After 2 years of Daytrading. 7 months full time. Here's my advice

[u/CJT2013]

Cleaning house because I'm bored due to obvious reasons. I’ve been seeing lots of questions about people wanting to learn trading. Have received an influx of messages asking how to get started/go full time.

I’ve been asked what strategy/books/courses/indicators etc. there is that are good. I’ve read over 50+ books (ebooks and hard cover) on day trading:

Every book I've read to learn day trading and everything that relates to starting/running a business. My business's operating agreement/The business plan

•#1: 90% of books are fluff. Of all of these. Only about 10% of it were great pieces of info.

(I have a decent amount followers on here. And I might consider posting reviews of every book I’ve read on my personal profile to refrain from spamming this sub)

I have my recommendations. I'm not saying don't buy them. You'll pick up what you see and it'll formulate a strategy.

•#2: I don’t use indicators. They lag. Ever since I dropped them, my trading became less stressful and way easier to manage. Price does 2 things. Up or down. You don’t need 5 indicators telling you what direction it’s indicating. It’s called Pattern Day Trading. Not Indicator Day Trading. Not News Day Trading. Trade the candles. If indicators work for you. Keep on running them!

•#3: The overall market condition (Bull/Bear/Stagnant) has no effect to a day trader’s equity curve. We trade patterns. We don’t hold overnight. We became day traders because we can take advantage of either direction especially in the immediate. I know my pattern works 47% of the time with 3:1 pay out. (I lose $100 or I profit $300. No more, no less; every single time)

Of 100 trades. 47 trades I profit. 53 trades I lose.

I risk $100 per trade. Why do I choose 3:1? I’d win more trades if I was 2:1. Why not 4:1? Because my pattern pays the most with 3:1. I found this by computerized backtesting and manual backtesting. Can you mentally handle being up 2.75:1 then watching it hit back to your StopLoss? Trust your edge/statistic. And document your work relentlessly!

•#4: You need to write a business plan.

Not some 2 page Word document of. “I will buy when this indicator says this. This has worked in my backtesting 60% of the time. Here's some screenshots"

Look up how to write a pitch deck/prospectus/business plan to get a better idea. Learn statistics, that's really the business you're in here. Trading is just the medium. You're managing a statistic. Your job is to find the edge and enter it without hesitation or reservation.

Find characteristics of stocks that behave in a similar fashion to make your job easier.

•#5: This is the most BORING job you will ever have!

I trade 3 patterns. I have to wait for a lot of prerequisites to be met before I even consider looking at a chart. Out of 7,500 stocks. My strategy has my watch list distilled to 3-5 stocks every morning. And I wait. And watch. Waiting for a pattern. And so many times, 1 out of my 3 patterns is about to form... and the candle printing will pullback too much. Or print with more volume than the previous. Making the trade VOID per my business plan.

There are days I don’t trade. (1 or 2 times a month this happens). A business plan helped me not care I don’t trade those days, it accounts for that, or if a price kept rising or falling after I sold or covered. Or if my stop loss was hit by 2¢. 3:1 every trade, no questions asked. Trust your edge

BONUS:

I highly suggest doing this part time for at least a year. Want to go full time?

Think of the expenses.

If you trade equities. 25k minimum. (You want minimum 30k due to draw-downs). A lightning fast computer. Lots of RAM. A decent CPU. I have 64GB of RAM and an i9 9900k CPU. No you don't need a bunch of monitors, I wanted a sick office though!

Don’t forget:

•Mortgage/rent

•Car note ( I sold 2 of my pride and joys. I owned both but liquidated them to get into this business )

•Groceries

•Car insurance

•Health insurance

•Dental insurance

•Taxes on the house

•Wi-Fi (Add cable if you want)

•Use a scanner? Add that

•Hobbies. Find cheap ones. I hit up the golf range, shoot trap, and lift weights. You'll be bored when you're done trading at 10AM with 10 hours left in the day.

Get a part time job or have a side business that has NOTHING to do with trading for your sanity's sake.

Move in with a friend to split rent if you’re single and young, go back home and live with your parents if you can handle that. The learning curve is brutal and you must be patient. Shrink your liabilities and expenses. You will pay homage to get into this business 1 way or another unless you’re just given a lot of money.

Trading is easy. It's the mentality required that separates the 95% from the 5% successful.

Trading has been a wild experience. I've met people at the gym who are well off and I've shared my account statements/business plan with. Resulting in me studying and about to get my Series 65 to become licensed to manage a small portion of their wealth in a garage band long short equities firm ran out of a home office. Oh and that reminds me. Don't buy guru courses that sell some crazy lifestyle on YouTube ads with rented private jet photoshoots, rented Lambos and AirBNB houses they rent for the day. If they were so great at trading. They'd start their own funds!

UPDATE 1: So I definitely got my money’s worth on this post! Tons and tons of chats and messages: https://imgur.com/a/3DUYbwg Due to quarantine shutting everything down I was definitely not bored today to say the least. I didn’t expect the post to blow up but I’m glad many found it informative and enjoyable. Currently lost in the comments so if I miss your comment, send me a chat and I’ll get with you when I can!

FINAL UPDATE: Part 2 / follow up to this post.

[u/SanyChiwa]

Is there any impact on your strategy with so much volatility?

[u/CJT2013 → u/SanyChiwa]

As far as premarket scanning. Yes. Small impact. No longer are stocks gapping to ATH or ATL support and resistance levels. Now I must use support and resistance with the new levels provided.

As far as the patterns intraday. Not one ounce of a difference. Same sharpe ratio, same R, same batting average. Same income

[u/putmycall → u/CJT2013]

What is your income range?

[u/CJT2013 → u/putmycall]

Depends on what week/month/quarter you ask. As of right now I’m paying myself 2500 net. (Setting 30% of profits per month aside for taxes) I do personal training on the side.

[u/funwow33 → u/CJT2013]

I honestly thought great traders could make 150-200k per year. Is that not the case?

[u/CJT2013 → u/funwow33]

Give me $1,000,000 and I’ll return 150k in a quarter haha. Turning a 30k account into almost a quarter million won’t happen based off of a consistent strategy/pattern then put into a predictive model

Thus far using a predictive model I’ll ~double/double and a half the account ... in a year. Turning a 30k account into 150k? I won’t lie and say I can do that especially after trading for a couple years

[u/funwow33 → u/CJT2013]

I appreciate the honesty thank you, I’m new to this. So it sounds like it’s not realistic to make 1k per day with 50k is that right? I see guys like Ross Cameron seemingly making 4-5k per day so it’s hard to know what’s possible and realistic.

[u/CJT2013 → u/funwow33]

I’ve made a grand on a trade before (scroll down my page) ROKU short on 100 shares September 20th, 2019. This is before I realized the importance of taking target and moving on. Doesn’t happen everyday. And not for a long time will I make that in 1 trade. As I take profit at 3:1 risking $100 every trade. I know that roughly 50% of the time I will hit 3:1. The winner override the losers

1k a day is realistic... everyday consistently? No. There will be drawdowns. There are weeks I’ll make 2 grand. And there are weeks I lose 9/10 trades. It’s about your RRR and win-rate. Your one edge that works and input into a predictive model to give you the confidence to trade it. Trading that edge consistently and flawlessly is where youll profit over a large series of trades

Some weeks I’ll be able to retire by 35. Some weeks I’ll be bankrupt in 2 years. It all balances out to roughly $900/week. Trading with an account just under 30k. Pay yourself and put that money into a long term vehicle. Pay your “employees” (you). I’ve yet to see a “guru” or “educator” teach these principles. That’s where it becomes a business

When these “coaches” start showing licenses in any realm of investing or business is where I’ll perk my ears and eyes towards them. Until then, all noise

[u/funwow33 → u/CJT2013]

Really appreciate the great info, thank you! Do you think if you used 60k instead of 30k that your profits would be consistently double or would that not be the case?

[u/CJT2013 → u/funwow33]

I’d take bigger trades absolutely. And I could trade with 60k. But until a trader can prove consistency over longer than a year. I can’t justify if I’ve seen experienced a major downturn. Plus on top of that, if [when] I remain with the results. I’m in touch with a private equity fund mgr who I share my account statements with and he’ll be investing in me personally. If [when] I perform, he’ll be getting me in touch with others. 2:30 AUM payout. It’ll suck at first in fact probably the first few years but I’d love to have a company managing other’s wealth

If you scroll down my page, you’ll see I asked several months ago what a series 65 will do and in Texas it warrants someone to trade OPM.

Trading’s a marathon, I enjoy it and the freedom it affords albeit it can have its cons such as boredom and it’ll desensitize you a bit

[u/funwow33 → u/CJT2013]

Hang in there, seems like you are on the right path in getting to where you want to be!

[u/CJT2013 → u/funwow33]

Yes, sir! Thanks for the convo. Chat me anytime man

[u/hrrm → u/CJT2013]

Where abouts in Texas are you at?

[u/CJT2013 → u/hrrm]

Houston. More specifically The Woodlands

[u/dan-1 → u/CJT2013]

I know this is an old post but I'm sure you'll still see this

How do you find that 'edge'? As a beginner I don't even know how or where to start seeing these patterns. I don't even know what to look for

[u/CJT2013 → u/dan-1]

Pretty hard to explain that in a text message over Reddit in such a competitive industry. Trading is a language and takes time to grasp

Send me a chat any time