Most traders start out with a dream. And usually part of that dream is that once you’re a
successful trader you’ll have a lot more time for the things in life you enjoy spending time with.
Your family, friends, hobbies, spend time in nature and start other business opportunities you’ve
been dreaming of realizing. Besides making money, for many the main reason to start trading is
actually that they no longer want to spend 40 hours a week sitting in a office staring at a screen.
Unfortunately many traders end up doing the exact opposite of that. Staring at their screens for
hours each day, looking at charts and quotes. They don’t really have a precise plan of their
trading day. Instead they wake up, turn on their charts and wait for what they perceive as a
trading opportunity. No need to say that this often leads to overtrading, but let’s say our trader
has matured enough to be mostly free from such flaws.
Still being an active day trader he’s trading a lot in and out during the day, but being very
talented he usually comes out ahead at the end of the trading day. Trading the E-Mini S&P 500 he
manages to make a profit of 2 points a day on average. He’s trading two contracts so that’s 2.0 x
$50 x 2 = $200. Doing 10 trades on average each day, paying $5 round turn per trade, that’s 10 x 2
x $5 = $100 commissions we have to subtract. So his actual profit after commissions is $100.
Trading for 8 hours each day, that’s $12.50 per hour…for doing a quite exhausting job! Ouch.
Let’s have a look at our second trader. He knows his business very well after having invested a
considerable amount of time and money to learn about the markets. Our second trader trades a system
with precise trading rules, also in the E-Mini S&P 500. Let’s call it Ambush.
He knows exactly at what times of the day he has to take action. In his case, when to place his entry order and when to
exit his positions each day. This way he can easily plan his day, knowing that he won’t have to
watch the markets at all. Being a professional he takes his trading business very seriously and
religiously tracks each trade, checks his fill prices and so on. Still he doesn’t need more than 10
minutes each day to run his trading business. On average he makes about $105 per trade per
contract. Never making more than one trade a day, he just has to subtract $5 commissions which
leaves him with $100. As he just needs 10 minutes each day to place his orders, that’s $600 per
hour on the days where he actually trades! For doing a not very exhausting job…
What a difference compared to our chart watcher! Hope you see the light here. This is huge, and
once you realized this truth you can make a big step forwards in your trading career. Herein lies
the reason why I decided to move towards systematic trading many years ago. First of all watching
charts all day does get really boring once you no longer trade for the excitement, and I had a very
different dream of what my days would look like as a trader. But even more importantly I can use
all that freed up time for other business ideas, hobbies, to create new systems and to write
articles like this one and make additional money helping other traders.
At least I’d suggest that even if you’re day trading discretionary, take your time to really learn
about the markets you’re trading. Get some statistics and you’ll discover that every market has
times during the day where it makes most sense to trade. Focus your trading activity on these time
periods. They’re hardly changing over time so you can plan your trading day nicely. Truth is that
most of the time it simply is a waste of time and money to day trade. I can almost guarantee you
that you’ll make more money this way than trading all day long, especially after subtracting
All content on AlgoStrats.com is only for educational purposes to show you the type of trades that you may consider once you have learned to trade and analyze the market yourself. It does not constitute investment advice. Marco Mayer & Trading Educators, Inc. will not accept liability for any loss or damage, including but not limited to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
There is a substantial risk of loss in trading commodity futures, stocks, options, and foreign exchange products. Past performance is not indicative of future results.
Trading Futures, Trading foreign exchange on margin and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures, foreign exchange and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, foreign exchange, stocks or options on the same. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. You should be aware of all the risks associated with forex, futures, and futures option trading, and seek advice from an independent financial advisor if you have any doubts. In addition, the information contained on this website is not intended to be investment, legal, accounting, tax or other professional advice. If such advice is sought, or other expert assistance is required, the services of a competent professional should be sought.
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CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
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