Last Updated on June 19, 2022 by Quantified Trading
(Some personal and random thoughts on day trading)
I love day trading!
I have day traded for over twelve years and I still like what I do. Actually, I love it! Day trading is some kind of addictive. I need my daily shot with research and trading. My day is simply not the same if I don’t trade, even though I suck at trading. My analysis is good, but my trading is a far cry from perfect. Certainly, there are ups and downs, but all in all, this is a very challenging and intellectual job. You have to be adaptive, flexible, and creative.
But day trading is a struggle
It’s a constant psychological struggle. At times trading is very painful and can cause headaches. Sometimes my strategies stop working and I have to start all over again. The pain and suffering can be pretty hard. If anyone disagrees and says it’s a pleasant ride I simply don’t believe it. It shouldn’t be painless either. No pain, no gain. Only the pain and suffering get me to another level.
Losses trouble me, but don’t frighten me (well – perhaps once or twice a year!). Unfortunately, I have the bad habit of letting losses eat into my private life. My life outside trading gets affected. Do you think you can trade and carry on your private life as normal? Most likely not. If you do, congrats to you. Of course, it’s the bad days that eat into my private life. If you’re a daytrader it’s either your passion or it’s your dream. And if you find yourself dreaming it’s time to cool it. When losing money many hide in a state of denial. Be candid. Otherwise, you can’t get a grasp of the situation.
Day trading requires change
Looking back, I have evolved a lot. My approach has evolved and changed. If I examine my recent trading and compared it to what I did some years ago, I’m thinking I’m evaluating a completely different trader.
Sometimes I’m frustrated. Really frustrated. Feels like I’m burnt out. The head feels exhausted and sleeping is difficult. Things take time. Strategies take weeks to test, sometimes months.
Testing is meticulous and a lot of it is routine. Only to find it’s been a complete waste of time. After spending days of testing, it’s hard to realize it’s been wasted. Back to square one. Sometimes I lay in bed thinking out new strategies.
However, this is the way to learn and to gain knowledge. The saying no pain, no gain, is very true. Suffering is a part of the process. I’m very good at suffering so I have no problem with that. Most people are not, which means lower chances of success. You have to suffer to get better at what you do.
Execution is boring, research is fun
Execution can become boring. It’s the thinking and analysis that is interesting. After a tough day with losses I always ask myself why I’m doing this. Most trading days are not good, either I win or lose. I dislike losing, and very often kick myself for trading too small when I make money.
My single biggest mistake is cutting my winners short and letting my losers run. I had my biggest loss ever on a Thursday in 2007. That was a horrific day for me.
Unfortunately, the next day was even worse even though I made 6 000 USD. I wanted to bury myself. Out of fear of losing like the day before I did the cardinal sin: turned off some of the strategies and traded small. I was so afraid of losing I didn’t think straight. Guess what? Needless to say, it was the best trading day ever. I would have made close 100 000 USD if trading as usual. The embarrassment was complete. Yet another bad trading day, even though I made money. I’m still working hard to detach myself from the money.
However, usually the next day all is forgotten and I’m yet again in front of the computer looking to test other strategies, the part I really love. Having a nice zip of coffee and let the world pass outside my window. Don’t bother about austerity riots in Southern Europe, bombings on the Gaza Strip, the civil war in Syria, or corruption in Russia. Just focus on trading and the other very important issue for mankind: football/soccer. Perhaps looking at some nice Harley Bobbers on the internet (I’m trying to build one myself). Never mind about endless nonsense political issues over details, more nanny state, more regulation, and new rules to protect us from ourselves.
Trading is all about focusing on yourself and what you can actually master. Concentrate the energy on the markets and block me from the rest of the world.
The advantages of day trading
Have you thought about all the advantages of trading?
I have no inventory, I’m not working for the man, have no troublesome customers, no employees, no commuting, no need for lawyers, no low-cost competitors and no arguments with the boss. To me, this is quite appealing! It’s the perfect job for introverts like me. I can manage some suffering and a few sleepless nights to avoid working for the man.
All I need is the following: laptop/PC, Excel/software, table and chair, and internet. I’m mainly trading prop and don’t need a significant deposit either. Instead, I invest the earnings in real estate and in long-term positions. The barrier to entry is extremely low. My monthly overhead is about 400 USD. The best tool I have is my brain.
If you want to open a cafe, you need to invest a lot of money and perhaps sign a long-term contract for rent. The odds for going bust are just as high for cafes (I presume). In trading, you have close to unlimited possible gains. The most you can lose is a small deposit and your time. The risk-reward seems quite appealing to me!
Over the years I have traded for longer periods from Arizona, Sweden, Malta, and Eastern Europe. I have traveled a lot within Norway, my native country. To summarize, I have been away from my home about 1/4 of the time. And all I need is to carry my computer and have access to the internet. I’m very grateful to have this opportunity. I can take time off whenever I want. However, I prefer to trade as often as I possibly can. Why?
- This is a numbers game. If you have an edge, trade it as much as possible.
- I never know when a good day suddenly comes around.
- I have to collect statistics every day.
- I need to be in the game to “stay in the zone”.
I have numerous times been in a cafe/restaurant and traded. Last summer (2012) I have traded outside my home about 15 times. In which other “job” can you do that? Of course, this is just something you can do once in a while. You can’t base your job working from cafes, at least I can’t.
Day trading forces you know yourself
Daytrading has made me know myself a lot better. My weaknesses get very exposed in the markets, and so do my strengths. I learn to master myself! I have learned to be disciplined and taught the value of continually learning. I manage risk and pursue opportunities and face uncertainty. That makes me respect risks, but also embrace them to make money.
Trading pushes me to find opportunities, to stick with what is rewarding and exit what is not. There are times to be aggressive and at other times protect what I have. Prudence! I have become humble and got ridden of my ego and be aware of my vulnerabilities. A lot of what I have taught me I can extend to other fields. The analytical aspect of trading is immense. I have learned to accept nothing and question everything. Rationality is so important. What I have learned from trading I can use in everyday life.