Day Trader

In trading, does an educated person (AKA someone with a degree or two) have any advantage over someone who's got less schooling under his belt? Or is the high school drop-out equally likely to succeed as the college graduate?

Asked by acedeuce almost 12 years ago

That's a great question. I think, weighing the totality of what I know and what I have seen, that it helps to be educated ... but not that much. At my firm the most successful guys are weighted more toward the former Ivy league types, but there are plenty of people who have almost no book smarts at all that have been successful. That said, I don't think that a top degree or a top education is what makes those traders successful. I just think that people that are driven to succeed, who are willing to work hard and who generally have good work habits are more likely to have been driven to succeed in both school and trading. If there is a high school dropout who is just as intelligent and driven as a Harvard MBA , I don't think you'd be able to predict who the better trader would be. However, I do think that you are more likely to find a smart, driven person who has a Harvard MBA than is a high school drop out. In other words, I think predominantly the best traders are well educated, but I don't think they are successful BECAUSE they are well educated.

What can a good day trader earn in a year?

Asked by fatman99 over 11 years ago

It is very hard to come up with a hard "average." The problem is that at my firm and in day-trading in general the structure is very bottom heavy, skewing the averages. Not only that, but the market changes drastically from year to year. In 2008, a monkey could have made a lot of money day trading... the same was true during the dotcom boom. On the other hand, the years following the dotcom boom and the recent financial crisis have been very tough. Day-trading depends on volume and volatility. The ideal trading environment is under a very confident or very panicky market. Uneasy trading markets are extremely difficult. The market since the financial crisis of '08 has been very uneasy. With all that said, let me try to give some parameters. I am going to put all these numbers into Net Profits before the firm takes its share (the amount a trader takes home will depend on the % of his profits he gets to keep, which changes for everyone). That's the amount of money a trader has made on the market after he pays commissions and any taxes or other fees. To get an idea of what someone takes home, typically beginners keep 35% of their profits and advanced traders keep 60%+. Intermediates will fall somewhere in between depending on their success. A firm with 100 traders might have 30 first year traders ("beginners"), 30 people who are still finding their way in their 2nd or 3rd years ("intermediate") and about 40 guys who have made it and are consistently profitable ("advanced"). Of the new hires, break-even might be the average in a bad trading year like this year, whereas in a good year you could see the average first year trader make $100k. Of the intermediates, there is a wide range. Some traders are breaking through and can make $400-$500k, others are barely treading water. Id say the average intermediate is making $100k (keep in mind, that a lot of the failing traders have left before they reach the intermediate levels) in a bad market and significantly more in a good market, maybe $250k. The advanced guys are all doing really well. The best of the best traders at my firm will make over $1M in a bad year and can absolutely crush good years. That might be a handful of guys though. Most advanced traders are more likely to be making $300-400k in bad years and $700k+ in good years.

What financial instruments do you trade?

Asked by crymeariver about 12 years ago

Domestic Equities. Any stock traded in the US on a major exchange.

Are you evaluated as an employee on any basis other than how much money you make for the company?

Asked by champagneroom1 about 12 years ago

Nope. Though certainly being likeable and/or helpful might help someone get a little more leeway in tough times.

What skills does it take to be a successful day trader?

Asked by biggiepac over 11 years ago

Speed. Focus. Consistency. High Emotional Quotient. I think day trading for the most part comes down to processing information quickly, rather than accurately. Combine the ability to process quickly with someone who can also be unemotional focused and consistent, and chances are you will have a very good day trader.

What movie or TV show gives the best portrayal of what it's actually like to be a trader?

Asked by BuyLowSellHigh about 12 years ago

I can honestly say I don't know of an accurate portrayal in movies about daytrading. There was a season of Wall Street Warriors that followed a day trading firm that probably gives you the best idea of what day trading is. I think it was Season 4 and you may be able to find episodes online.

As a day trader, do you have to close out your positions at the end of each day? Will your firm let you take a position for a week or two (or longer) if you want to? Or is it literally "DAY trader"?

Asked by monty over 12 years ago

Generally, yes, you have to close out each of your trades every day. More successful and experienced traders are allowed to keep "overnights" but even they will only do that on a very small percentage of their trades. Nobody who starts out keeps trades overnight and even those who do do it rarely. Day trader, for the most part, really means DAY trader. Of course, there are exceptions to the rule, and there are a few people that trade on a much longer term basis. But they are exceptions.

What's the difference between a trader and a hedge fun guy?

Asked by C.J. over 11 years ago

Well, they are both in finance and they both buy and sell securities, but after that there isn't too much in common. The most basic way I can explain the difference is this: Day traders often make hundreds of trades a day based on order flow. Hedge fund guys are trying to find angles/value/market inefficiencies and may spend weeks or months picking their investments. Thats oversimplifying it, but what day traders and hedge funds do really aren't very similar, so its a tough comparison.

Will you get fired if you have a bad week / month / year?

Asked by DaveJP almost 12 years ago

It all depends on a trader's previous success. IF you've shown you can make $50k in a month, then losing $50k in a month is no big deal. As long as your losses stay within proportion to your gains, you won't be fired. But if a trader is making $10k a month and all the sudden drops $100k pretty fast and doesn't look like he's able to turn it around, he is in trouble. It’s also in his best interests to just quit, since he probably won't see a paycheck for a long time anyway.

What advantage do you have working for a trading firm as opposed to online trading from home?

Asked by Jen over 11 years ago

Hi Jen, Please see my answer above to the question, "What stops successful traders from leaving to become independent traders (or starting their own firm), instead of sharing their profits with a firm?"

What stops successful traders from leaving to become independent traders (or starting their own firm), instead of sharing their profits with a firm?

Asked by Fernie over 11 years ago

#1 - Risk -If things go wrong, your own money is not at risk (you may lose your job, but at least you won't go broke). Also, it's much easier psychologically to trade someone else's money. #2 - Capital/leverage - legit trading firms will give their good traders a lot more money to trade with than they'd ever be willing or able to trade on their own. #3 - Technology - trading firms can pay for better technology, have professional IT people on hand, develop new technology, etc. The average independent trader is going to have a VERY tough time keeping up with technological developments on his own. Also at a trading firm, one trader might find a new way to take advantage of new technology and spread it to the rest of the floor. There are lots of shared ideas, which brings me to the next one: #4 - Opportunity to work as part of a team. There is a lot of shared information on a trading floor. You would lose that if you moved on your own. That said, lots of people have gone off on their own, and I'm sure many of them have been successful. Still, all the successful traders at my firm stayed on. I guess it makes sense: those guys that understand risk/reward and just want to focus on trading (not the entreprenuerial stuff) are more likely to stay on and are also more likely to be successful.

What's the male : female ratio among traders at your firm?

Asked by epique about 12 years ago

There are two female traders and over 100 male traders. I don't think this has anything to do with the hiring practices of the firm. Day trading does not seem to be a business that attracts many females.

How much luck is involved? Are there well-respected day traders at your company who you think are just getting lucky?

Asked by BringIT over 11 years ago

If we define luck as random chance, then 0% of it is luck. If we want to include variance in the definition of luck than there is plenty. Generally daytraders are making so many trades in a day that the sample size gets pretty high, pretty fast, and it’s next to impossible for any consistent success to be based on luck. The same few guys are the best traders at the firm every year, month and even week. You can certainly make bad trades and luck out and make money on it and you can make good trades and lose on them, but make enough bad trades or good trades and eventually you will earn what your combined decisions suggest you should earn. Daytraders are trading hundreds of thousands of shares a day and so reversion to the mean happens fairly quickly. There is definitely a lot of variance, but very little "luck" as strictly defined.

What sort of training did you get?

Asked by snoopysnoop about 12 years ago

Not a lot. It’s kind of sink or swim. There is some structured teaching (once a week classes) when you begin, and you are given a trainer when you start. But that’s about it. How much instruction/training you get depends largely on who you are placed with as a trainer.

Do a lot of traders take speed or focus-oriented pills etc to stay on top of their game all day?

Asked by billy valentine over 11 years ago

I can tell you that I don't see much of it. Some guys take a supplement called "Jack3d," which is a stimulant used for focus. There is lots of coffee and tea around. But I have not seen any drugs or anything abusive. In fact, I saw more adderall and ritalin usage in college than I see on the trading floor. That doesn't mean it doesn't happen, but I think it does mean that drugs are not a part of the normal culture. People do talk about how popular drugs were "back in the day," but I don't see it around now.

Do different day trading shops employ different trading strategies? Are some consistently more profitable than others?

Asked by MAT14 over 12 years ago

Yes and Yes. Every individual trader is going to have his own style and his own strategies, but firms are going to have some styles and strategies that tend to work better for them, that they are able to teach better, and that their trading program is built around. Its only natural. There are trading "shops" that are consistently successful and make a lot of money. Other shops don't do nearly as well. The quality of recruits, training, and especially in today's trading world, technology, make a huge difference in the success of different firms.

What's the most a typical trader will make or lose in a single day?

Asked by COSTANZA almost 12 years ago

Beginners will typically make or lose no more than $3k in a day. Intermediate traders often have 5 figure days and rarely lose more than $5k. Advanced traders can make $50k in a day and lose more like $10-20k. I've heard of traders making millions in a day and also of losing hundreds of thousands.

Do you trade your money or your employer's?

Asked by retro_travis over 12 years ago

I trade 100% my employer's money, which I think is pretty rare. I think at most purely day trading places, traders are expected to put up some percentage of money. At the more successful firms the company will provide all the capital, but as I said, this is rare.

How emotionally fulfilling do you find your job? What do day traders contribute to society in your opinion?

Asked by ja1lbreaker almost 12 years ago

Emotionally fulfilling? Does not apply. The token answer is that traders add liquidity to the market, which, I tend to believe is true. Neither Mom and Pop investors nor big institutions are going to be able to buy or sell shares unless someone is on the other side of that trade. That’s what traders offer: someone to take the other side of the trade for you. That might be about it.

Are junior traders expected to be profitable from the moment they walk in the door?

Asked by i-looooove-gold about 12 years ago

No. In a bad market, no one is profitable for at least a few months. Most don't really turn the corner for 7-9 months. If after a year you are not profitable, the company will pretty much give up on you. In a great market, as I said, a monkey can make a profit, so there are plenty of people who are profitable right away.

Barring all the possible legal issues, do you think Facebook was priced appropriately, and did you get in on the action?

Asked by Unfortunately Not Zuck almost 12 years ago

I assume you mean from a process standpoint? Because I can think of very few things that are more clear than that facebook was not priced correctly. From a process standpoint, I can't pinpoint anything the bankers did incorrectly, except maybe underestimate the sophistication of the market. This isn't 2001 anymore. The market generally demands that companies show earnings. I played around a little, trying to buy a few bounces, to mixed results. I didn't have a "play" on Facebook, if that's what you mean. IPO's typically are not my game. I'm sure plenty of traders crushed it though.

I have heard that the "covered call" techniques taught by companies such as CSE can be very lucrative,even in a down market. And that you can on average earn as much as 5-6% returns daily? Even with some extensive ongoing training,is this possible?

Asked by DavidB over 9 years ago

If I have a stock that has doubled but is expected to possibly triple or more.. should I sell it and take the profit then buy more or just just let it ride till it gets to the target price?

Asked by dok0619 about 5 years ago

What time does daily candle for forex opens and closes ? Does the chart changes in a few days or few weeks or it remains same forever ?
Thanks

Asked by Tshering over 6 years ago

Why do you think about Trumps economy?

Asked by Seth over 3 years ago

why did my td ameritrade option order cancel before experation And I did not cancel it I ended up with a pl $1.50

Asked by Trademan825 over 5 years ago

I read your answer about what day trader's bring to society, which didn't sound like much. How would you describe the CHARACTER of most day traders? Are they just completely self-interested people who will they do anything for a buck?

Asked by Raul d. over 11 years ago

What is the significance of 514 shares being treated and those other codes that we see once in awhile thank you if you could give us a list of those codes that would be nice

Asked by Hub Investor about 3 years ago

I recently read that something like 80% of trades are done automatically by computers that suss out market inefficiencies. How can humans compete with that?

Asked by Chad Wilkes over 11 years ago

We’re looking for Daytraders willing to test our virtual trading platform. It’s completely free and designed to be a lot of fun, but apparently it’s not as interesting as we thought, so we’re looking for some honest opinions from specialists.

Asked by daytraderbox.com over 10 years ago

Ok,here's my question.I'm with a licensed USA broker,but I noticed a UK broker(FCA)cert,has hundreds of more products but does not accept USA customers(firm ETX in London.Are there any loopholes or any way to trade with these guys from USA?How to?

Asked by Herbert Marshall about 8 years ago

What type of impact would there be if the bids/ask showed an average of all the traders skill level next to it? For instance of a frequent trader had an imaginary rank of say 10 and a new trader, 1 with an avg bid rating of 5 at that bid. Good? Bad?

Asked by Jason about 10 years ago

how do you lock in profits when using a trailing stop?

Asked by john over 7 years ago

how do you lock in profits when using a trailing stop?

Asked by john over 7 years ago

Is it considered a day trade if I buy stock in aftermarket and sell it the next day?

Asked by Will about 5 years ago

I have heard that patterns repeat themselves in trading. Do patterns that happen in the morning tend to occur throughout the day, or is it more widespread than this?

Asked by LB about 1 year ago

Hello.
I trade Nasdaq only. I just wanted to know when the market opens at 09 30 - 10 00, where the manipulation takes place, is it market execution orders or limit orders that they use?

Asked by Kaaris about 1 year ago

What is the best way to exempt some taxes? The TTS status but is there any other tips or tricks that you could give? United States/ Texas

Asked by leec1617@outlook.com about 1 year ago

I trade from home with my own money. I find emotions completely take over during pullbacks if I'm long. I panic and sell then sit watching the screen as the SP rises again beyond where I bought it in the first place! How do you deal with emotions?

Asked by Dan Jenkins over 10 years ago

I am watching Spring (S). For the past hour and a half almost all trades going off at the bid price without a price change. Is the Market Maker accommodating a huge order and will then let the price go up? Is this a bullish sign?

Asked by Richard Goyette over 7 years ago

That's Sprint

Asked by Richard Goyette over 7 years ago

Hello, I am thinking about dropping out of college and becoming a full time trader. Do trading firms hire traders with no college degree and with only two years of part time trading experiences? Could you give me some advice on how to get started?

Asked by Julius about 8 years ago

WEIRD thing I noticed?last night i watched utube vid of a guy trading on lets say sept.10 2019@10am-price of xxx was $5.00-but pull up stockchart today and go back to that date and time,and the chart doesnt match what u c on his utube. its way off,Y?

Asked by GUY - NOTICED WEIRD GLITCH about 3 years ago

As a sophomore Honors student in college, how should I go about starting a trading career?

Asked by JT over 10 years ago

Hey,How come past candlesticks change? Say like 2/2/21 @ 3:41 I watch live a price of stock is $85.00, but if u check the chart a week later, and look back at 2/2/21 @ 3:41 it’s no longer $85.00, shouldn’t prices be the same ?

Asked by Guy almost 3 years ago

I keep 1 stock from each day trading stock. Will this have any penalties at the year end (ie, profit/loss/flash sale). Example when I buy X stock 100 unit, keep 1 and sell 99. This goes with all the stocks I own. I currently have 65 stocks qty 1@. Thank you.

Asked by Demon almost 3 years ago

Hi, I dont know if you would be able to answer this question, but I am having trouble getting into trading because I am an American Living abroad and havent resided in the US for over 3 years... can you recommend any online brokers that would take me

Asked by gizzles619 over 10 years ago

is there a technique traders in E-mini ES futures market can use to combat fill problems when the price makes a sharp move against them so that they don't lose a lot of $?

Asked by dc about 10 years ago

If I sell a naked put option with expiration a year out, on a stock that I want to own anyways, do I need to have that money sitting in that account all year in case I get assigned? Or do I have time to get it in there after I’m assigned?

Asked by Joe over 3 years ago