I started #daytrading in 2005. I have been making a living from it since 2006.
Here's how I started out and was profitable within 1 year.
A thread:
Here's how I started out and was profitable within 1 year.
A thread:
In 2005, fresh out of university I saw a job posting that said something like "If you like playing online poker and video games, maybe you want to be a day trader."
I said, "Yup!" and applied.
Three interviews later I was in training to be a prop trader.
I said, "Yup!" and applied.
Three interviews later I was in training to be a prop trader.
A prop, or proprietary, trader trades firm capital, and then gets paid a percentage of profit. I started out day trading stocks.
They didn't give me a strategy, they just taught me how their trading platform worked and then said figure it out.
They didn't give me a strategy, they just taught me how their trading platform worked and then said figure it out.
I had about a week on a demo account, just to get used to the software, but then it was straight to live trading on the trading floor...with very small position sizes.
When starting out with live trading, I was allowed to trade 100 shares of relatively stable stocks. I could choose from two that they gave me.
One of them was WMT (which was around $40 back then).
I was only allowed to lose $10 per day (not including commissions).
One of them was WMT (which was around $40 back then).
I was only allowed to lose $10 per day (not including commissions).
Being able to lose only $10/day may seem ridiculous, but it got me used to reading price action.
I had to study the chart and find points where I thought the price would move quickly, because my stop loss could only be 2 or 3 cents away (lose $2 or $3).
I had to study the chart and find points where I thought the price would move quickly, because my stop loss could only be 2 or 3 cents away (lose $2 or $3).
I would then try to make 4 to 8 cents ($4 to $8).
This got me to understand risk/reward.
With millions of shares changing hands in many stocks, I realized if I could make $6 on 100 shares in a few minutes, I would make $60 with 1000 shares...
This got me to understand risk/reward.
With millions of shares changing hands in many stocks, I realized if I could make $6 on 100 shares in a few minutes, I would make $60 with 1000 shares...
I just needed to build up. If I could move up to trading 2000 or 3000 shares, I would be making $120 or $180 many times a day (with some losers thrown in there as well).
And the firm's structure let my build my position size.... slowly....
And the firm's structure let my build my position size.... slowly....
If I was profitable on the day ($10 level), the next day I was allowed to trade 200 shares and lose up to $20.
IF I lost more than I was supposed to on a day, I had to write an email to the manager explaining why I lost, and how I planned to mitigate my risk in the future.
IF I lost more than I was supposed to on a day, I had to write an email to the manager explaining why I lost, and how I planned to mitigate my risk in the future.
This process continued. If I made money, I moved up a level (100, 200, 300 shares etc).
If I lost on a day, I moved down a level.
If I hit my goal—the goal was the same as the max loss—I got to move up 2 levels.
If I blew up—hit my max loss—I moved down 2 levels.
If I lost on a day, I moved down a level.
If I hit my goal—the goal was the same as the max loss—I got to move up 2 levels.
If I blew up—hit my max loss—I moved down 2 levels.
For the first two months, I oscillated in the low levels.
I would move up levels, but also down levels. The tight risk structure of the firm meant that I was only losing a tiny bit each month...maybe only $100 or $200 for the whole month.
I would move up levels, but also down levels. The tight risk structure of the firm meant that I was only losing a tiny bit each month...maybe only $100 or $200 for the whole month.
Traders starting out from home are well advised to keep position sizes & daily risk very small at the start.
There's plenty of time for big profits once you're profitable trading small position sizes.
If you can't trade 100 shares profitably, you won't trade 1000 profitably.
There's plenty of time for big profits once you're profitable trading small position sizes.
If you can't trade 100 shares profitably, you won't trade 1000 profitably.
In month 3 I started to gain traction. I was trading 1000 shares or more routinely, and made a bit of profit for the month.
I had learned to stop trading and get out positions if I was near my max loss for the day.
NO BIG LOSING DAYS meant even small winning days added up.
I had learned to stop trading and get out positions if I was near my max loss for the day.
NO BIG LOSING DAYS meant even small winning days added up.
The goal was to hit $2000 in profit for the month.
This meant I was no longer on the level system, I could trade as many shares as I wanted, and my maximum risk for the day was roughly equal to my average profitable day.
18 years later, I continue to use a max daily loss.
This meant I was no longer on the level system, I could trade as many shares as I wanted, and my maximum risk for the day was roughly equal to my average profitable day.
18 years later, I continue to use a max daily loss.
In month 4 I made several hundred in profit.
In month 5 I made $2000.
In month 6 I made $4000.
In month 7 I made $8000.
In month 8 I made $16000.
In month 9 I made $20,000
My numbers roughly doubled for several months, and then plateaued around $20K
In month 5 I made $2000.
In month 6 I made $4000.
In month 7 I made $8000.
In month 8 I made $16000.
In month 9 I made $20,000
My numbers roughly doubled for several months, and then plateaued around $20K
I've talked about this extensively...almost every trader hits a plateau. It is different for everyone.
It's where you're comfortable. Making more would require lots of INTERNAL work to push through whatever mental block is keeping you where you are.
It's where you're comfortable. Making more would require lots of INTERNAL work to push through whatever mental block is keeping you where you are.
To push through those barriers, you'll probably need a psychologist or coach like @AlphaMind101, or spend more time in @VanTharpInst programs.
Be prepared to spend time in reflection, working through beliefs, so you don't sabotage yourself going bigger than you can handle.
Be prepared to spend time in reflection, working through beliefs, so you don't sabotage yourself going bigger than you can handle.
I was very happy with my performance. I saw no reason to change anything. I basically came in expecting to make $1000 per day, and I did.
Psychologically I plateaued because once I neared a $1000 profit for the day I didn't want to lose it.
So unless I just happened to catch a monster trade that took me well past $1000 for the day, I usually stopped or took it really easy.
So unless I just happened to catch a monster trade that took me well past $1000 for the day, I usually stopped or took it really easy.
Either way, I was happy with my income. At 24 I was killing it and living the dream.
I traded and then golfed in the afternoons.
My dad loved telling people that I was semi-retired.
He worked 9-5 his whole life, yet was my biggest supporter (I miss him)...
I traded and then golfed in the afternoons.
My dad loved telling people that I was semi-retired.
He worked 9-5 his whole life, yet was my biggest supporter (I miss him)...
I'm so thankful for that.
Things were fantastic for years.
I had steady big paychecks.
I was living in different cities, taking trips, golfing daily.
I didn't have a losing month in 4 years after I was profitable.
Adversity did eventually hit (for a different thread).
Things were fantastic for years.
I had steady big paychecks.
I was living in different cities, taking trips, golfing daily.
I didn't have a losing month in 4 years after I was profitable.
Adversity did eventually hit (for a different thread).
But let's get back to how to start trading.
Summary:
1. Set a daily max loss, and keep it small to start.
2. Increase position size only if profitable
3. Find trades where you can have a very small stop loss and then take profit at 2x or 3x that amount....
Summary:
1. Set a daily max loss, and keep it small to start.
2. Increase position size only if profitable
3. Find trades where you can have a very small stop loss and then take profit at 2x or 3x that amount....
Bigger stop losses aren't the answer. You'll have losses no matter what. A small stop loss means a target x2 that amount is also close and easy to hit.
If a stock moves a $1 a day, it's easier to target $0.10 with a $0.05 SL.
VERY hard to target $1 with a $0.50 SL.
If a stock moves a $1 a day, it's easier to target $0.10 with a $0.05 SL.
VERY hard to target $1 with a $0.50 SL.
4. Have a structure for your progress. I just provided you with the structure I started under.
Have rewards and punishments for good & bad behavior. Give yourself objectives. If you meet the objectives you get to move up. Fail, move down.
Have rewards and punishments for good & bad behavior. Give yourself objectives. If you meet the objectives you get to move up. Fail, move down.
5. If you blowup or make a big mistake. Write a letter to someone explaining why it happened and an actual protocol you will implement to minimize the chance of it happening again (spend time on this).
If you enjoyed this, give me a follow @corymitc
My stock day trading methods are covered here:
tradethatswing.com/product/price-…
My forex day trading method is covered here:
tradethatswing.com/product/the-eu…
Please retweet or like the posts you enjoyed.
My stock day trading methods are covered here:
tradethatswing.com/product/price-…
My forex day trading method is covered here:
tradethatswing.com/product/the-eu…
Please retweet or like the posts you enjoyed.
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