Why Day trading is Tough and only 2-3% are successful

[JPK35]

In day trading you have less room for response to market changes (only one day) so this requires more dedication and experience from the trader. That's why I don't think day trading is the most suitable sort of trading for newbies.

 

[suri112000]

In day trading you have less room for response to market changes (only one day) so this requires more dedication and experience from the trader. That's why I don't think day trading is the most suitable sort of trading for newbies.

To add further, The day trade has to move in the desired direction by 3:30 to realize the profit potential. Time constraint is more in day trading. In swing trades, any temporary stall in price or adverse move can be recouped in due course.

Day trading requires absolute talent to guage direction and momentum of the price. If you fail in any one of them you are doomed to fail. He may be right in predicting the direction but if the momentum fades, day traders will fail. Swing traders on the contrary have the luxury of waiting for build up of momentum in their desired direction.

 

[Serious_Trader]

great post from some unsung TJ members


1. Get Your Mind Right

2. Always cut your losses and let your profits run. Take small losses and large wins.

3. Trail stop loss. Don't let a profitable trade turn to a looser.

4. Trade as per plan. Don't trade unless you know where you should get in and where you should get out.

5. Always use protective stop to limit your losses.

6. Learn to be patient. Don't trade impulsively. Wait for the right opportunities and setup.

7. If the reason you entered the trade is no longer valid, get out.

8. Do your own homework. Keep ready long/short levels to enter trade. Make use of system to inform you when the target entry/exit price is there for the taking.

9. Be open to research.

10. Give time to your sytem to work. If your method of trading is working, don't keep changing it.

11. Remember the market is never too high or low to buy or sell.

12. Be disciplined. A trader has periods of profit or losses. Don't let the losses get to you psychologically.

13. No indicator that is a 100% right all the time. Use common sense along with your method of trading. If your indicators are telling you one thing but the market is obviously doing something else, listen to the market.

14. Remember the golden rule - The market is always right.

15. Never risk all in a trade/trades. Max. loss on open positions should never be more than 5% of capital. Close all loosing positions immediately if this loss level is reached.

16. Don't overstrech your capital. Trade markets you are sufficiently capitalized for.

17. Never trade with money you cannot afford to lose.

18. If you hit your target profit, take it, or atleast protect with trailing stop loss.

19. Don't revenge trade and try to make up for all your losses in one trade.

20. Don't blindly follow someone else's recommendations or tips.

21. If there are few consecutive days of losses or there are a row of loosing trades, take a break for a few days or weeks. Trade only when you are in the right psychological frame of mind.

22. Don't trade to many markets. It's better to be an expert in one market than a novice in many.

23. If there is a margin call, it means something went wrong with your trade, and exit the trade.

24. Don't take losses personally.

25. Most important, have a life besides trading. If you are not happy with life in general, you will not be in the right frame of mind to be trading.

If you use the following 3 criteria , u will be able to survive the market. That's a guarantee.

Suppose you have Rs.36,000 in your trading account.

You see a stock that is selling at Rs.29 and is in a number 2 spring position with an upside potential (point and figure chart indication ) of Rs.38 . So, you basically have 9 points profit potential. Your maximum risk can be 3 points......that would give you a 3:1 reward risk ratio. However, you determined that you can put your stop a little closer...lets say 2 points below the current price action. So, your first criteria has been met.....you are within the 3:1 reward risk ratio....you are actually better than that.

Now move to the second criteria, which is to risk no more than 8% on any one trade. If you were to buy the stock at Rs. 29 , and it were to drop by 2 points, that is about a 6.8 percent loss.....so you are below the 8 %.....that is good.

And now, the final criteria....and possibly the most important. How much stock should you buy. Well, you know that you can only lose 2% to your account, so, 2% of Rs.36,000 is Rs.720......so your total loss to your account can not be more than Rs.720.....you now divide your risk (2 points) into Rs.720 to determine how much stock to buy. 720 / 2 = you can buy 360 shares.

Lets check this: 360 shares purchased at Rs.29 = Rs.10,440
Stock drops to Rs.27, Rs.27 X 360 = Rs.9720
Rs.10,440 - Rs.9720 = Rs.720

So, using this method, you know how much stock to buy. The closer your stop. the more stock you can buy...the further away, the less.


Courtesy: Traderji

 

[James Martin]

The money doesn't come into being out of thin air. The money you make from your trade is lost by someone else at the other end of your trade. Because you don't just buy shares from the market. You buy them from some individual like yourself or from a professional money manager.

And that's why it's so difficult to make money from day-trading. Someone has to be on the loosing end in order for someone else to make money. You can't day-trade without loosing money at least occasionally. And sometimes these losses are so big that they wipe out all of your gains.

 

[ROCKSTAR55]

Excellent thread....keep posting friends to help each other....great source of knowledge

 

[suri112000]

my friend told me about this thread in traderji
http://www.traderji.com/day-trading/98262-10-profit-intraday-trading-achievable-not-6.html
with a capital of Rs.20,000 I started day trading on 22-04-2015.i did not trade on april 24th.i got a payout of Rs.37,000, the balance in my account is Rs.27,889
i have done this in 6 trading days
when you cannot be able to do that does not mean nobody could do
welcome to the world of high frequency

I generated Rs.1,00,000 just with a capital of Rs.20,000 many a times. When the capital is raised to Rs.10,00,000 the return has come down manifold. The pressure of protecting capital is more when capital is more. The risk taking capacity increases while the capital is low. I want to see anyone who is generating maximum and consistent returns in day trading even after increasing their capital size.

 

[sumosanammain]

I generated Rs.1,00,000 just with a capital of Rs.20,000 many a times. When the capital is raised to Rs.10,00,000 the return has come down manifold. The pressure of protecting capital is more when capital is more. The risk taking capacity increases while the capital is low. I want to see anyone who is generating maximum and consistent returns in day trading even after increasing their capital size.

The main reason why tape reading cannot be scaled up.

For Higher capital, you need time to take decisions, as based on 2 and 3 minute charts, you cannot take decisions with conviction, unless its coded into the system.

I know a trader who trades an insane amount of capital, taking trades on weekly charts. And I am talking of hundreds of crores. I asked him if he would ever consider a lower time frame, and he said that he started with 5 mins, went to 15, 30, hourly, daily, and is now at weekly charts and that all the lower time frames are just for small cap traders, as you cannot trade 2 lakh nifty 5 times a day, without your own order ruining your impact cost. With weekly, he can stagger the order over 2 hours and 5 points, a luxury that intraday traders do not have.

 

[TraderRavi]

Zerodha had shared winners stats/data 2 years ago , but not giving now despite many times promise => figures dont lie

 

[jahan]

Due to the high frequency of orders executed, the profits are consumed more & more. Statistically there is no edge in day trading.

Hello,

There is always psychological edge to have...,in any form of Trading.statistic only helps to gauge performance,and without(statistics) this we cannot proceed further.

Regards,

 

[vijkris]

day trading is what they called trading " noise" , swing trader/positional trader/investor filter out noise from their system , and a daytrader trades that noise , odds are heavily against , its like snatching meat from Lion's jaws :lol:
In terms of the retail participant, successful day traders are the most elite group in the markets.They are highly skilled, disciplined traders, who use risk based methodologies. it is a level of financial mastery that most will never achieve, but millions desire.Actually there is a small number of day traders - maybe 1% - who make money day trading.

Is this your original post or did you quote some book/website etc ?

Jo bhi hai, bahut acha post hai. :clapping: