My friend who has been trading for profitably for 6 years moved from position trading to day trading. He got sucked into day trading This is a guy I spent hundreds of hours a year teaching him the ropes about position trading. He made very good money trading 8 - 10 times a year but he wanted more - he wanted the $10k+ a day big trades. Thanks to falling for the flashy trading literature and false promises doing the rounds everywhere And so he took the plunge Jan 2019 with his account size of $450k. Less than 18 months everything has gone. Vanished not a dime! I said it guys no one on this planet and consistently make money day trading. You might have a few lucky years but the market is going to take it all back. As an ex-floor trader, if you want to be in the day-to-day action, you might as well take the lesser evil and start scalping provided you have the right exchange fees, broker agreements etc. Scalpers don't have to worry about overtrading (The number 1 killer for day traders) and just trade the spread. I only know of 2 former colleagues who were still scalping the bund via Kyte Brokers. But even they have packed it in and gone into property development. They are much happier after saying adios to 30 years of scalping
Liked for the fact that you invested so much time into him. Other than that - hes a fool. What is in his plans for now & the future ? A comeback ? If no, then a fool + a looser (giving up), not a worthy person to remain friends with. Almost as much as he had : timestamped
No criticism from me, 8-10 trades per year is very quiet. Yourself, also quiet on a similar annual trade count?
YOLO Get rich quick or die trying I put smileys as I too have lost big money in the past. Im suprised it took 18 months, maybe not as it was 450K. That was his mistake, he should have funded his account with just 50K or max 100K to start with. Whatever you start with will end up vanishing on the first attempt at day trading. You want to win back losses and that just digs you deeper into the hole.
Daytrading is certainly not as easy as the salesmen claim but it's not impossible. You need to be very fluid and adaptive though. There's no fixed rules, everything is negotiable. Anyway, I'm still around after more than a decade.
I have been day trading for 15 years. My system gives about 30 day trade signals per month, and that is enough to keep me busy. These days I also have a monthly loss limit: Down 6% for the month I stop trading for the rest of the month. So if the month starts out bad i don't even take all 30 signals i just stop. Keep powder dry for the easy months that are profitable from the get go. Some times I hit the monthly loss limit 3 months in a row Having to stop day trading is hard, because its very addictive. And that is main problem with day trading its so addictive and sometimes rage inducing that you cant stop yourself and losses get out of control.
On a seperate note, i hope your friend is feeling ok. Big trading losses can lead to depression and even suicide.
With all the information in the thread, the obvious thing is the utter lack of risk management and position sizing. Day traders like to swing for the fences each time at huge percentages of capital at risk on each trade. A lot of traders think they can make a fixed say $10,000 a day or more. Quite possibly, too had too many trades going all at once which increases the risk exponentially. Just my 2 cents, if he had proper risk management, and assuming he knew how to trade, he should not have blown thru the $450,000. He should not have been risking more than $9,000 per trade and have stop losses in place, right after he entered a position. Hard stop losses that is. Had he been doing that, he would have kept most of his capital even if he sustained losses.
$9000 is 2%. Personally i wouldnt risk $9000 when starting out. I would start risking $500 per trade, and scale up to $9,000 eventually. Be extra conservative with initial capital, but take more risks with profits. Avoid going into a big hole with your initial capital. Lets say i made 100K, so i was at 550K, i would obviously be betting more than $500 per trade at this point. But if i fell back to $450K i would be back to betting $500 again.