October 7, 2020

My move from Day Trading to “Trading for a living”

By equrve

Trying to move from day trading to trading for a living. My day trading system worked well and generated approx 60 percent returns in 5 months which is seems like a good enough result. But then a few things were bothering me which made me rethink and brought be back my drawing board a little.

trading for a living
Trading for a living

The problem

The first thing I realised was that while my system return was good it had drawdowns which sometimes were big time wise, and this was when the system and market conditions were quite favourable. So I backtested my system to some more past years. My initial tests were on 2015, 2016, 2019. 2017 came as a shocker with 6 months of drawdown. Now while eventually this does make money, I felt that I could not trade this system for a living. Not to mention trading futures in Nifty is mostly feeding the brokerages and taxes.

The Solution

This made me feel that I needed to have another system on top of these systems, which may not be scalable, which may not get me huge wins, but will consistently give me small returns to pay my bills. [Note I have other means at the moment to pay my bills, but its goal to pay them all by trading sooner than later.]

With this in mind I looked around at other methods of trading. So I came across at something which I always looked down upon, scalping. The problem with scalping is always the cost associated and profits are so small that one loss can wipe up a lot of profits. Therefore I was still not convinced about the way. But finally after a lot of experiments, during which I ended up making 26 trades in 1 day, and tinkering with various Indicators and price action, finally settled for a system.

This new system that I trade has small targets but loses are smaller. There is trailing, but not trailing to eternity. There is also a profit target. This gives me an opportunity to take multiple trades a day. Trades that the system generates are between 1 and 6 in a day on a single instrument. Right now its trading only USDINR. The results have been good. Have been able to pay most of my bills.

Automation [Trading for a living]

Which brings me to the last part. 6 trades were becoming too much for a lazy person like me. And being a coder myself and a mechanical trader, I decided to automate the system. I managed to automate the system (took 2 days of coding and 2 weeks of procrastinating). And it gives me time to explore other systems and look back at my previous system.

As of now this is the update from me. So my compounding experiment has given way to trading for a living experiment. Will keep updating how this goes and soon come up with the analytics for this too. Will also try to keep writing more on this journey, the successes the failures.