Day Trading?

[quote]Gettnitdone wrote:
Maybe the day traders here could tell us how profitable day trading is for them or in general and thus, if it’s worth it for newbies. [/quote]

It runs the gamut. I’ve seen guys make $1MM a day. I saw the same guy make $1MM a day on 2 different occasions. Others, like the poster above, is happy to make $75. Still others are looking to augment their portfolio and are happy making an extra %10 or %15 on the money they have at risk.

There are people who can be effective trading from their laptop, putting in limit orders for $2 a contract. In my case, I have a 5 figure monthly nut I have to make just to break even.

[quote]Dr. Pangloss wrote:

[quote]Gettnitdone wrote:
Maybe the day traders here could tell us how profitable day trading is for them or in general and thus, if it’s worth it for newbies. [/quote]

It runs the gamut. I’ve seen guys make $1MM a day. I saw the same guy make $1MM a day on 2 different occasions. Others, like the poster above, is happy to make $75. Still others are looking to augment their portfolio and are happy making an extra %10 or %15 on the money they have at risk.

There are people who can be effective trading from their laptop, putting in limit orders for $2 a contract. In my case, I have a 5 figure monthly nut I have to make just to break even.
[/quote]

Do you only trade futures? I am looking to day trade stocks for growth in addition to working my job. Do you have any advice on that?

Ideally, I would like to only day trade stocks and manage longer term investments to eliminate the need to work a conventional job.

I trade primarily futures, although I’ve also traded cash FX.

Trading stocks as an way to make a living is extremely difficult. First, the HFT firms like GETCO and Citadel have made the profit opportunities few and far between. Next, the penny tick makes getting filled more difficult as HFTs jump in front of orders by a penny.

Also, unless you’re trading with a prop shop, you’re getting 50/50 leverage and my understanding is that prop shops are slashing leverage as well. So, to think about this in portfolio return terms, if you think you can earn %8 after costs, you need to have $1MM of purchasing power in order to take home $80k/year and no one is doing this job for $80k.

Futures margins run around %3, so your leverage is much greater. As an exchange member, my leverage is nearly infinite as I can trade whatever size I want during the day. It much easier to make $300 -$500 a day consistently trading futures than equities, and of course, that amount is easily scalable.

Let’s say you put in $1000 of your own capital, ignoring any margin. If you earn 3% a day like traders say and you reinvest your retained capital every day, theoretically you could be sitting on $48 million after one year. That’s obviously far from realistic, we’re exploiting an exponential curve, but if you’re willing to take big risks there are big rewards.

[quote]Dr. Pangloss wrote:
I trade primarily futures, although I’ve also traded cash FX.

Trading stocks as an way to make a living is extremely difficult. First, the HFT firms like GETCO and Citadel have made the profit opportunities few and far between. Next, the penny tick makes getting filled more difficult as HFTs jump in front of orders by a penny.

Also, unless you’re trading with a prop shop, you’re getting 50/50 leverage and my understanding is that prop shops are slashing leverage as well. So, to think about this in portfolio return terms, if you think you can earn %8 after costs, you need to have $1MM of purchasing power in order to take home $80k/year and no one is doing this job for $80k.

Futures margins run around %3, so your leverage is much greater. As an exchange member, my leverage is nearly infinite as I can trade whatever size I want during the day. It much easier to make $300 -$500 a day consistently trading futures than equities, and of course, that amount is easily scalable.

[/quote]

What are some resources in which I can learn more about trading futures? I took a spendy class(got 97% off though) for trend trading stocks and have had decent success, although I’m still starting. Limiting my investments solely in equities is a bad idea for the long term, but at least it’s a place to start.

[quote]Gettnitdone wrote:
Let’s say you put in $1000 of your own capital, ignoring any margin. If you earn 3% a day like traders say and you reinvest your retained capital every day, theoretically you could be sitting on $48 million after one year. That’s obviously far from realistic, we’re exploiting an exponential curve, but if you’re willing to take big risks there are big rewards. [/quote]

Big Risks come Big Rewards and Big Losses.

[quote]Gettnitdone wrote:
Let’s say you put in $1000 of your own capital, ignoring any margin. If you earn 3% a day like traders say and you reinvest your retained capital every day, theoretically you could be sitting on $48 million after one year. That’s obviously far from realistic, we’re exploiting an exponential curve, but if you’re willing to take big risks there are big rewards. [/quote]

I don’t follow you.

If you start with an initial investment of $1,000 and compound every trading day (I figured 250 business days in a year), you wind up with $1.79MM at the end of 1 year.

Is my math off?

[quote]Dr. Pangloss wrote:

[quote]Gettnitdone wrote:
Let’s say you put in $1000 of your own capital, ignoring any margin. If you earn 3% a day like traders say and you reinvest your retained capital every day, theoretically you could be sitting on $48 million after one year. That’s obviously far from realistic, we’re exploiting an exponential curve, but if you’re willing to take big risks there are big rewards. [/quote]

I don’t follow you.

If you start with an initial investment of $1,000 and compound every trading day (I figured 250 business days in a year), you wind up with $1.79MM at the end of 1 year.

Is my math off?
[/quote]

Doesn’t matter. It’s silliness to even pretend you could make 3% every trading day.

[quote]on edge wrote:
Doesn’t matter. It’s silliness to even pretend you could make 3% every trading day.[/quote]

Yes and no. It’s silly to think you can compound your money by %3 daily. I know quite a few people who take home $750k or more a year and keep $100k in their trading account.

When your trading to make a living, you don’t think in terms of percentages, you think in absolutes. My mortgage is an absolute, my kids education is an absolute. You’re not trying to make %3 on your money, you’re trying to make $500 a day (or $1,000 or $2,500, whatever your goal is.)

[quote]Dr. Pangloss wrote:

[quote]Gettnitdone wrote:
Let’s say you put in $1000 of your own capital, ignoring any margin. If you earn 3% a day like traders say and you reinvest your retained capital every day, theoretically you could be sitting on $48 million after one year. That’s obviously far from realistic, we’re exploiting an exponential curve, but if you’re willing to take big risks there are big rewards. [/quote]

I don’t follow you.

If you start with an initial investment of $1,000 and compound every trading day (I figured 250 business days in a year), you wind up with $1.79MM at the end of 1 year.

Is my math off?
[/quote]

My bad I compounded 365 days. But yeah, you’re right, thinking in absolutes would be a better way to think of profits for people actually day trading.

Out of curiosity, what do you mean by people who make $750k and have $100k in a trading account?

[quote]Gettnitdone wrote:
My bad I compounded 365 days. But yeah, you’re right, thinking in absolutes would be a better way to think of profits for people actually day trading.

Out of curiosity, what do you mean by people who make $750k and have $100k in a trading account?[/quote]

When your a member of an exchange, you keep your money in an account held by a clearing member. A clearing member is typically a small regional firm who specializes in guaranteeing small traders and retail investors. A lot of the firms you’ve never heard of…RJ O’Brian, Vision, Peregrine, Refco, Shepherd, First Options, etc. The large NY based firms like Goldman, JPM, Morgan Stanley et al only handle institutional business or clients with more than $5MM in liquid, tradeable assets.

So, a local trader (locals were called locals because they lived in the general vicinity of the exchange and had a physical presence on the floor) would deposit $100k with their clearing house. The clearing house would guarantee the locals trades to the exchange. If I had $100k on deposit with my clearing house and lost $200k, the exchange would demand that the clearing house come up with the shortfall. The clearing house would then have to come after me to get the money. So, you can see that not only do they hold my money, keep my books, and generate a statement every day, but they also act as a short term lender to me.

For our examples sake, I’ve got $100k on deposit. This would allow me to trade 4 emini SP futures with a notional value of about $1MM. But, that’s only if I keep the contracts overnight. During the day, I might have a couple hundred eminis on with a notional value of $10,000,000. As you can see, as an exchange member I have nearly infinite leverage…or did for many, many years until EDF Man went bankrupt. Then, clearing houses started paying much closer attention to the intraday positions their traders were carrying.

Back to the original question, I knew lots of guys (20 - 30) who keep $100k -$200k in their trading accounts who take home $750k and up a year. There’s probably a dozen guys in the ag pits right now who have $100k - $250k swings in their positions every NIGHT. Like, they go home to their wife and kids and the market went $500k against them today. And these aren’t funds, they’re not banks, they’re individual traders. It’s crazy to even think about and I saw it first hand every day for years.

[quote]Dr. Pangloss wrote:

[quote]on edge wrote:
Doesn’t matter. It’s silliness to even pretend you could make 3% every trading day.[/quote]

Yes and no. It’s silly to think you can compound your money by %3 daily. I know quite a few people who take home $750k or more a year and keep $100k in their trading account.

When your trading to make a living, you don’t think in terms of percentages, you think in absolutes. My mortgage is an absolute, my kids education is an absolute. You’re not trying to make %3 on your money, you’re trying to make $500 a day (or $1,000 or $2,500, whatever your goal is.)
[/quote]

Could you point to some educational material you believe is really worth it? Especially for FX and futures in my case. There is tons of information out there and as usual as an outsider and beginner I have difficulties knowing what sources are worth it.

Thanks for your input.

I’m living in Australia and 20 years old, just started trading stocks in the last 12 months. Mostly medium-short term trades only about 25k capital but made about 50% since then doing these educated/researched trades.

I have lost money on 2 trades though in the last 2 weeks. They were my first 2 ‘day’ trades. I bought around open. Panicked emotional sell a few hours later, only to see the stock hit highs after lunch or the next day.

Day trading is fucking hard for beginners , don’t let your emotions get in the way and have a thorough plan beforehand and a damn good reason to be day trading that particular item.

I’m not saying day trading is bad, infact I see it as a challenge I can’t wait to get better at and will be over the moon I make my first successful one.

But for beginners, it seems hard and alot of factors need to be considered.

If you want to do more reading, I’d pick up anything by Jack Schwager but if you’re completely new to trading and markets, then any basic fundamental book will do. Definitely read Market Wizards 1 and 2. I really like Al Brooks book on reading price charts, Mark Douglas’s book, “Trading in the Zone” and “The Futures Game” by Richard Teweles.

The very best educational material is going to come from the exchanges themselves. If you want to trade crude oil, get on the CME website and look at the material they have specific to the crude oil complex. Once you decided on what indicators you want to use - if any - there are many books to choose from.

Trading simulators are offered by many trading software providers and clearing houses. Try implementing some of your strategies and see how you do over time.

If someone came to me and said they wanted to trade for a living, I would tell them to either get hired by a prop shop or have $50k to put in an account as well as 6 months living expenses. You could do it with less but it would be very, very difficult.

Day Trading against computers is like playing Russian Roulette alone for 6 rounds straight. If you are 1 in a million where gun misfires - you win, otherwise the rest lose.

But if you insist: avoid ETFs with multiples, practice account on futures before committing money, and I would say if you are not Dr Pangloss, avoid currencies, And most important only put in the amount of money you consider expendable. Just like a trip to the casino.

[quote]treco wrote:
Day Trading against computers is like playing Russian Roulette alone for 6 rounds straight. If you are 1 in a million where gun misfires - you win, otherwise the rest lose.

But if you insist: avoid ETFs with multiples, practice account on futures before committing money, and I would say if you are not Dr Pangloss, avoid currencies, And most important only put in the amount of money you consider expendable. Just like a trip to the casino.
[/quote]

I suppose because the internet is always right(3% a day, no problem, beat the 2012 s&p in 4 days and never worry about a losing day/week/month!), it’s simple to become the next Ken Griffin or James Simons.

And, you know, no one stands to make any money off of joe 6-pack putting several months salary towards a risky strategy.

Any of you guys see what FMCC has done in the last couple of days?

For such a bad history and low price per share, it really has moved.

I’m damn tempted to get like a hundred shares or so just to see what happens.

[quote]SkyzykS wrote:
Any of you guys see what FMCC has done in the last couple of days?

For such a bad history and low price per share, it really has moved.

I’m damn tempted to get like a hundred shares or so just to see what happens.
[/quote]

That sure is a breakout. I’d be inclined to wait for a pullback to under 50 cents. Could miss it that way but it’s not uncommon for high (relatively) volume breakouts to return to their original trading range.

CREE has had about 3 breakouts in the last 5 months and I like that they are a pure play on those little curly light bulbs that are getting forced on the world. Disclosure; I do own.

I did have a fair bit invested in this today…

only 108% gain in one day…

I’m happy

[quote]on edge wrote:

[quote]SkyzykS wrote:
Any of you guys see what FMCC has done in the last couple of days?

For such a bad history and low price per share, it really has moved.

I’m damn tempted to get like a hundred shares or so just to see what happens.
[/quote]

That sure is a breakout. I’d be inclined to wait for a pullback to under 50 cents. Could miss it that way but it’s not uncommon for high (relatively) volume breakouts to return to their original trading range.

CREE has had about 3 breakouts in the last 5 months and I like that they are a pure play on those little curly light bulbs that are getting forced on the world. Disclosure; I do own.[/quote]

Yeah, it sure is. I’ve had it on my watch list for a couple of years thinking “I’ll get it if…” and “I’ll get it when…”

Now I’m thinking I should have gotten it last week. Up another 30% today.