Is it possible to make money by daytrading?

#1
Hi all.Is there anybody in this forum who is making money by day trading consistently?
If yes then what is the risk reward ratio for day trading,because i have found that 1:2 does not work with day trading.say my risk in 20 points of nifty i should have 40 reward which is not posssible everyday.
and suppose i keep 1:1 risk reward for day trading then 70 % of success even then i make very low profit.say i risk 10 points reward is also 10 then out of 20 days if i make profit 14 days(70%)and loss 6 days then i have only 80point which after deducting brokerage and slippage i would be left with nothing.Then how do successful day traders trade?
If i trade swing and positional trades i will be in good profit no doubt about that but the problem is it is difficult to sit idle before the computer watching the charts without doing any thing every day.
 

AW10

Well-Known Member
#4
Hi all.Is there anybody in this forum who is making money by day trading consistently?
If yes then what is the risk reward ratio for day trading,because i have found that 1:2 does not work with day trading.say my risk in 20 points of nifty i should have 40 reward which is not posssible everyday.
and suppose i keep 1:1 risk reward for day trading then 70 % of success even then i make very low profit.say i risk 10 points reward is also 10 then out of 20 days if i make profit 14 days(70%)and loss 6 days then i have only 80point which after deducting brokerage and slippage i would be left with nothing.Then how do successful day traders trade?
If i trade swing and positional trades i will be in good profit no doubt about that but the problem is it is difficult to sit idle before the computer watching the charts without doing any thing every day.
Raj, In my view, trading doesn't mean to be in the market always. It is equally important for a trader to know - When NOT to trade. It certaily tests our patience and most of us breakdown on patience and end up putting a trade where there is no trade.

Basic fudamental question to be answered first are
- what is the Timeframe of chart that u want to trade ?
- What is the average size of trends in that timeframe ?
- how frequently you see the trends (there are days without any trend in your timeframe) ?
- How long you might have to wait to see next trend ?
- what part of that trend that your system catches (I am happy if my system can catch middle 40 to 50% of a trend) ?
- how much of minimum risk you have on that timeframe (I conside 2*ATR on my TFrame as minimum risk while designing my system).
- most importantly, can the answer of above question FIT my psychology or not ?
(if I can't live without doing something every moment [watchout workaholics], is my mind not tuned to wait long enough, if I am not comfortable with the minimum risk etc)

At next step, if you can find a sytem based on the answer to above questions then yes, u have better chance to succeed as daytrader. Daytrading, tests our trading psychology to the maximum extent compared to swing/position trading. So be mentally prepared to trade among that roller coaster feeling.

Happy Trading
 

adultvish

Active Member
#5
my two cents

Day trading should be initiated after one feels comfortable with positional trading. During initial stage of Day Trading, one should not enter with margin money and should pick up the trade on short term basis so that if it doesn't come out on the same day - you can hold the stock. Further, short day trades should only be done after having reasonable experience ( 2-3 months at least ).

For example, if someone like to enter in day trade; first he should pick up a script to enter long for an outlook of 3-4 months. Thereafter, practice at least 10 trading days with paper trading only. Thereafter, initiate his first trade by entering long and buying shares of the amount which he can hold. It is only after gaining sufficient experience and courage that one should start using margin and going short.