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The brutal truth of day trading

  • #1,241
  • Jun 14, 2021 11:40pm Jun 14, 2021 11:40pm
Quoting Winston Reed
/MES (mini S&P) is a nice futures contract for beginning futures traders. Each 0.25 tick is worth $1.25 compared to /ES which is $12.50/tick. I use think or swim which requires a minimum deposit of $1500. To trade /MES you must have a minimum of $1210 and with/ES you must have a minimum of $12,100. Don't be fooled by mini contracts, you can get in to trouble in a hurry. ... {image}
thnks
  • #1,242
  • Jun 14, 2021 11:49pm Jun 14, 2021 11:49pm
Quoting bilal1947
{quote} Hi Peter Glad i can now understand more with chart please dont be reluctant with words and marking candles showing price action as you see why buy when to exit. A keen learner below posting my yesterday entries for persuasion i have entered from order block and targeted the imbalance gaps on both. Regards bilal {image} {image}
Could you pls help me to understand how to draw, then how to interpret the lines with the labels H4 , H1, M15 you have in your GU M5 chart? they are yours levels but what is the logic in them. Thanks.
  • #1,243
  • Jun 15, 2021 5:12am Jun 15, 2021 5:12am
The brutal truth of day trading.....forex.
source
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  • #1,244
  • Jun 15, 2021 5:33am Jun 15, 2021 5:33am
Quoting Le.Metier
The brutal truth of day trading.....forex. source {image}
Ha, 23.8%

check their website, there are crypto hedge fund. And it is +120.4% and in 2017 it was +1708.5%

So in your logic do not trade long-term equities, trade crypto. Yes?

Do you have more truth?
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Observer effect
  • #1,245
  • Jun 15, 2021 6:02am Jun 15, 2021 6:02am
Quoting ryuryu
{quote} Ha, 23.8% check their website, there are crypto hedge fund. And it is +120.4% and in 2017 it was +1708.5% So in your logic do not trade long-term equities, trade crypto. Yes? Do you have more truth? {image} {image}
Hi ryuryu

Who wouldn't be impressed with those returns - how can I join

But in all seriousness, the small retail trader can out perform those forex returns because we have total freedom to trade without restrains.

I often get asked many times how much return I expect to get a month, I always reply its totally depended on size of equity.
$1,000 account - I would expect 20% return a month
$10,000 account - I would expect 10% return a month
$50,000 + account - I would expect to get 5% return a month

Honestly, if you read most of the threads on Forex Factory, you would believe many traders are making 25% plus a month, every month.

DEMO traders

No one trading professionally wouldn't jump at the chance to make 5% at month of their equity. They would be ecstatic.


That's the brutal truth - Bills need to be paid and YouTube followers don't pay the mortgage.
Trading thin liquidity at the boundary of the charts
  • #1,246
  • Jun 15, 2021 6:28am Jun 15, 2021 6:28am
But getting 5% a month is a slow game which takes be 6 hours a day for 20 days to achieve my trading goal.

CHIP AWAY WITH SMALL PROFITS
IF THE TRADES WRONG - GET THE HELL OUT QUICK

Tonight I started at 6.30PM which is about 1.5 hours after London open today. So far I have taken 22 trades as of 9PM where I have had 16 wins, 2 losses and 4 break evens. My profit so far sits at 0.34% increase in equity and my Goal is 0.50% increase in equity.

Even on my profits so far is enough to hit the monthly target, but there will be a few nights that are almost untradeable. Therefore I try and keep ahead of the required run rate.

Here is one of those trades tonight that earned me 0.06% increase in equity, if I can hit a few more before the night is finished (12.30am Brisbane time)
I am happy as larry.
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Trading thin liquidity at the boundary of the charts
  • #1,247
  • Jun 15, 2021 6:47am Jun 15, 2021 6:47am
Quoting RickM
But getting 5% a month is a slow game which takes be 6 hours a day for 20 days to achieve my trading goal. CHIP AWAY WITH SMALL PROFITS IF THE TRADES WRONG - GET THE HELL OUT QUICK Tonight I started at 6.30PM which is about 1.5 hours after London open today. So far I have taken 22 trades as of 9PM where I have had 16 wins, 2 losses and 4 break evens. My profit so far sits at 0.34% increase in equity and my Goal is 0.50% increase in equity. Even on my profits so far is enough to hit the monthly target, but there will be a few nights that are almost...
You may try Dax 30 index because of three times more volatility than EU.
I quit GBPJPy trading 18 months ago.
For almost 34 years I practised kicking each kick 1000 times and realised its limitation as to 80% in a year.
Finally, I changed tack by kicking 10 kicks a couple of times and the account started growing by 400% in a year.
Diversification helped maximise the use of margin, control of drawdown and helped exponential growth of the account.
My investment of time in trading spot, futures, options and assets of currencies, indices, commodities, stocks, interest-rate, treasuries, swaps helped.
Now the target is cryptocurrency for fun.
Practice makes a person perfect
  • #1,248
  • Jun 15, 2021 6:48am Jun 15, 2021 6:48am
Quoting Le.Metier
The brutal truth of day trading.....forex. source {image}

Viva Eternal Easing and monetary policies vs low volatility in fx markets where whales have to swim shallow waters.

Look before 2012, before Greece and Euro crisis & QE1,2,3,4,5...............
  • #1,249
  • Jun 15, 2021 7:01am Jun 15, 2021 7:01am
I am happy if can get 3-5% per month, not often 5%, more often 2% , i try to keep my DD low as possible.
I would need other tools, if like to increase number of trades per day.

Rick I like this sentence very much "Personally I don't like to guess on levels but let them play out without me"
The sentence makes me think should i use footprint. I know I should.
  • #1,250
  • Jun 15, 2021 7:15am Jun 15, 2021 7:15am
Quoting kk100
I am happy if can get 3-5% per month, not often 5%, more often 2% , i try to keep my DD low as possible. I would need other tools, if like to increase number of trades per day. Rick I like this sentence very much "Personally I don't like to guess on levels but let them play out without me" The sentence makes me think should i use footprint. I know I should.
Hi KK100

The advantage is massive - and as simply as this.

Brisbane 6.18pm, 1 hour after London open Gold spiked down for a run of stops.

If we can see inside a candle, we break the hearts of our brokers
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Trading thin liquidity at the boundary of the charts
  • #1,251
  • Jun 15, 2021 7:38am Jun 15, 2021 7:38am
I have no fantasies about increasing my account by some imaginary leaps and bounds. My goal is annualized not monthly and it is to beat the S&P 500 return which is realistic. Unmet weekly or monthly goals will occur regularly and are demoralizing.

I don't trade for a living and I'm very glad I don't because the truth about trading for a living is ugly. Day trading can be ugly if it's just for fun. Day trading for a living...now that is truly ugly. Just imagine one does in fact trade for a living and must pay all living expenses and save for retirement purely from trading.

Let's say to do this an individual needs a minimum of $7500/month which annualized is $90000/year. Also remember you'll need to pay taxes. In the US in New York you'd be scraping by with this income.

On a $100,000 account you would need to make 7.5% monthly just to pay expenses. With only about 20 trading days per month you would need 0.375% per trading day. Every day you miss this you will need to increase the percentage on remaining days. Every day you lose... well you get it. Sadly with this your account would be static if you could in fact maintain a 7.5% monthly return. The first month you don't make it then you would have to dip into your capital and suddenly you have less than $100,000 and you now need to make a higher percentage of what you have left.

If you have $1000 or $5000 or even $10000 you'll be lucky to make enough to make your next car payment. If you think your going to turn something like $1000 or even $10000 into a massive fortune in less than a year then you're just delusional. Trading high risk will eventually just blow your account. I would consider high risk, risking more than 3% of your account on any given trade.

A sane approach to trading is to have a goal of consistently and modestly adding profits to your account over the long term. During this time of capital appreciation one should also be able to add to trading funds from income from other sources such as a JOB. As funds increase the trader will be able to make more profit since the absolute dollar amount will increase with the same percentage risk.

The reality of trading for a living for most is really not obtainable.

More important is to focus on each trade. I ask myself these questions with each trade.

1. How much am I risking? This is just for this trade but it also fits into my overall trading plan. How much can I risk per day, per month? What is my max risk on one trade?
2. With said risk on that trade what is my expected return? If I risk 25 pips should I accept a 10 pip profit? Do this and you'll never go anywhere. How about 25 pips or 1:1. Do the math on this and you'll find that over the long term profit will be immensely difficult and stressful. Personally I go for a minimum of 3:1 or if I risk 25 pips I need to make 75 pips on the trade. If this doesn't look reasonable then I just pass on the trade.

When I see a trader sitting in front of the screen all day taking 10,15,20 or more trades per day (and I've seen some taking way more than that) and walking away with very little for the day or worse with losses then I know it is only a matter of time before that trader blows the account or just burns out.

I'm still a working stiff and pay my monthly expenses from my JOB. Admittedly trading for me is a serious hobby and therefore gives me pleasure rather than stress. I'll be retiring soon and trading will continue to be a hobby but one that will add a modest amount to retirement income and one that I will never rely on for a living.
  • #1,252
  • Jun 15, 2021 12:10pm Jun 15, 2021 12:10pm
Quoting Winston Reed
I have no fantasies about increasing my account by some imaginary leaps and bounds. My goal is annualized not monthly and it is to beat the S&P 500 return which is realistic. Unmet weekly or monthly goals will occur regularly and are demoralizing. I don't trade for a living and I'm very glad I don't because the truth about trading for a living is ugly. Day trading can be ugly if it's just for fun. Day trading for a living...now that is truly ugly. Just imagine one does in fact trade for a living and must pay all living expenses and save for retirement...
Hi, Winston.


First of all, thanks for your honesty; something very few have here.

I would say: "can be demoralizing". Not perfectly, but masters of their own psychology/mood/emotions, can mitigate that in grand extent. That's why to some (I would say many) people, activities like proper secular "mindfulness" style "meditation", can help; as well as the "responsible" use of some psychedelic compounds (which I'm not encouraging nor recommending, as it can be dangerous to some psyches) to get to know the mechanics of your inner/subconscious mind, better and faster.

Your goal is achievable. And the fact that you don't need a constant bull market, like the benchmark, makes it better.

Definitely, for living solely from trading (in a good {not necessarily "ideal"} scenario), you need to yield on average at least about 150% of your median monthly expenses; generally with no sweat and without much stress.

There are much cheaper places to live (it can be part of the strategy, once you're consistent enough). And of course, a minimalist "low-cost" lifestyle (without reckless unnecessary luxuries) with lots of saving and possibly passively investing a part, is even better.

Great (more than just "good") scalpers can make >5%+ per month with less max DD at any given point, risking around 0.05 → 0.5% per trade; even with 1:1 RR if the win/loss ratio is sufficient (and they BE more often than at-market executed SLs).

-- THE brutal truth of Day Trading:
As with any high skill/performance — high risk/reward profession, great consistent players, are less than 1%.
* so you're very right in :"for most is really not obtainable".

Some (very few proportionally) specialized Futures Markets (mostly indexes) scalpers can manually take around 15-30[1-5 ticks] trades per hour in 3-6h windows, when the "market conditions" (like liquidity, volumes & volatility) are suitable.

Good enough skills, experience and the right mind-set/state = consistency ≠ "over the long term profit will be immensely difficult and stressful".
Also, being "in the right" place "at the right time" (with everything all that implies; some things balancing others), is crucial.

Live real-time "market depth" data from regulated exchanges ISN'T absolutely necessary, but as Rick said: "the advantage is massive", if used wisely.

* Related to: "IMHO, micros simply don't work for scalping 1-3 ticks from the DOM, because of their much higher commissions, proportionally speaking. I mean, 1/10 the size/value and margin requirements, but with the same data costs and about 1/2-1/4 the commissions (so 2-3x of the tick)".
https://www.forexfactory.com/thread/...5#post13146005


Best...
  • #1,253
  • Edited 12:44pm Jun 15, 2021 12:25pm | Edited 12:44pm
Quoting Winston Reed
I have no fantasies about increasing my account by some imaginary leaps and bounds. My goal is annualized not monthly and it is to beat the S&P 500 return which is realistic. Unmet weekly or monthly goals will occur regularly and are demoralizing. I don't trade for a living and I'm very glad I don't because the truth about trading for a living is ugly. Day trading can be ugly if it's just for fun. Day trading for a living...now that is truly ugly. Just imagine one does in fact trade for a living and must pay all living expenses and save for retirement...
I pretty much agree all your points, and not want create bubble of full of dreams.
There or here are not lot of work or business opportunities, if you put 100k and will automatically get 7% or 7000$ per month.
and if get education where base salary is 7000$ your 100k has gone Yale or Rutger, and you own -100k for "banks", before starting get 7K and you can put it where you want.

That also is dreaming as well for most of the people got it from markets, month after month.
Both cases expectations are too high. Some can do it fx markets too as well, have seen it, but i can't do it without increasing my DD.

I can't think trading as hobby, i rather do something else, far away from screens.
But I know fishermen who like to go fishing they spare time too.
  • #1,254
  • Jun 15, 2021 12:39pm Jun 15, 2021 12:39pm
Quoting RickM
{quote} Hi KK100 The advantage is massive - and as simply as this. Brisbane 6.18pm, 1 hour after London open Gold spiked down for a run of stops. If we can see inside a candle, we break the hearts of our brokers {image}

When you have started thinking hearts of brokers, that is very kind. I will light a candle for brokers, whose hair you and group will make grey too early.

hehehe, don't tease not want see that kind of beautiful charts, i got stuck for while last evening(servertime) with EJ, it happens once or twice per year, and could avoid with tools like that......
  • #1,255
  • Jun 15, 2021 1:17pm Jun 15, 2021 1:17pm
Quoting kk100
{quote} When you have started thinking hearts of brokers, that is very kind. I will light a candle for brokers, whose hair you and group will make grey too early. hehehe, don't tease not want see that kind of beautiful charts, i got stuck for while last evening(servertime) with EJ, it happens once or twice per year, and could avoid with tools like that......
Good brokers only take commissions. At least in regulated exchanges, you can be much surer (not 100% though).
  • #1,256
  • Jun 15, 2021 3:22pm Jun 15, 2021 3:22pm
Quoting Winston Reed
I have no fantasies about increasing my account by some imaginary leaps and bounds. My goal is annualized not monthly and it is to beat the S&P 500 return which is realistic. Unmet weekly or monthly goals will occur regularly and are demoralizing. I don't trade for a living and I'm very glad I don't because the truth about trading for a living is ugly. Day trading can be ugly if it's just for fun. Day trading for a living...now that is truly ugly. Just imagine one does in fact trade for a living and must pay all living expenses and save for retirement...
Excellent post. Too bad most here will not get what you just wrote.

Professional traders almost never draw from their accounts. The goal is to grow the account to a size where a trade or two a month will sustain you if you need it. People here are from the working class, so they tend to think like workers. They want to know how much they will get per day, month, etc. It is my understanding that hedge funds spend most of their time getting clients. Trading is a simple and infrequent task unless you are an HFT fund, and then you spend most of your time watching software to make sure it does not do anything stupid.

If I had a one trading wish it would be to help people understand that they must trade small and build positions. New traders here think win rate, they do not think return. Running a portfolio is no different than running a store of any kind. Buy more of what people like, and clear inventory of what people do not like. It escapes me as to why traders throw good money after bad. It is like buying more shoes to add to those shoes than no one is buying.

Anyway, good contribution Winston.
If you are good at something, never do it for free--Joker
  • #1,257
  • Jun 15, 2021 4:58pm Jun 15, 2021 4:58pm
Quoting jmn5611
Professional traders almost never draw from their accounts. The goal is to grow the account to a size where a trade or two a month will sustain you if you need it.
You don't say! That's completely individual; everything's relative.
Quote
It is my understanding that hedge funds spend most of their time getting clients. Trading is a simple and infrequent task unless you are an HFT fund, and then you spend most of your time watching software to make sure it does not do anything stupid.
Hedge Funds ≠ Retail Traders
Quote
If I had a one trading wish it would be to help people understand that they must trade small and build positions.
This can be true for some kind of strategies; but, there are different ones, along with distinct methods, time-horizons and styles... and markets.
Quote
New traders here think win rate, they do not think return. Running a portfolio is no different than running a store of any kind.
It's not as simple as that; the operation isn't the same. There are also diverse factors and metrics.
Quote
Buy more of what people like, and clear inventory of what people do not like.
Good analogy. Much easier said than done.
Quote
It escapes me as to why traders throw good money after bad. It is like buying more shoes to add to those shoes than no one is buying.
You're right. Like many "averaging down" grid or martingale failed applications.

---

Man, you're so full of assumptions as if they were the only absolute truth. Very narrow view, sorry.
Sometimes, some ~ RED High Impact Members~ truly mesmerize me...
  • #1,258
  • Jun 15, 2021 5:04pm Jun 15, 2021 5:04pm
Quoting jmn5611
Professional traders almost never draw from their accounts.
If they are professional traders, that means trading is their job and their only source of income...so without withdrawing some profits, what do they live off?
Everyone can see the chart, but only a few can actually read it.
  • #1,259
  • Jun 15, 2021 5:46pm Jun 15, 2021 5:46pm
I've always thought of professional traders as those individuals with a Series 7 license who traded other people's money. So, those guys never want money withdrawn from accounts. But as a retail forex trader (I am just a filthy speculator) I move money out of my account all the time, for several reasons, including: I make money trading and have uses for that money in other places; keeping unneeded money with a retail forex broker increases your broker risk (you should try to mitigate broker risk and this is one way to do that); if I need more money in my trading account, I can move funds within a few minutes or hours. There's more to this topic that I've written here, but I'll stop now.

As for rate of returns, win rates, etc., think about opportunity costs when thinking about your current performance or your targeted performance. If you'd be satisfied with a rate of return equal to the S&P 500, then you might ask yourself, why not invest the funds in your trading account in a S&P Index Fund, and spend your forex trading time doing something else. If you are running your trading account like a business, then what are the competing ways to invest that money, based on expected ROI, factoring in your time. I've been very disciplined in this regard, and my ROI in trading is a hell of a lot better than any other investment I could make. IMHO, everyone here should be aiming high, not settling. You may not be there today, but you should have reasonable and realistic expectations of high returns for your money and your time, especially your time.
  • #1,260
  • Jun 15, 2021 6:43pm Jun 15, 2021 6:43pm
Quoting GEfx
I've always thought of professional traders as those individuals with a Series 7 license who traded other people's money. So, those guys never want money withdrawn from accounts. But as a retail forex trader (I am just a filthy speculator) I move money out of my account all the time, for several reasons, including: I make money trading and have uses for that money in other places; keeping unneeded money with a retail forex broker increases your broker risk (you should try to mitigate broker risk and this is one way to do that); if I need more money...
Hey, GEfx.


True, that's another category: the traders or money managers who trade/invest for others; earning their income by a salary and/or commissions.

And regarding your 2nd paragraph: I agree and it's part of what I talked about in the post #1,252.


Best...
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