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How can I make 'big profit' in day trading if every stock I've seen only raises by around £10?

I've actually found some companies that make me a £30 profit, is this what I need to go for? I'm just worried after commission I'm not going to make anything. I would invest more money but this is all so new and I don't wanna lose everything.

Also, how do I work out my profit? I think I've been doing it wrong...

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    Be very careful of companies that offer to double or triple your money quickly. They are either using leverage to multiply risks incredibly or are scams. – D Stanley Mar 15 '18 at 13:29
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    "I would invest more money but this is all so new and I don't wanna lose everything." Yeah, I would say day trading is a bad idea for you – user1723699 Mar 15 '18 at 13:54
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    You started day trading before you knew pretty much anything about how it works. Please, for your own sake stop day trading, like, right now. Put your money in a low-cost index fund and spend some time learning about investing. Only day trade with money that you'd be happy to lose at a casino. – Eric Lippert Mar 15 '18 at 15:23
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    Honestly, OP, you NEED to listen to this advice: stop day-trading immediately. I don't mean to sound rude, but you clearly do not understand how this works. Until you do, just do paper trading. – turnip Mar 15 '18 at 16:30
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    Ah day trading...did you hear about the guy who made a small fortune in day trading? He started with a large one. – zzzzBov Mar 15 '18 at 19:26
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Large profits in day trading are made via buying stock in volume not large rises in price. If you buy 100000 shares of stock and it rises by $10 (or whatever currency) then you sell for a large profit. If you do not have the money to buy in volume and aren't willing to assume a large amount of risk, I'd recommend against day trading.

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    And if you do have large amounts of money, I´d still advise against it - especially if you have to ask for the basics on the internet. – Daniel Mar 15 '18 at 15:09
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    Well, technically market-makers are professional large-scale day traders. But that's a specialized role for which you need to qualify, and I'm pretty sure it requires that you (as a market-making company) have an actively enforced risk management strategy. – MSalters Mar 15 '18 at 16:51
  • This answer doesn't mention margin trading or selling call options - both of which are common day-trading tactics. Thus I would say it's incomplete. – Chris Mar 15 '18 at 19:05
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    @Chris The asker is obviously a beginner so I kept the answer as simple as possible. Asking about margin trading or options would probably warrant a new question. – Zackary Murphy Mar 15 '18 at 20:03
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    @Chris: If day trading = gambling, day trading on margin is gambling with borrowed money. – jamesqf Mar 16 '18 at 3:33
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Avoid thinking about potential swings (gains/losses) in £. Rather think in percentages (%).

i.e. stock XYZ's rise from £30 to £33, is a +10% gain.


When factoring in commissions, also think of commission costs as a % of total position.

i.e. if your total position is 100x shares (100*£30 = £3,000) and commission is £10 per trade (£5 for entry + £5 for exit) commissions will account for (£10/£3,000 = 0.33%).

Thus to break even on this £3,000 position, XYZ must rise by at least 0.33% (or to £30.10).


When you employ large position sizes (total order cost), total commissions costs as a percentage(%) will decrease drastically.

Overly simplified: £10 commission is £10 regardless of size. Placing a £10,000 order, the £10 commission only accounts for 0.1%. Placing a £100 order, the £10 commissions now accounts for 10.0%. Very hard to overcome commissions when working with small capital.


Note: for the reasons above, when working with small capital a "buy-n-hold" strategy (long term) can achieve better returns because you are giving your position more time to realize gains while accruing less total commissions costs. There are also other strategies, like "swing trading". Overall, when choosing the best strategy, your capital, time, goals and psychology will be important variables, but math is King.


Robinhood which is a ZERO-Commissions brokerage may soon be moving to your area.

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    You don't even need to just "buy-n-hold". There are many alternatives to day trading and "buy-n-hold". You can be in a position for weeks or months and still take advantage of better returns from small position sizes. – Victor Mar 15 '18 at 22:44
  • I already up-voted you, but your edit makes it even a better answer. – Victor Mar 16 '18 at 8:44
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How can I make any sort of profit in day-trading...

You (very, very likely) can't. Don't do it. The best thing would be to stop day trading right now.

The reason is that even buying and selling large volumes (so relative transaction costs are minimized) doesn't guarantee you making any profit with day-trading (otherwise we would all pool our investments and do it).

To constantly make profit with day-trading you probably need, fast market access, vast knowledge to make up complex mathematical models and the capability to process large amounts of data in a short amount of time.

Very likely you don't have that, so don't do day-trading because it would just be like gambling for you. On average you would lose lots of money. Even if I repeat myself, the summary should be: Don't do it.

And if you still really think you must try it, simulate it and do paper-trading first for a couple of months. Only if you make a decent profit over a long term on paper, start using real money.

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There are lot's of long answers here, mostly with correct information. But they have a lot of words.

Question: "How can I make 'big profit' in day trading?"

Answer: "You don't."

Not unless you get really really lucky. Like going to the casino and hitting zero on the roulette wheel multiple times in a row. You mention fees which you pay on the buy and the sell each time. I'm not sure how it works in the UK but in the US, you pay a higher tax rate on short term gains. The upshot is you are running uphill and against the wind.

There are certain periods where day-trading becomes popular. It's during bull markets when most stocks are going up. Going back to the roulette example, that's like playing red on a wheel with extra red numbers. When the market starts trending down flattening out, the 'geniuses' that were winning at day trading tend to crap out and find another get rich quick scheme.

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During the tech bubble in the late 90's, the State of Georgia required brokerages in Georgia to hand over the records of their day trading customers for research. They found that 90% of day traders during the bubble lost 100% of their money. Only a small percentage of customers made a profit.

I have decades of experience in the financial markets. In addition to my work in financial institutions, I have a doctorate in financial economics and I do research. People like me are looking for people like you in order to take all of your money. You cannot win this game. Please do not play in it. It is obvious that you do not understand the rules. Please go to a very boring and very well respected broker in your area.

Get references. Interview the person just like you would any tradesman. This is no different than hiring a plumber or a cancer surgeon. Their knowledge and skill matter.

Big profits are slow in coming and are long-term profits at that. If you want to get rich quickly, send me all of your money. I won't ever give it back, but it will save you all the work of losing it ten pounds at a shot.

If you do go to the broker, listen to what they say and ask them why they are suggesting it.

After that is done. Go to the library and pick up books on accounting. You need about one year of college accounting to be able to do your own investing. Then, when that is done, find a basic undergraduate textbook on financial analysis. You need the first one or two classes in financial analysis. In particular, you need to understand thoroughly the time value of money. When you get through that, then pick up Benjamin Graham's 1972 book "The Intelligent Investor." When you are through that book, get Graham and Dodd's 1943 book entitled "Security Analysis." It is still in publication because it is that good.

Once you are done with that, take some of your money and invest it on your own. Don't take all of it. You may have no talent at this. There is a reason no one will let me be a neurosurgeon. Lots of people are alive today because I am not allowed to do surgery.

If you don't want to learn first and don't want a boring broker, I can send you my address and you can wire me everything. Of course, I won't give it back. Please don't do this on your own. Please, this is a field where boring is wonderful.

  • So what you're saying is day trading, swing trading, any short term-investing... Is usually a foolish pursuit? – JohnOsborne Jun 18 '18 at 21:35
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    @JohnOsborne unless you are working inside an institution, yes it is generally a foolish pursuit. When I teach students who also daytrade, their jaw usually drops when they find out the things they don't realize about how it works. I did a formal evaluation of a mathematician's idea on how to beat the market maker. Had years of tick level data. He used his model for a year before I saw it. He got lucky. Outside of that specific set of trades, it rarely worked. On average, the strategy lost quite a bit of money. Even the very skilled rarely survive validation testing. – Dave Harris Jun 18 '18 at 22:05
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Take the price-per-share it was at buy. Take the price-per-share it is now. Subtract them, hopefully you get a positive number. Now multiply by the number of shares you bought. That is your profit if you were to sell right now.

Subtract out the two trading fees (to buy and to sell) and that is your net profit. Example:

  • Buy 10 shares at $100 ($1000). Pay $10 trading fee. Total cost basis $1010
  • Sell 10 shares at $104 ($1040). Pay $10 trading fee. Total proceeds $1030
  • Net proceeds $1030 - $1010 = $20.

golfclap

You may be figuring out the broker makes more money than you do. That's true. You could dramatically increase your buys/sells. Same deal but we bet $10,000 instead: earn $400 minus $20 in trading fees = $380. Of course we also risk a lot more money, so this is complete suicide.

The general idea of the stock market is that economy tends to grow, so invested money tends to grow - even a monkey can pick a stock portfolio that grows over a long enough period of time**. But not overnight. Because there's no appreciable market value to be gained in a single day, day-trading is a zero-sum game. You win only if someone else loses. Now look around at all the daytrading noobs like yourself, and also the professional funds managers, Wall Street traders and market makers - they are smarter, have more experience, have better information, and have 'bots. Who wins this zero-sum game? They not you. You are cannon fodder.

Another downside to day trading is the massive tax paperwork. American IRS wants you to list stock, cost basis, buy date, sale price and sell date for every trade and that can quickly get into the hundreds of trades, making for a lot of tedious paperwork.


** ask John Bogle, he proved that mutual funds managers are monkeys. And that is one book you really, really ought to read.

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Day trading can be very profitable if you do two very simple things.

  • Buy only when you KNOW 100% that a security will rise in the next 5minutes

  • Buy with a leveraged position to the hilt

It's that simple.

In order to be able to do the first part, you need high quality and low latency information.

There are 3 main ways to do this.

  • Be really really really smart

  • Use really really really really really really fast computers

  • Get insider information

The second part involves not buying the instrument at all, but a derivative. You can buy forwards, swaps, CDOs

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    when you KNOW 100% its called insider trading and it is illegal! – Daniel Mar 16 '18 at 11:46
  • @Daniel nope it's called arbitrage. It's often due to mispricing or slow information. – Aron Mar 16 '18 at 13:18
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    Can you give a real-world example in the context of this question. I.e. the average joe can use it, – Daniel Mar 16 '18 at 13:28
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    @Daniel The point is, you'll be playing with the big boys if you want to make money day trading. If you don't know how to steam process an IP packet bypassing the kernel and be able to price a flow product in a few microns we don't even speak the same language. – Aron Mar 16 '18 at 14:24
  • @Daniel As they say, the early bird catches the worm, and he doesn't leave left overs... – Aron Mar 16 '18 at 14:26
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The best advice (given above) is to stop trading if you don't know how, since there is a great potential to lose a lot of money.

Good advice that has already been given:

% gain or loss is the only thing that matters. You should size your orders according to the amount of money you're willing to risk on a particular trade (share price isn't really a factor).

Your question implies that you're trying to employ a buy and hold strategy but you're asking about day trading. This alone might indicate that you need to do more research first.

Investing is a grind. You will not get rich right away if you're doing it right, but you may produce some good income. The amount of income you can make depends directly on the amount of money you have. Trading equity probably isn't worth it unless you can trade $5000 weekly or so, given the amount of time you will spend worrying and commissions paid. If you trade this amount of money skillfully, you can probably consistently end each month with 30-50 more dollars when you're starting out. This translates to a roughly 7-10% rate of return, which is likely better than a bank will give you and more than you can expect from buy and hold in an average year. The downside is it requires work. When I started day trading, I treated it as a part time job and made about $10/hr. I think this is a healthy way of thinking.

I disagree with previous answers that say investing is necessarily zero-sum. Traders use many different strategies on many different timeframes. At the scale you can work at as a human, high frequency trading isn't very visible most of the time, and buy-and-hold may expose you to too much external risk that a fund manager is more prepared to ride out. Helping someone exit from a riskier bet that still has a little profit left helps everyone. Selling into a trend when you've made your target might allow an employee to get his stock bonus shares. Think of it more like a garage sale.

My advice is this if you still intend to do it:

First off, consider who is paying you and why. Nobody is going to give you money for free. In the abstract people pay day traders for the service of providing liquidity to distressed shares. A share price declines from its peak and they want to exit to preserve their longer term profits. A share prices has become too low and could use a spark of purchasing to start a rally. Your job is to give somebody the exit they want at a fair price, determined by market orders or to reward employees who are slogging along during periods of low prices. This is what you get paid for.

You will absorb losses from time to time, but more often, assuming you do your homework, you will get a share at a slightly lower than consensus price and be able to exit it at a slightly higher price. As such, you must learn to conquer fear and buy shares whose prices have declined recently, and may still be declining. You can do this confidently by determining a logical basis for having a higher share price based on historical ratios for the company and industry. Additionally, you must set an exit price target and timing for yourself and conquer greed by selling a share that has risen or may still be rising.

It's worth reiterating that you must enter ownership at a low price and exit it at a higher price. The amount of time you own a share represents risk because you are diversifying along the time axis rather than across companies. You must conquer fear and greed to at least a small degree to trade well.

Share prices follow cycles that alternate below the consensus price and above the consensus price on varying time scales, and these are semi-predictable. If you day trade, you will likely become comfortable with one time scale and a few strategies you are prepared to evaluate and employ over and over.

I started trading by just sitting down to my new scotttrade account, believing that a share price was too low and buying a bit of it, exiting when I felt good about getting a little money. You can start simply if you're willing to learn.

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