Soullfire

The discussion is going back and forth between the feasibility of earning a living via day trading with modest account levels and the likelihood of being able to sustain a high continual rate of return on this modest account level. As Thales has stated, apples and oranges are being compared here. Day Trading is NOT the same as long term investing and therefore one can't hold day trading to the same rate of return constraints as one would normally apply to long term investments. For a better comparison, Day Trading is closer to Poker then it is to long term investing. No fundamentals are taken into consideration...just the short term information available in real time. So let's use a poker player as an example... The very top poker players can earn millions in a year. Go down a few levels and the earnings are in the hundreds of thousands. Now entry into poker tournaments requires satisfying a buy in requirement. For this discussion, let's say the buy-in is $50,000. Now if an expert player consistently wins playing tournaments at this level to the point where his annual income average $200,000, does it make sense to apply long term investing rules to his earnings? If we do that he would be generating a 400% return for which long term investing rules say is not sustainable and would lead to an infinite amount of money. However, that also assumes that the poker player is going to now enter tournaments that require a $200K buy-in, and then attempt to win $800K, which isn't the case at all. His $50K used to play is NOT an investment in the long term sense of the word. He is not compounding his winnings into bigger buy-ins, so there is no infinite return generation going on. So despite the modest buy in level, some people can make a great living from the game that far exceeds the buy-in amount, and do this on a consistent continual basis. Now back to day trading. The "buy-in" for day trading is a minimum of $25K, for which you get 4X trading leverage- and an even higher multiplier if working at a prop firm. So for example, let's say a good day trader has $50K in their account. That gives them at least $200K buying power. If the day trader finds a good trading set up, they can easily buy a few hundred to a few thousand shares of most stocks to exploit the move. This means a good day trader should on average be able to make at least a few hundred dollars per day. There are several high beta stocks that move as much as over 4 points a day so this isn't a stretch by any means. Obviously, being able to predict these moves based on real time information isn't simple and many fail at it, but the point is there are those that are able to do it. Summing up, a day trader need not have a huge account to be able to generate a living income. The day trader only needs to be able to afford the "buy-in" to trade high beta stocks. Earning just an average of $200/day yields $52K/year.

I registered just so I could chime in on this discussion.... The discussion is going back and forth between the feasibility of earning a living via day trading with modest account levels and the likelihood of being able to sustain a high continual rate of return on this modest account level. As Thales has stated, apples and oranges are being compared here. Day Trading is NOT the same as long term investing and therefore one can't hold day trading to the same rate of return constraints as one would normally apply to long term investments. For a better comparison, Day Trading is closer to Poker then it is to long term investing. No fundamentals are taken into consideration...just the short term information available in real time. So let's use a poker player as an example... The very top poker players can earn millions in a year. Go down a few levels and the earnings are in the hundreds of thousands. Now entry into poker tournaments requires satisfying a buy in requirement. For this discussion, let's say the buy-in is $50,000. Now if an expert player consistently wins playing tournaments at this level to the point where his annual income average $200,000, does it make sense to apply long term investing rules to his earnings? If we do that he would be generating a 400% return for which long term investing rules say is not sustainable and would lead to an infinite amount of money. However, that also assumes that the poker player is going to now enter tournaments that require a $200K buy-in, and then attempt to win $800K, which isn't the case at all. His $50K used to play is NOT an investment in the long term sense of the word. He is not compounding his winnings into bigger buy-ins, so there is no infinite return generation going on. So despite the modest buy in level, some people can make a great living from the game that far exceeds the buy-in amount, and do this on a consistent continual basis. Now back to day trading. The "buy-in" for day trading is a minimum of $25K, for which you get 4X trading leverage- and an even higher multiplier if working at a prop firm. So for example, let's say a good day trader has $50K in their account. That gives them at least $200K buying power. If the day trader finds a good trading set up, they can easily buy a few hundred to a few thousand shares of most stocks to exploit the move. This means a good day trader should on average be able to make at least a few hundred dollars per day. There are several high beta stocks that move as much as over 4 points a day so this isn't a stretch by any means. Obviously, being able to predict these moves based on real time information isn't simple and many fail at it, but the point is there are those that are able to do it. Summing up, a day trader need not have a huge account to be able to generate a living income. The day trader only needs to be able to afford the "buy-in" to trade high beta stocks. Earning just an average of $200/day yields $52K/year.