands of day traders with a history of losses in the prior year go on to earn gross (net) abnormal returns of -11.5 (-28.9) bps...
source: https://faculty.haas.berkeley.edu/od...or%20Skill.pdf
read the pdf for more research on day trading.

I speculate that most of the consistent and profitable day traders either are really really good at projecting future price movements or that they have ,dare I say, the luxury of information asymmetry (i.e. insider information)

not to mention the amount of costs spent during those transactions over the years that can possibly accumulate to millions (fyi, this is how brokers get their money from)

also I speculate that those consistently profitable day traders definitely have the luxury of low commission and/or spreads that your average retail don't get to enjoy.

Hence, their profitability & consistency.

The point I'm trying to make is:
you can trade everyday and hopefully not lose your mind. (or potentially blow up your account)
or
you can accept & embrace humanitarian's flaw (i.e. fear, greed, ignorance & hope) by doing longer-term speculating, riding the longer term trend.

like a good friend once said:
Quote
A slower life . . . is more effective, more artistic, much richer than a life lived as a race against the clock. It gives you time to pause, to think, to reflect, to decide, to weigh pros and cons. It gives you time for relationships.
Steps to profitability: Collect data, money management, stay bored
  • #48
  • Edited 4:13am Mar 29, 2021 3:42am | Edited 4:13am
Quoting rockypoint
Sorry but I disagree. Yes the attributes of greed, desire for action, impatience, fear of missing a profitable trade, lack of discipline are things all types of trader might have issues with until they learn to control their emotions. To think that day trading doesn't require patience and discipline is just wrong. To be a successful trader you need: 1) Thorough understanding of your psyche, what kind of trading suits your personality best. Most people are suited to longer time frames. But some are not the waiting breeds impatience and loss of discipline,...
Thanks for the reply rockypoint,
this is the cliché of "Find a trading style that suits your personality"

It is not wrong, absolutely not wrong trading a system that suits your 'personality'.

But the thing is rocky, almost nobody says no to a get-rich quick opportunity. nobody.

So actually this 'personality' thing is quite predictable given the extreme example above (i.e. fear and greed) that is also the very reason why the market moves in the first place.
Different people got different 'personality' hence, different point of views = balance / ranging price or should I say 'randomness'
But when it comes to fear and greed somehow the market trends = 'personalities' have become 'personality' , by this point in time almost everyone has the same view.

so actually there are no 'personality' because literally almost everyone is the same when it comes to fear and greed.

Hell, even the greats are like that, take Livermore, his rules states that he only trade 4-5 times a year. source (pg. 26 last line)

and every time he deviates from his system because of none other than fear and greed. he losses money and goes bankrupt. (4 times to be exact)

Yes, there is in fact a structure we can monetize from, but this structure has to be rigid enough not to get carried a way by the news.
Hence, the longer term trend. Higher Time Frame. Long Term Speculating.
Steps to profitability: Collect data, money management, stay bored
  • #49
  • Mar 29, 2021 3:44am Mar 29, 2021 3:44am
Where is data about long term traders? Do we compare something or only blaming something?
What role play in statistic words like "MOST", or "almost uniformly"?
In trading only fraction market participants are winners, little fraction no matter of the timeframe...
How you can compare day traders efficiency with long-term efficiency when some of long runners execute few trades monthly (maybe) with guys executing tens trades every day... this is ridicules to compare two different animals
This thread is about why tigers are eating less grass then cows...
  • #50
  • Mar 29, 2021 4:14am Mar 29, 2021 4:14am
Quoting ryuryu
{quote} Hi RickM! Hope so too But my message was... To be successful in trading you have 1. To be Disciplined 2. To have Patience 3. To follow Rules 4. To use one Strategy and be the master of that strategy Okay. Let's say I have some rules that I follow to go short for example: 1. Signal candle on 1m TF must be lower than the daily open. 2. It must be in range of 7:00-20:00 broker server time. 3. 1H tf must be red. .... 10. Exit will be at 0.25% custom adr, or on nearest level, or on previous HL. 11. DTP will jump every 0.01 custom adr....
Hi ryuryu

That was a great post and a good description on why trading EA's can be more beneficial to most traders.
Looking forward to seeing you not WASTING TIME WITH PROP FIRMS and instead growing your account via EA's instead.

I just have a problem with all those thousands of wasted hours I have spend developing and testing strategy's on corrupt data.

Cheers
Trading thin liquidity at the boundary of the charts
  • #51
  • Mar 29, 2021 4:38am Mar 29, 2021 4:38am
Quoting remonpilip
{quote} Thanks for the reply rockypoint, this is the cliché of "Find a trading style that suits your personality" It is not wrong, absolutely not wrong trading a system that suits your 'personality'. But the thing is rocky, almost nobody says no to a get-rich quick opportunity. nobody. So actually this 'personality' thing is quite predictable given the extreme example above (i.e. fear and greed) that is also the very reason why the market moves in the first place. Different people got different 'personality' hence, different point of views = balance...
Hi remonpilip

Yes, there is in fact a structure we can monetize from, but this structure has to be rigid enough not to get carried a way by the news.
Hence, the longer term trend. Higher Time Frame. Long Term Speculating.

Nothing wrong with that concept, its the execution of that strategy is the problem.
When is a trend a trend and when does a trend stop being a trend ?

I had a mate who in June 2008 believed the Aussie dollar was going to $1.20 and he started buying at 70 cents. Three years later and after adding along the way, he had turned $10,000 into $120,000. Then it started to dip so he thought he would keep buying pullbacks as this was just a short term pullback.
Then in panic he started to trade bigger at every pullback till he had successfully lost $97,000 of his original profits.
It wasn't greed that got him, it was FEAR.
He was fearful of losing his profits so he traded in hope.

He lost the lot and ended up $5000 in the Red three and a half years later. True story

The trend didn't work out to well for him.

Cheers
Trading thin liquidity at the boundary of the charts
  • #52
  • Mar 29, 2021 4:41am Mar 29, 2021 4:41am
Quoting RickM
I take it was from one EA you have running, not the other 99 EA’s you have on live charts. To be honest, you would have to be crazy to run so many EA’s on a live market, if your broker sees you have more than 250 open positions on their platform, they consider that abuse of their systems. They will close your accounts.
Yes this Darwinex is 1 EA. Have 3 brokers, 10 accounts. On some accounts only 1 EA, on some 20 EAs running.

On account where 20 EAs running total ~3000 deals in 24 months. It's ~130 deals on average per month, about 3 to 20 opened deals at the same time.
  • #53
  • Mar 29, 2021 6:42am Mar 29, 2021 6:42am
Quoting RickM
{quote} Hi remonpilip Yes, there is in fact a structure we can monetize from, but this structure has to be rigid enough not to get carried a way by the news. Hence, the longer term trend. Higher Time Frame. Long Term Speculating. Nothing wrong with that concept, its the execution of that strategy is the problem. When is a trend a trend and when does a trend stop being a trend ? I had a mate who in June 2008 believed the Aussie dollar was going to $1.20 and he started buying at 70 cents. Three years later and after adding along the way, he had turned...
Hey Rick,

I'm glad that you brought this up, the moment I read it I know I have to postpone other 'questions' and reply this particular one.

Well the way I see it, the trend works very well for him in fact.

Why?

Because he rode the trend from the bottom to the top and back down to the bottom.

So why does he lose money?

This one is quite obvious isn't it?

He doesn't have a clear well defined exit plan.

as a dead guy once said, and I quote:
Quote
"A speculator of great genius once told me:
“When I see a danger signal handed to me, I don’t argue with it. I get out! A few days later, if everything looks all right, I can always go back in again. Thereby I have saved myself a lot of worry and money. I figure it out this way. If I were walking along a railroad track and saw an express train coming at me sixty miles an hour, I would not be damned fool enough not to get off the track and let the train go by. After it had passed, I could always get back on the track again,...

And from my humble perspective, it is not only FEAR that is driving his actions. It is clearly ignorance, denial.

Clearly it has broke the Higher Lows, that should be ~at least for me~ the last indication that the trend has ended. non-arguable.


Danger Signals can range from various indicators, break of an innocent trend line to as simple as candle stick patterns which Dan Zanger used (source 7:21) and pin-bar pattern which Jesse Livermore used. (source pg. 24 line 14)


When is a trend a trend and when does a trend stop being a trend ?

Good Question, I can only speak for myself, various people have various way to identify the start of a trend, but me I follow Jesse Livermore, which is as simple as:
an Upward Trend starts after price has broken a Down Trend's Lower High.
a Downward trend starts after price has broken an Up Trend's Higher Low.

exits are on danger signals, which I use a pin-bar as a guide, but an innocent pin-bar doesn't define an end of the trend. I just simply exit. and get in again if everything looks alright.

Quote
"A speculator of great genius once told me:
“When I see a danger signal handed to me, I don’t argue with it. I get out! A few days later, if everything looks all right, I can always go back in again. Thereby I have saved myself a lot of worry and money. I figure it out this way. If I were walking along a railroad track and saw an express train coming at me sixty miles an hour, I would not be damned fool enough not to get off the track and let the train go by. After it had passed, I could always get back on the track again,...


Of course the question becomes: How to identify the swing Highs and Lows?
Livermore did explain how in his book, but to summarize, significant swings which is very experience-driven, discretionary and subjective.
Steps to profitability: Collect data, money management, stay bored
  • #54
  • Mar 29, 2021 7:10am Mar 29, 2021 7:10am
Quoting ryuryu
{quote} Let's say I have some rules that I follow to go short for example: 1. Signal candle on 1m TF must be lower than the daily open. 2. It must be in range of 7:00-20:00 broker server time. 3. 1H tf must be red. .... 10. Exit will be at 0.25% custom adr, or on nearest level, or on previous HL. 11. DTP will jump every 0.01 custom adr. 12. DSL will fix profit after 50% reached. ... I agree that it is impossible to run robot and go to sleep. You have to check everything. Even space crafts are not 100% auto, a lot of people check/track its behavior...
just curious how long for u to get it right?? as per your rudimentary flowchart you seem to be there, for me it was 10 yrs. but i had recurring income from elsewhere. lot of guys head straight to EA's that's wrong. you have to get it right manually or close to it and then design the EA around it.
  • #55
  • Mar 29, 2021 7:40am Mar 29, 2021 7:40am
Quoting joyny
{quote} I use only EAs. have running more than 100 EAs now.. "high long term profits", "great results"... and here is the main issue. People think they can earn money with FX for a living. Very naive idea. With a small capital, you need big constant profits to pay bills. "Big" and "constant" profits are not possible. Too high expectations of profits. Normal and achievable profits is 20-40% yearly. And that can be done easily with EAs.. Then use compounding. View forex as investing and not "trading for living"... All "gurus" here in FF cant show...
Hey joyny, big fan of your work.

Most beginner traders are ,dare I say, delusional. They think that they need to make money everyday why that's not the case, cuz if you did you be in the top 100 Forbes list.

Making 1% a day consistently makes you better than Warren Buffet & Medallion Fund. Now that is laughable.

"investing" is indeed the right word of choice.

with money management intact, I personally would consider 20% per year is a realistic goal, 60% optimistic, 300% lucky, and 1,000,000% delusional.
Steps to profitability: Collect data, money management, stay bored
  • #56
  • Mar 29, 2021 8:03am Mar 29, 2021 8:03am
Read the book that I linked, How To Trade In Stocks - Jesse Livermore (pdf)

It has been a journey.
Jot down the prices, trust me you'll see a clearer picture. (you'll understand when you read the book)

Goodbye,
Raymond.
Steps to profitability: Collect data, money management, stay bored
  • #57
  • Mar 29, 2021 9:00am Mar 29, 2021 9:00am
Quoting traderfox7
{quote} just curious how long for u to get it right?? as per your rudimentary flowchart you seem to be there, for me it was 10 yrs. but i had recurring income from elsewhere. lot of guys head straight to EA's that's wrong. you have to get it right manually or close to it and then design the EA around it.
Hi traderfox7!

I don't have much experience, I'm creating algos and robots since 2017. I have tried hundreds of systems and came to conclusion that
1. EA must do what human can't (for example trade 30 pairs at once on 1m tf)
and
2. Everything must be dynamic. No static values.

And now the picture is more clear as it was 1-2 years ago. But still a lot of work to be done.
Observer effect
  • #58
  • Mar 29, 2021 3:05pm Mar 29, 2021 3:05pm
Quoting kk100
{quote} Hope you can get lot of investors in darwinex, many just watch profits and not DD, or the DD's are diffrent than trading metrics. Are there about 160 trades ?, so too early comment nothing about performance and quality. Good start.
Need to wait additional ~2 years. Now Darwinex score for "Experience" is only 1.8...from 10.
  • #59
  • Mar 29, 2021 3:22pm Mar 29, 2021 3:22pm
Quoting BlackNapkins
Where is data about long term traders? Do we compare something or only blaming something? What role play in statistic words like "MOST", or "almost uniformly"? In trading only fraction market participants are winners, little fraction no matter of the timeframe... How you can compare day traders efficiency with long-term efficiency when some of long runners execute few trades monthly (maybe) with guys executing tens trades every day... this is ridicules to compare two different animals This thread is about why tigers are eating less grass then cows...
"The more actions (trades) you do the more mistakes can be made."

I see from thousands (? ok dont know but did/still doing a lot) backtests/optimizations and simulated forward tests of EAs - overtrading is relevant to EAs too...

EAs are not intended only for intensive trading... M1 chart and 30+ symbols at the same time... EAs can be set up to hunt for the most lucrative entries which might be 1 per month. If you see from 20 years history that there exists for example 50 entries with SL 20 pips and TP 60 pips and 80% was ok - would you hunt for those trades? Why not? Too small statistical data amount? But if those are rare conditions... why not use the opportunity? Yes from statistical viewpoint 700 deals history is must-have... But who has time 30 years to forward test rare conditions? Just idea... I have a bunch of EAs just hunting the rare moments... will see after several years is it working..
  • #60
  • Mar 29, 2021 6:33pm Mar 29, 2021 6:33pm
Brutal truth. Day trading the market.

Good title.


Two camps.

Mechanical (EA) trading, or Observational (manual) trading.


In the end the market is going to do one of two things, imho.

It will go somewhere to get something, and then come back.

Or it will continue (with trapped AND winning traders) and go on a longer ride (grind/trend).


This may or may not be a reality, but it's how I view the market each day as a manual day trader.


So Mechanical (EA) trading I guess would be looking for a now event (TA/PA etc) to trigger a new trade.

Observational (Manual) trading might be employed best by just waiting for the particular now ‘first’ event to happen.

And then trade the ‘2nd’ or subsequent follow up event, to that first event. It might be tough to program all that into an EA I don’t know.


These days I don’t like to be anybody’s partial liquidity (joking) by viewing a chart to trade with my eyes, TA, PA whatever, and saying it looks like price is going to go up/or down now.

I would wait for an event to happen (price to MOVE).

And that's often the brutal part lol.
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