Note: I have recently stopped day trading. This is due to 4 reasons:
- Day trading futures is getting more and more difficult.
- While slightly profitable, I was not making enough to justify the time investment. I never got over the hump where I felt confident in increasing size past 2 lots.
- I do not have time for it during market hours due to the need for family time and other hobbies.
- I can swing trade stocks with less time commitment during the week and a better ROI.
I’ve updated this page, but keep in mind that it was written when I was actively day trading futures.
Here is some advice I have compiled for those who are interested in and/or are new to day trading.
The first question you must ask yourself is if you really want to do this? I tried for many years and it took me several until I was making a little bit of money. Even after almost more than 5 years I’m still not making half of what I made before as a software developer. So depending on your job and if you like it, it may not be worth it. 3 of those years were more than full time, working evenings, weekends, etc. I think it takes about 10,000 hours to be able to make money in trading.
If you’re doing it part time, say 2 hours/day during the week and 6 hours on the weekend, you’re looking at 12 years!! I don’t want to discourage but rather tell you exactly what you’re in for. It really is a full time job and you have to be very motivated, even obsessed with it to succeed. It will be the biggest challenge of your life.
Also know that when trading professionally, it’s really boring. You sit & wait for a trade and if you get distracted you miss it. It’s even more boring when trading on simulator and it’s very hard to remain disciplined and do it. I doubt many people can trade on simulator for many years, I know I couldn’t.
In theory one finds one setup that works and just increases size to 100 contracts. It’s not that easy. I traded 1-2 lots for several years now. It’s hard to increase size unless risk is totally under control and that’s quite challenging. Stops too tight = get stopped out. Stops too loose = big losers. it’s not easy finding the balance. And the market is changing over time so it’s like I was chasing a moving target.
Trading US EST evenings:
Trading US EST evening will not be good. The markets are really slow. No major cash markets are open. I don’t recommend trading this time. A better alternative would be to get up early and trade European markets and even ES pre-market. May not be easy for you to get up so early though, and even then, it will be during the slow period around the European lunch, and when the US has news releases (around 8:30 EST).
Tools for trading:
If you want to practice, NinjaTrader is free for simulator use and has market replay which looks & acts exactly like real time. I’ve used it a lot. The “issue” is if you want to do market profile & volume profile, you will need paid indicators. I have used the Acme Volume indicators from back when they were cheap, now I find them quite expensive. If you are using NinjTrader 7 there are some free GOM indicators for profiling, but they require recording the tick data which is a pain because your PC has to be running or you miss the data. For NinjaTrader 8 the GOM indicators are paid.
I have also used Investor RT (around $60/month I believe, I also used the pro version of market delta which is more). IRT has a replay but the problem is it doesn’t have a DOM so you can’t trade it on sim but you could paper trade it writing down entries. So my preference is NinjaTrader so that I can have everything in one application, and also because I’m a programmer and I can program it in C#.
You don’t need to buy ninja until you’re consistently profitable on sim so basically your costs would be whatever volume profiling indicator you use. Brokers no longer give free data feeds, so count on around $20/month for data
I think ES is the best market to trade. Others trade it especially those following FT71 so you can compare notes. And it’s slower than some of the more volatile markets. Stay away from anything volatile like crude, euro, gold, etc. ZN is another good market but I just focus on ES. Focusing on 1 market is best.
Set aside around $10-$15k for your trading account and plan on loosing at least half of it and maybe all of it depending on how good your discipline is. So plan on another $10-$15k to reload it assuming you don’t give up.
I use a daily chart, 30min market profile chart, a 5min chart with composite profile & volume profiles, and to time entries a footprint chart and fast tick chart. That’s about it. I use VWAP & cumulative delta and that’s about it for indicators except for my own proprietary indicators. Anything with a lookback period is not going to be very useful and this rules out MA’s, stochastics, RSI, MACD, etc.
Books & Webinars:
I’ve probably read 30-40 trading books and I found that most books were not very useful. These are the best that I’ve read:
- Mind Over Markets
- Markets in Profile
- Dalton‘s free webinars
- FT71‘s webinars & chats (requires a small donation to charity)
- Reading Price Charts Bar by Bar
- Diary of a Professional Commodity Trader
- Reminiscences of a Stock Operator
- Market Wizards
- The New Market Wizards
- The Very Latest E-Mini Trading ( This book is good for beginners to give you some ideas on how to use Market Profile)
I have done trials of many trading rooms and my opinion is that none of them were very useful to me. I recommend doing a free trial any time you can in order to learn something new but I do not recommend investing money in them.
One room I was in the guy claimed to make around $4k/day. He decided to trade live showing his DOM for a month and during that time he barely made money. Another room I tried, I learned that he was not reporting all his trades particularly his losses. Another room the guy would only tell you he took a trade after it was profitable (thus keeping quiet about losers). In one popular room a member compiled performance stats and the guy, widely known as a profitable trader, lost money. I’ve seen so many scams that it’s not even worth it to get involved in these rooms.
A consistently profitable trader will have a huge salary and the freedom to do whatever they want. Running a trading room is a huge commitment. It’s like having a job. The two just seem incompatible to me.
The only course I can recommend is from Balance Trader but it seems it is no longer available. Please note that this is not a trading system. It focuses on the “big picture” and teaches the concept of balance and how to identify balance areas and then to look for trades around these balance areas. It does not cover timing entries, trade management, or anything like that.
Trading forums may seem very helpful to someone new, but I would caution against spending time participating in forums. The reason is the forums are full of unprofitable traders. Even worse, many of these unprofitable traders are pretending to be profitable trading gurus! This can be very dangerous to someone new. I can’t count how many hours I wasted investigating ideas & methods I read about on forums. It was a wild goose chase. Most forums are full of “the blind leading the blind”.
I met one guy who learned how to scalp the DOM and he wrote (I’ll paraphrase): “I wish I could delete every post I ever made because it was all wrong”. I feel exactly the same way. I used to write on forums about a cycle method. I tried explaining what I was doing, how it worked etc. The truth is I really didn’t know myself. I thought I did at the time but now I realize I really didn’t. It was useful for me to try and explain it and show examples, but was it useful for anyone else? I wish I could delete all those posts as it would only lead people astray.
It’s been years since I stopped participating in forums. The time I had spent at forums was then channeled towards studying my charts & trades, or doing something completely different. Both of which were much more beneficial to me. Many forums sites are simply businesses that make money from advertising and/or donations.
I hope that helps. I hope to expand this in the future as I receive more questions so if anything isn’t covered here please let me know.