Source
r/Daytrading•
StepBoxStep

The Simple Cause of Failing at DayTrading and How to Win Consistently

Identify these three states during the trading session: Happening, Not Happening, Wanting Something to Happen.

  1. Happening - your setups are appearing - take the money-managed trade.
  2. Not Happening - your setups are not appearing - wait and do nothing.
  3. Wanting Something to Happen - you introduce emotions - you take an inappropriate trade, lose and then try to dig out of the hole.

Check your daily journal for "Average Total Efficiency" and see how many times your Efficiency<0 when you have been wanting something to happen.

When you can recognize when your mind is generating the emotion that is wanting something to happen, and then take a step back, you have put yourself in a position to win consistently.

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Posted Jun 25, 2023, 3:39 PM UTC

7124
ezpdt•

The simple cause of failing at day trading is breaking your rules.

If you don't break rules #3 never happens.

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SoggyResearch4•

It really is that simple.

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[deleted]•

[removed]

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StepBoxStepOP•

Thank you for your comment. Yes, you are right! Maybe what I was getting at is why we break the rules we have so painstakingly examined.

https://www.youtube.com/watch?v=0XafQHxHKak

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ezpdt•

Nice short vid, haven't seen it before 👍

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Speshul27•

Just to add on to this, I think this works provided the trader backtested and knows the stats of their strategy. They could have learnt the strategy from someone else and just blindly followed it. They'd see small successes here and there, then later see a long streak of losses and wonder why it's not working and start to question if they did anything wrong from their analysis, when it's really just a part of the strategy. That's when they start doubting themselves and start breaking rules, overtrading etc.

So trust your strategy. You should know how much you can lose with it and you shouldn't be surprised when it happens.

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PossessionSmooth2453•

Agreed. Getting to know your strategy deeply makes you want to follow it. Also, people need to understand that they can't take every possible setup, that your strategy might not have a trade today even if your best friend made a lot of money. Every strategy has its timing and even if you spotted a setup, if it doesn't belong to your strategy, you don't have to change it..you just have to wait.

People are way too focused in the money. "I wanna make that sweet money every day, every session"

Few times I hear : I wanna stick to my rules because that will bring me money eventually

3
The1Matthannew•

After going over my trades, one thing became insanely clear: if I follow my stoploss, I make money over time. If I don't follow my stoploss rule, I lose shitloads of money quickly. Simple as can be, lol

9
CETxgasa•

Talk about getting liquidated real quick and assuming the liquidation price will never hit. lol. I learned my lesson after multiple liquidations.

When I don't see my setup playing out, I check my AI-driven crypto research platform for the best course of action to take.

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ScarletHarktrades multiple markets•

Small correction - it's not about "winning consistently", it's about "gaining more than you lose over time". A 20% win rate is profitable if the winners are 10x the losers, for example.

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StepBoxStepOP•

Thank you, I appreciate your comment. And yes, there are many days when the win rate is less than 50% (sometimes well-less) and it is still a winning day. I consider the day a "loss" though if I introduce the thought of "wanting something to happen" even if there is a dollar gain.

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ScarletHarktrades multiple markets•

Indeed, for many (most?) retail traders, trading is an addiction and their brokerage's smartphone platform app is just DraftKings for a different game. Not trading - not having some action - is unconscionable and that's where #3 kicks in.

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heller1011•

It’s not just about the setup, you can take good setups all day and still have a 40% winrate , the real edge we have is risk management ,win more than you win than what you lose when you lose

Even if people are a 70-80% winrate without risk management 1 loss can be catastrophic

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StepBoxStepOP•

Yes, I totally agree, thank you for your comment.

On some days, setups just consistently crumble and have to be abandoned with a good stop loss and the whole day runs like that. On other days, the setups just run. And still on other days, setups will fail and then work. That said, I certainly enjoy it when setups are working rather than when they are not, but both happen and have to be accepted as part of the day. Risk Management makes all the difference, once you have graduated from introducing emotions into the mix and can concentrate on your risk management.

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heller1011•

Awesome! You have a great understanding and mindset of what makes a successful trader

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StepBoxStepOP•

You are very kind with your words. The best a trader can do is try to follow along as best one can and try to accept what is being presented by the market in the very moments it is presenting itself (which is difficult enough for anyone).

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[deleted]•

[deleted]

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MiracleOfficial•

I disagree a little. You're right in everything you said, but none of that matters if you don't have edge. Most traders have not identified their edge. Discipline, psychology, rules, cutting losses, letting your winners run, risk management, waiting for your setup, etc. doesn't matter if a trader doesn't have an edge.

It takes a lot of work to identify your individual edge. A trader can't learn their edge from someone else because no two personalities are the same, and no two traders are going to trade the exact same way. You can incorporate aspects of another trader's strategy, but you have to make it your own.

Most traders fail because they don't put in the work to identify what works for them. They can work on discipline and all that stuff after they have something that works in the market.

That's like a bodybuilder having the discipline to go to the gym every day, but they do a bunch of random stuff every time they go with no proven strategy just because no ones on the machine. It's great they're disciplined, or it's great that they're waiting for someone to stop using the 20lbs dumbbells, but that's not going to give them results.

6
Juniors234•

Well said. It took me a while to find my own strategy of trading early gap ups in the pre market sessions. It’s uncommon, and probably not recommended for most traders, but for me it fits my personality (I like to wake up very early each day anyways).

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NathMcLovin•

So, while this may seem vague to those who are looking for "the magic bullet" sort of advice, I agree that is plays a huge part in success. Emotional discipline can definitely be the difference in being a profitable trader and not being a profitable trader, and many people underestimate that!

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Also, could you explain the "Average total efficiency" that you mentioned you track in your journal?

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StepBoxStepOP•

Thank you for your comment. I look at all the Trading Analysis included with standard NinjaTrader.

https://ninjatrader.com/support/helpGuides/nt8/NT%20HelpGuide%20English.html?statistics_definitions.htm

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https://preview.redd.it/ctq4i6czw68b1.png?width=1404&format=png&auto=webp&v=enabled&s=b3ac752905bf1a44540c709d4f8f9456c13ab6f0

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NathMcLovin•

Ah yes, that makes sense!

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max-the-dogo•

The simple cause of failure is 99% don’t have any edge

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Busy_Philosopher8345•

I guess I should start actually having rules then...

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Maleficent_Mine6218•

Looks like I need to add 'don't break rules' to my list of hobbies.

3
kenjiurada•

I agree in general, but it’s not totally accurate. This is only really true for mechanical strategies. Any element of discretion can very easily cause you to lose if you simply didn’t get a good entry or your stop loss was too tight. I’d say that risk management is job number one, it just happens to come after developing a strategy.

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Constant-Signal-2058•

Good post. Trading can be a simple, yet incredibly complex task. For me, nearly every aspect of my life has to be in good order if I expect to earn. A healthy physical and mental state can work wonders.

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Woohyy•

Those are Painful lessons I learned before, that I need to read, remember, and not forget in the few seconds that are crucial. Algo’s seem to have a slow and eroding way to pull me away from those rules. Mine are worded differently into plans of time; 2 seconds close if happening, and no need to go to 2 and 3. Having time as a limiting factor prevents 2 and 3, but I admit I still break it. Oh my humanity.

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Mindless_Bread_653•

This should be very helpful because it is a reminder to self awareness.

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Rarindust01•

Oooo that's pretty good. I just want my setup to happen. 🤣

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[deleted]•

[removed]

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