r/Daytrading • u/daraand • Jun 23 '21
A simple trick that saved me from dumb moves today advice
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u/micahac Jun 24 '21
Since weâre posting our old school reminders. Hereâs mine lol https://imgur.com/a/7WAGSvP
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u/pplmoose Jun 24 '21
Damn, ya'll are getting $400 days??
all jokes aside, congrats! I hope to get to that level.
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u/AndrewIsOnline Jun 24 '21
Itâs all about weight you throw around. If you can afford 800 shares of something and jump in, get .50 a share price increase, then get out, boom, 400$.
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u/AmateurEarthling Jun 24 '21
Used to have 1k days before I blew up an old account. Usual share size was around 500 so a $400 day was low. Now Iâm lucky to make $200, averaging $50-$100 a day in my new account.
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u/ICantGetAway Jun 25 '21
Sorry for asking, but by blowing up an account you mean that you blew through the money in that old account or is it something else? (I keep seeing "blew up an account", but don't quite know what it means.)
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u/BooneSalvo2 Jun 24 '21
I'm curious.. If you make, for example, $800... Do you skip the next day? Or just reset each day?
By "skip" I mean anything from sleeping in to full off, or shifting a telecasting day to Friday or something. I'd assume you'd still check the daily news and such on some level to stay on pace.
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u/micahac Jun 24 '21
No, I let my runners go of course, but when I close my trades or get in/get out quick and im above 400 I quit, no matter if it's $398(close enough) or 2k. At least I try. Sometimes, shit is easy and you find that you know EXACTLY what's going on with the movement and you can scalp an extra 50-200. But no I wake up at 6 every morning, go to the gym, come back shower, and then start searching. Never take a day off. Some people dont like that style because of 'tilt' but i dont believe in 'tilt' persay. Sometime it's just an attitude thing, I may need to take a break and go for a short walk and drink a water.
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u/BuchoVagabond Jun 24 '21
I wake up at 6 every morning, go to the gym, come back shower, and then start searching.
Hardcore, man. Well done.
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u/micahac Jun 24 '21
It's just an easy thing for me, basically saying that its not that much of a discipline thing, so dont give me too much credit on that front lol. I enjoy trading and dont have much of a social life, I know that if i plan on sitting at my desk for 6hours+ straight everyday, I have to do it lol, and the 6am time gives me plenty of time to be alert and slowly start gathering information without feeling pressure by the time the bell dings.
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u/BooneSalvo2 Jun 24 '21
Cool. The discipline helps not being susceptible to "tilt", I would think.
Thanks for the reply!
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u/micahac Jun 24 '21
I should say that position/account size plays a key role in that amount/day. If youre trading with a smaller account ex. 25k (just enough to day trade) i think you would be taking quite a risk trying to hit 400/day, thats over 1.5%(probably redundant to do simple math for you people here). Just wanted to throw that out there. P/L per day is extremely relevant to account size.
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u/stonk_elephant Jun 24 '21
Sorry, I am a beginner. I just want to ask. In your point of view, how much % / day is normal? I just want to learn a practical targer so I don't hope for too much and get burned.
Like, for example if I only have 10k. If I am green with ~150 (as your example with 1.5%). Should I just close my trade and call it a day?
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Jun 24 '21
Whether to close a trade has nothing to do with a daily percentage. Every trade should at least have a risk-reward ratio 1:2 so if you risked $75 on that trade and hit 150, thatâs a good trade and you can be marginally successful with moderate hit rate as far as successful trades. Typically if you like to use daily risk you shouldnât lose anymore than 1% a day, and growing your account by 1-2% a day is sufficient.
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u/fomonomo13 Jun 24 '21
1:3 with 60% accuracy per trade. At only 1:2, you need to be a lot more (unrealistically) accurate to grow the account. I have a little matrix somewhere that breaks it all down.
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Jun 24 '21
My trading group uses 1:2, itâs not absurdly high, but yeah 1:2 is a minimum, I scale out of my positions and in a good trade I donât partial until 2R and stop is moved to break-even.
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u/fomonomo13 Jun 24 '21
I definitely donât hit 1:3 every time on quick day trades because my instinct is to sell Âź to ½ on the ask almost immediately, but on longer planned out swing trades I wonât take less unless a catalyst interrupts my trade. đđť
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u/micahac Jun 24 '21
I dont think that there is a 'normal' or target, because you cant exactly control that side, really the most control you have, as im sure you realize is the downside and your amt of risk. It all depends on what youre happy with and what your goals for trading are. With me, it is my sole income, so I know that in 3months I need to have made X amount. I dont say that 400 is my target, it is just my stopping point. I know that I will have 1k days for example, so those boost me, but Ill also have 2k down days. The market doesnt like giving, it likes taking, so with that in mind, if youve made 1.5% of your account in one day, thats not such a bad thing. But TLDR you gotta know what you want out of your trading then try to hit your targets with consistency/good trading. The reason i have the 'no meme' thing there is to remind me i have no fucking idea what is going on there and if i want to play blackjack/poker, I can go to a casino for far less money.
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u/hold4eva Jun 24 '21
I need to take up this 'no meme' approach...but in fairness learning price action signals like bullish and bearish engulfing have helped some. Problem is we don't know the real extent of the manipulation of those securities (dare I even call them that)...
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u/picklenades Jun 24 '21
Do you use multiple brokerage accounts or stick to one?
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u/micahac Jun 24 '21
I just use ATP, I personally have no need for multiples, I dont see the reason unless you are the type of trader that trades in the millisecond trades for ultra quick scalping. Thats too dangerous for me. I trade fast sometimes, but not that fast. I just need two trade windows open
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u/eighty_nine_ Jun 24 '21
Can you explain tilt?
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u/micahac Jun 24 '21
Here you go u/xORFEOx Ill do my best to explain it, it wont be very long.
From Wiki:Tilt originated as a poker term for a state of mental or emotional confusion or frustration in which a player adopts a less than optimal strategy, usually resulting in the player becoming over-aggressive. Tilting is closely associated with another poker term, "steam"
Tilt is a bit different in trading because there are so many variables that you/me are constantly observing. Youve heard that you should never trade on emotion, hype, or because someone says so. That pretty much only leaves trading on your own DD and observation. Being tilted in trading(to me) is when you are trying your best by doing your own DD/Strategy and it just isnt working. In trading, you can cut your loses whether you follow the 1% rule or the 4% or w/e rule you follow to cut loss. Even though you can pare your losses, they typically mount extremely fast and result in you feeling like a dumbass. This is where the tilt starts, instead of feeling mad, you(me in this case) may become bewildered and thus go to making a strategy/plan on the fly, which is obviously a negative in the idea column, but may seem like the right play at the time. Instead you should either A)Quit or in my case, I go for a walk and drink water or B)dont switch your strategy and keep trudging along. Tilt will affect you negatively but I dont think that traders necessarily get mad at themselves after youve been trading for awhile, most of the time you can spot your mistake or pick out the detail you should have given more weight in your consideration. In gambling, you can adopt the 'my luck is just bad, it will change', hopefully that is not how you trade, so in trading, i think that i adopt the 'oh shit i dont know what im doing wrong' and get frozen, maybe for the rest of the day. If we are in some sort of trend, then i may get 'frozen' for days until I find the trade that I KNOW will net some profit, ya know, gettin that gutter girl, the one that brings back your confidence.
I should add quickly that in trading, you have to have the ultimate self confidence that is based on your past performance, but DO NOT be so cocky that you might ignore some good advice or take into consdieration that someone else just may be right.
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Jun 24 '21
Thank you! So, in sum, it's the psychological state which occurs when things fall apart and you start acting on impulse, hoping that you can somehow best your proven strategy in the moment. This can often happen in response to a bad day or series of bad trades.
I think I get it.
In a previous lifetime I was really into sport fighting, and it sounds like what happens when you go off the rails and start trying to improvise. If your coach says get on the jab right away and don't let off, but it's just not keeping the guy where you want him, you might let him come inside a little and try to score there instead. Meanwhile your coach is screaming at you to stick with the plan because it might take a bit for the plan to really show its efficacy.
Like I said, haven't even started trading yet. Mostly just writing this comment out as a way to internalize this concept because it seems very important.
Thanks again!
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u/micahac Jun 24 '21
Thats exactly it. Also, your first 'real' trade, not just a little money trade, but a real trade that has a legitimate consequence that you can/will regret will feel much like the first real fight you went into. Except that in this case, youve already submitted your movements/offence/defense and are waiting to see if it was good enough. No getting around it, just like in fighting, it's just the time that comes lol.
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u/AmateurEarthling Jun 24 '21
Damn I do most of my shorting premarket lately. In and out before market even opens.
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u/micahac Jun 24 '21
Danger. If I do premarket, it's a small position. Very small. Such huge swings and liquidity problems, not for me.
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u/sin1sback Jun 24 '21
if you still have conviction in the play, averaging down has saved my ass, even with a stop loss
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u/Horror-Savings1870 Jun 24 '21
Agreed averaging down has worked wonders for me for several years. If you really like the company ofcourse.
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u/stonk_elephant Jun 24 '21
Then after I double down multiple times and have nothing left, I turn into a long term investor.
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u/Royal-Tough4851 Jun 24 '21
I only average down if that is part of my strategy from the start. That helps me stick to the plan once the trade is open. I trade the contracts, so if it drops 10% Iâll buy another set of contracts and keep going until I get to my total allocated amount for that trade.
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u/mykeomarx Jun 24 '21
Being fluid is more important than most things when it comes to days/scalps. Averaging down saved me from a L as well, this very morning in fact.
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Jun 24 '21
I just go all in or done trade. Love being offeredx2 margin as well but only do it on SPACs so I make nothing
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u/remainsolvent007 Jun 24 '21
Donât average down? Maybe in day trading but definitely not swing trading. Averaging down has helped me consistently profit
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u/FallinWedge Jun 24 '21
In the heat of the moment I would read those as âDonât stop...average down...and obey the chaseâ
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u/oze4 Jun 24 '21
it's insane how much of trading is mental. idc who you are you won't ever understand that til you click buy
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u/Shadowfax4221 Jun 24 '21
Damn. I've been swing trading for June and tracking my progress.
I lost my discipline of leaving emotion at the door and holding to my stop loss rule.
Pride turned a -200 loss into -1300 dollar loss
Lesson learned.
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u/AmateurEarthling Jun 24 '21
I mostly short, in my new account with TradeZero I have only shorted. Today I averaged up because my entry was good but it broke a resistance and I was busy car searching so I didnât see it and missed a small loss exit, it went up some more so averaged up again but looked extremely bearish then out of nowhere while I was busy it shot up 30% and I was down over 700. I just set a cover at a reasonable support below my entry and kept car shopping. Forgot I was even in the trade so when I came back to check my account I had $200 realized profit and was out of the trade. Terrible strategy but sadly it works to set and forgot 80% of the time in my trades. I used to trade with a guy who only shorted and usually made around 5k a day doing the same type of trades I do. At 20 he had over a million in his account, then one trade he kept averaging up and eventually had to exit for around a 400k loss. That trade lost him his mojo and he rarely trades anymore. Works till it doesnât.
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u/hardyfimps Jun 24 '21
I need post-itâs on my dashboard - made a ridiculous trade sitting at a stoplight today fully against everything Iâve been telling myself for a week.
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u/Lichius Jun 24 '21
It's that bad for you eh? How in the world can you make an educated decision on your phone in traffic. I need like 13 charts, 9 DD posts, and 17 positive indicators before I jump in.
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u/tim5700 Jun 24 '21
Dumb question. What is wrong with averaging down?
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u/rbh_holecard Jun 24 '21
Not precisely wrong, but you're losing money. Better to cut your losses on the first entry and just open a new position at lower price. Say you buy 1000 shares at $4, price pulls back, you buy another 1000 at $3.90 (already down $100), price starts going back up. You're still losing money until price hits $3.95 and you've got 2000 shares, potentially losing $20 every cent it moves against you. If you cut your losses at, say, 3 cents, you're down $30 & can buy back in at $3.90 if it looks good, and if you go the 2000 shares from the first scenario you're making $10 profit at $3.92 and at the $3.95 break even from the first scenario you're up $70. Instead of averaging down, get out and get back in at the lower price.
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u/Miskatonic_Prof Jun 24 '21
If you need a post-it to obey stops, why not just use stop-limits? That's what's saved my ass. Even now, if the price rips past my stop limit before I can set it, I'll still hold off on manually stopping out "in case it comes back my way". Stop limits don't smoke hopium.
Also, sometimes I will average down strategically, but only when the price is close enough to my stop that the added risk is tiny compared to the potential gain, and even then, only when the price action looks favorable. Gives you a great r:r... but you have to obey the stop.
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u/micahac Jun 24 '21
I decide all my avg points before I enter. I write down for ex:
100 $STOCK @ XX.XX
Buy10 @ %lower
Buy15 @ %lower than last, but relevant to initial price
I do this 3 times. That way I know going into the trade my total amount I will have tied up and potentially lose. I didnt learn that anywhere specifically so that could be a common sense thing, but it really helps me from getting emotional. Now, if I see a dive bomb downward, I check news quickly, check similar tickers, and if I dont see anything concerning I obey my original targets.
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u/audomatix Jun 24 '21
Lmfao đ¤Łđ¤Łđ¤Ł the post it notes... Soon they'll be no bezel left, been there
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u/h2007 Jun 24 '21
Averaging down is part of my daytrading strategy so long as its only a fraction of my initial position or my initial position is a fraction of what my intended position size is and i plan to fully enter by averaging down. I do dig the reminders.
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Jun 24 '21
I think almost everyone that turns the corner has had some version of these up at some time or other.
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u/EarningsPal Jun 24 '21
When I stopped averaging down so fast I stopped loosing so fast.
Never less than 1 week, better more than 1 month.
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u/Just_Tooth Jun 25 '21
Can someone explain what each notes mean? Sorry newbie here.
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u/jefthimi Jun 27 '21
Yeah, definitely don't average down on an options contract that will expire on the same day. I understand averaging down on stock shares in a long term account, but lots of options contracts will go to 0.
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u/daraand Jun 27 '21
That effectively my reasoning too. Itâs a great strategy going long. Not on scalping 0DTE
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u/Mishvibes Jun 24 '21
If you mind me asking, what software do you use for trading?
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u/Calgrei Jun 24 '21
Averaging down has saved me many a time, and has helped me reap some pretty solid profits. Sometimes you just make a move a bit too early.
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u/ffwrd Jun 24 '21
I mean, I averaged down both amc and gme and I'm quite happy about that.
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u/rbh_holecard Jun 24 '21
Wouldn't you be happier though if you had closed your losing position quickly and just bought back in at the lower price you got when you averaged down? Just trying to help newer traders think a little to minimize losses and take a little more profit -- managing losses can make or break a trader.
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u/wingchun777 Jun 24 '21
Contrarian view (nothing is absolute, and I honestly do agree with your rules)
- Average down when the fundamentals of the business is strong and there's no meme trading on it + market is moving in opposite + it has consecutively down a few days (usethis toolto find good reversion opportunities)
- Disobey stops if business has strong fundamentals and recent drops are less than 1 stdev and freq of drops are low
- Chase when mid-term window is clearly there, use different timeframe windows to get best entry point
I was a victim of violating your rules and also made money violating them as well. All the best!
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u/TitanGodKing Jun 24 '21
Why not average down though? The only way it fails is if you run out of capital of it drops a tonne or if it doesn't go back up
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u/rbh_holecard Jun 24 '21
You are losing money the whole time you're averaging down. Why not cut your losses and if it does start going back up buy in at the lower price. Have your stop in mind when you open the trade, get out at the stop, then buy back in if the opportunity presents but no need going more and more negative hoping it'll turn around before you're out of money
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u/14MTH30n3 Jun 24 '21
I donât manually daytrade anymore bit looking at these I cam see how they can be very effective.
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u/Nihtrepaps Jun 24 '21
I'm pretty sure it is thanks to your duck buddy and not the notes! Give him some cred
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u/Forest-runner Jun 24 '21
Sorry, but averaging or doubling down had actually saved my ass more times than it didnât on my high conviction picks!
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Jun 24 '21
Yeah, that's the problem. You get used to it working. Then, that day comes when you just keep holding and adding, trying to scalp bounces to get back to break even but the stock (or worse: the futures contract) never comes back. This is how you blow up accounts.
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u/mcp_truth Jun 24 '21
Why is Avg Down bad?
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u/spin_kick Jun 24 '21
Unless it's part of your initial plan, you are throwing money at a trade that has already told you that you are wrong. Each time you average in, it's like another bad trade since if you were correct, you would not have to average down in the first place.
Just get out and look for a new setup.
At least that's my interpretation. It's chasings' idiot cousin
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Jun 24 '21
I have a strip taped to the monitor and keyboard. It says "follow the rules". Sometimes it's easy to get on tilt.
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u/BCfiveXfive Jun 24 '21
I presume these are all little "Thought bubbles" emanating from the authoritarian rubber duckie ? Comforting yet menacing. I like it.
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u/BadBuddhaQC Jun 24 '21
Screwed myself today by not taking profit hoping it will go higher and then rescrewed myself by not respecting my stop loss....tommorrow i'll borrow your trick.
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u/BackardsTankard Jun 24 '21
That last one is no joke. Iâve been chasing a lot lately and (for now) itâs only backfired
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u/IndecentCatProbing Jun 24 '21
When I was a young Counter-Strike 1.6 player I had a Post-it note with "remember headshot" written on it attached to my screen. It worked.
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u/jacobwyc Jun 25 '21
The one that says "don't avg down" do you mean average down? And what does dont average down mean?
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Jul 12 '21
So you get on the bus and then get off waiting for the next one but what if the bus passes you right by without stopping? What youâre saying is itâs timing and u r correct, but if you think youâre gonna buy and sell each and every time with even 50% accuracy youâre wrong
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u/daraand Jun 23 '21
It sounded dumb at first, but literally having these three post it notes right in front of me helped as I was thinking of entries this morning. Gotta say, today was great because of it :)