Late Night Musings

I’ve been practicing day trading since April of last year. I’m sure I’ve mentioned it before but at the beginning of this month I started trading live with cash. This is real day trading not in the simulator. Real money is at risk and I could lose it all. Insert evil laugh here.

Much of what people call intra day trading can be summed up in one sentence: profit more than you lose. Sounds really easy but it’s not. There’s so many pitfalls you can find yourself in if you’re not careful.

Click through to read more….

This month has been interesting so far. I’ve set a daily target of 2% of my total account size. I consider it a winning day if we can hit that target. My results so far:

  • Tuesday March 1: $1, technically 97 cents but I’m fine with the small rounding
  • Wednesday March 2: $145.06
  • Thursday March 3: $174.83
  • Friday March 4: $103.06

Yes that’s right; Tuesday was a profit of $1. That was only because I lost a trade for my max loss per trade of 17$ then profited$18 on another trade and ran out of time because I was still working my day job.

But the other three days were quite successful as my daily target is 2% of my account size which during this week was ~$64 a day. As you can see I blew through that on each of the other days during last week. I need to say that I was surprised as Wednesday and Thursday were very successful because I was very in control of my psychology, focused on what I wanted to do.

It’s important to note that I use stop-losses that protect me if the trade doesn’t go my way. For example, most trades taken will have a 20 cent stop loss put in place, automatically by my trading software. I then try to get a 2:1 return on my risk. Using 20 cents as a stop loss, I am going to try to gain a profit of 40 cents before I start closing my position. We’ll now go through a better description:

In my morning scans, I find a stock that is gapping up from where it closed yesterday. That’s interesting because it shows strength and that people have been buying the stock outside of normal trading hours (0930 – 1600 EST). There’s the potential for that stock to continue up after the open OR it might sell off as holders of the stock decide to sell their positions and take profit. I decide I’m going to watch it using one of the strategies I follow. The market opens, the stock shows more strength and I buy in at $40. My software will put a stop-loss in place at $39.80 so that if the stock starts going back down, my stocks will automatically sell at $39.80 and I will take a 20 cent loss on each stock I purchased. However, if I’ve made the good decision and it goes up, I will wait until the stock gets to $40.40 before I consider taking profits. Some of the big numbers from last week were from me holding even further past the 40 cent target. That is the ELI5 explanation. There’s far more to know about what it takes to day trade but this isn’t a tutorial.

I’ve built out a spreadsheet that describes the next ten months to the end of 2022 and I’m having a hard time believing this could be something I could do. I’ve included an abridged screen cap below to give you an idea of what I’m talking about. The idea is that if I can get to the point where I can replace my salary at SAIT, this is what I want to do for an occupation.

This shows the month of March, 2022 and the expectation to the end of the month. Change Value column is my target for the day, Actual is what was actually generated for the day. The change value column is auto generated by Excel with a 2%

This could blow up in my face. I have a very small account currently and when it’s gone, I’m done. I have other money in a TFSA and in the bank but I need for this to be self-sustaining or it’s not feasible going forward. I can’t imagine having loss after loss, watching my balance decline and try to rationalize putting more money into the account. That sounds like insanity to me so I’ve got what I’ve got and that’s it.

I’ll continue to post about this experience as new things pop up. Going to be a slow and steady ride, if I get my way.