What I have learned from trading: Year one

[iota]

Trading is like the matrix: Even if you're the one, everybody falls the first time.
I've read countless posts along the lines of 'I blew/am blowing/will blow my account'. They're all generally from those that have jumped straight in at the deep end and they're drowning for lack of experience. In hindsight having blown a few thousand on bucket shops, I should have realised the deep end isn't the place to be when you don't know how to swim. Take your time in the shallows where the risk is low first.

Day trading is for algos, gamblers, pit traders, bullsh**ters and the occasional genius.
The longer the TF I trade on, the more success I have. This isn't to say the longer the better, but the less constrained I feel by time, the clearer my head when placing a trade. This allows me to to have a life and a normal job and have trading as a 'sideline'. It also means I don't place any panic trades. Trades should be based on analysis, not compulsion.

Return should always be greater than risk. If you're placing a trade thinking 'this will make or break me', you're not trading, you're gambling.
I just closed off a USD/CHF trade that had an initial risk of about £10. The profit was £158. This for me was an exceptional trade, but it's also indicative of what patience and and sticking to the rule of Reward>Risk will provide you with.

Go look at your trading history. Is it profit or loss?
If I look down this week's history, I see small potatoes, but I also see nine trades with only one loss. If I do the same with two weeks it's 13 trades with only one loss. In contrast to where I started, I eek out a profit every week.
The percentages aren't that important to me (honestly, they're not that great anyway), because I'm still on the first rungs and it's gonna be a while before I stand at the top and take in the view, but in the mean time I'm at least making progress.
If you're not making a regular profit, you're doing something wrong. Stop and find out why, because the further down you go, the further you have to climb back up.

I'm gonna get a Ferrari, a penthouse flat an ounce of blow and a differnt hooker every-fu**ing-night
I think a lot of people are running head long in to bad 'I'm gonna trade for a living' fantasies because they've been conditioned by media or third hand bulls**t.
I did it because I have three people I know that trade, they all do well. What I've learned in the meantime is that one had a lot of dedication and a lucky break with a bank, the other had a huge inheritance and the guidance of someone that had been in the market for 20+ years and the other was just born with a silver spoon up his a**e and was always headed for money in whatever they did because of daddys influence.
If you're reading this and you are thinking of/beginning to trade on your own money remember this quote "In order to make a fortune, start with a fortune".

I'm not posting this for a discussion as much as I am for posterity, so in future I can look back smugly or wonder what the f**k I was thinking. If it helps anyone else all the better.

 

[TheBramble]

iota - I note you're posting for posterity rather than discussion, but you've posted, which makes it fair game for comment.

The risk:reward thing is a canard. You can never know what your reward is going to be in any given trade. You can have a good guess at where you'd most likely expect it to end up, but that's about the best you can do.

You didn't know for certain your £158 trade for £10 risk was going to work out that way prior to taking the trade, did you? It's a good result, absolutely. But it could have been a £10 loser, or a £5 profit.

It's hard enough without setting abstract constraints on what might or might not be a good trade based on where you think it's going to end up. If the setups generally provide you with a positive expectancy, go with them, regardless.

While I’m sure it all comes down to personal preference, I’m more than happy to chip away with rewards less than risk as long as I’m staying the right side of expectancy. That’s how the market is sometimes. Other times you need two pairs of hands to fill the saddle bags.

Adding an assessment of potential reward (you’re always going to know your risk, for sure) is an extraneous and limiting activity and keeps you out of good trades as often as it gets you into poor ones. It has no bearing.

 

[0007]

It's hard enough without setting abstract constraints on what might or might not be a good trade based on where you think it's going to end up. If the setups generally provide you with a positive expectancy, go with them, regardless.

............

Adding an assessment of potential reward (you’re always going to know your risk, for sure) is an extraneous and limiting activity and keeps you out of good trades as often as it gets you into poor ones. It has no bearing.

I'd agree wholeheartedly with that. So long as tactics give a positive expectancy then R/R is not a deciding factor for me. And as Bramble says: reward is only a best guess. I've found the best technique for me is to go for setups that on balance will have a good outcome. Then just take what the market "rewards" you with.

 

[brewski1984]

I've been trading for around a year myself now, well live trading for about 10 months. The biggest thing I've probably learnt is that it's incredibly easy to say/write/understand the things you're going to do but incredibly hard to actually do them.

 

[SanMiguel]

Day trading is for algos, gamblers, pit traders, bullsh**ters and the occasional genius.

Does that mean pit traders are also gamblers?
Does that mean that someone who trades a long TF but only for one day is a gambler?
Whilst I agree with you that the majority start here and fail, it's a bit too generalistic.

 

[new_trader]

Does that mean pit traders are also gamblers?
Does that mean that someone who trades a long TF but only for one day is a gambler?
Whilst I agree with you that the majority start here and fail, it's a bit too generalistic.

I am content with being an "occasional genius". Day trading doesn't necessarily mean making a trade every day! :smart:

 

[SanMiguel]

I am content with being an "occasional genius". Day trading doesn't necessarily mean making a trade every day! :smart:

That's swing trading innit...or position trading...or intraweek trading

 

[new_trader]

That's swing trading innit...or position trading...or intraweek trading

I would define the style by how long a trade is held rather than the amount of time that passes between new trades.

 

[SanMiguel]

I would define the style by how long a trade is held rather than the amount of time that passes between new trades.

I'm kidding. MY point was it's swings and roundabouts with definitions.
If you know what you are doing, the TF is irrelevant.

 

[Pazienza]

You make some good points, and whilst I agree that the vast majority of noobs should stay away from day trading, saying "Day trading is for algos, gamblers, pit traders, bullsh**ters and the occasional genius" is absolute boll0cks.

 

[iota]

iota - I note you're posting for posterity rather than discussion, but you've posted, which makes it fair game for comment.

The risk:reward thing is a canard. You can never know what your reward is going to be in any given trade. You can have a good guess at where you'd most likely expect it to end up, but that's about the best you can do.

You didn't know for certain your £158 trade for £10 risk was going to work out that way prior to taking the trade, did you? It's a good result, absolutely. But it could have been a £10 loser, or a £5 profit.

It's hard enough without setting abstract constraints on what might or might not be a good trade based on where you think it's going to end up. If the setups generally provide you with a positive expectancy, go with them, regardless.

While I’m sure it all comes down to personal preference, I’m more than happy to chip away with rewards less than risk as long as I’m staying the right side of expectancy. That’s how the market is sometimes. Other times you need two pairs of hands to fill the saddle bags.

Adding an assessment of potential reward (you’re always going to know your risk, for sure) is an extraneous and limiting activity and keeps you out of good trades as often as it gets you into poor ones. It has no bearing.

Perhaps it's semantics... but basically I agree with you. I have the expectation of reward, but no actual knowledge of how much. But I don't go in if I don't expect more in return than I'm laying down. Maybe in year two I'll agree with you, but for now this is my preference and opinion.

You make some good points, and whilst I agree that the vast majority of noobs should stay away from day trading, saying "Day trading is for algos, gamblers, pit traders, bullsh**ters and the occasional genius" is absolute boll0cks.

Again, maybe come year two (if I'm still here) I'll agree with you and the others yelling out 'boooo', but at the minute I see continuous streams of people coming in with expectations of millions from an hour or two a day in front of a monitor, and after a year of finding my feet I don't see it as a viable way to trade if all you have a is a chart.

 

[Pazienza]

Again, maybe come year two (if I'm still here) I'll agree with you and the others yelling out 'boooo', but at the minute I see continuous streams of people coming in with expectations of millions from an hour or two a day in front of a monitor, and after a year of finding my feet I don't see it as a viable way to trade if all you have a is a chart.

Don't get me wrong, you show some good insights.

But making generalisations about trading is tricky, because there are so many ways of doing it.

With regard to your last sentence, all you need is the chart, some original thought, experience and patience. Genuinely.

It's very viable indeed, although it is true that most people will fail at it.

 

[Doomberg]

I agree with Paz, not because i want his schlong but because the day trading comment was a bit of a sweeping statement, sure you may not like day trading yourself but many people are very successful at it and collect points daily, and many of them are not gamblers.. in fact trading a set up someone is comfortable with on 5m/15m is no different from you trading a set up on 1d, they are both as much gambling as the other

 

[Hotch]

Does that mean pit traders are also gamblers?

I don't know but they're certainly bull****ters.

 

[maxima]

"In order to make a fortune, start with a fortune"

I am not sure from your post - do you feel you are a success? and did you start with fortune? what was the initial size of your account from what you grew what you are calling a success now?

 

[iota]

I am not sure from your post - do you feel you are a success? and did you start with fortune? what was the initial size of your account from what you grew what you are calling a success now?

The current one started at £250, went up to almost £1.5k on the USD/JPY elevator ride a few months back and came crashing back to just under £100 on the same ride.
At that point I stopped looking for quick fixes and started taking positions/swing trading/whatever you'd like to call it.
Currently it's just under £400. Like I said I'm eeking (and from the figures you can see I really do mean eeking) out a profit, but it is a profit and I succeed much more often than I fail now.

As far as I'm concerned I'm getting there and gaining the knowledge and skill and making regular profit however small is the important part.

 

[maxima]

so roughly you need to grow your account 100 times to be able to live out of the profit....

tought isnt it?

 

[iota]

I'm figuring if I can take it to 10x the initial without dropping under the initial again, I'll look at putting real money in to an account. Until then I'm just in training and/or wasting my time.

And yeah, it is tough. And long, don't forget long.

 

[maxima]

I hear ya