MB,
First, let me tell you I'm a millionaire--on paper. In reality, I've got a relatively small account and I've been daytrading for just a few months. I read somewhere that the ideal trader would be a not-too-bright 12 year old boy (not sure why it wasn't a girl) because they wouldn't overthink a trade. They'd just do what they were told by whatever indicators they were using.
Paper trading is so easy it should be outlawed. I agree totally with William Dwyer's explanation of the differences between paper trading and real trading. I also share your concern about the unbelievably high failure rate of daytraders. Sometimes it's so scary I stop trading. But here's the reality- some people do make money consistently. Why? They find a system that works and they stick with it. Period! Any deviation and you might as well flip a coin. Therefore, you must find a system that works for you on paper, meaning if you followed every signal exactly, allowed for slippage and all the times you would have lost money by following those same signals, you would still come out ahead. Then you have to find a way to do it for real.
I put my trust in charts. Doing so is a lot like driving blindfolded and taking directions from a trusted friend next to you. Could you do that? And what if you followed their instructions exactly and you crashed anyway? Not a big crash, but a bunch of little fender benders. Would you still listen to them or just rip the blindfold off and use your own judgement? No one can know what the market will do. My charts don't know, either. They just help me to identify lower risk opportunities. It's difficult to accept that the market is unknowable. That's why a lot of people get angry with it, as if it did something to them.
So, in closing, let me give you an example of just how hard trading is for me. At the end of every day, I print out my charts for whatever stock it was that I followed. Every day that chart shows how much money I would have made if I followed it exactly. There has not been one day since I developed my system that showed a loss. Never! Do I follow my charts exactly everyday? No. Do I make money every day? No. In fact I often lose money. Not much but still, it's striking to lose $250 on a day my chart says I should have made more than $1000. What's the problem? The chart says to do one thing and I don't believe it. I can't believe it. So I don't follow it. We're taught to think, right? Well, thinking can get one into a lot of trouble. Market Makers are masters of masking their intentions. I don't know how anyone can make money just by looking at Level II (but some do). Without my charts, I'd be truly lost. My goal is to follow them better everyday, and I'm succeeding (slowly). As an aside, this is my first year and I've doubled my trading capital (through sheer luck). I realized if I didn't change my ways I wouldn't have a dime within a month. So I stopped trading and started reading. Now I'm very, very careful. Too careful (that's why I'm having difficulty following my chart's signals). I'm also really cheap, so I'd never allow a small loss to turn into a big one. Conversely, it's hard to let a small win turn into a big one. Live and learn.
Good luck,
Paul Kaz |
