Why I’m Not A Day Trader
Like most traders, I was obsessed with day trading at the start of my career, it’s what I studied, it’s how I traded, it was how I lived. However, I quickly discovered that something was wrong. I just couldn’t seem to make any money trading this way. It was stressful, time-consuming, difficult and even maddening at times. I would make money on a trade and then give it right back. It seemed like I would take one step forward and then two steps back.
In short, it quickly became very clear to me that dodging in and out of the market all day, trading short time frames was really no different than gambling on a slot machine at the casino, I was just doing it from my home. I had spent more than enough time in the trenches early in my career to realize that day trading was unnecessarily difficult, I knew it wasn’t going to work for me and I hadn’t met anyone else it was working for. So, I had to evolve and try a different approach to trading or I was going to lose all my money, quickly.
This was when I decided to stop day-trading and start thinking differently about the market. I began looking into higher time frame charts and taking a lower-frequency approach to trading. I quickly found my groove once I began focusing on the daily chart and trading less often. It was a far less time-consuming, less stressful and just an overall friendlier approach to how I wanted to live my life.
I found that not only was I suffering less losing trades, I also would catch bigger moves and my trading costs (spreads / commissions) went way down because I wasn’t entering and exiting the market so often. Instead of taking 30 to 50 trades a month (or more) as with day trading, I was now only taking 4 to 5 trades a month some months.
Currently, I trade just 30 minutes a day from anywhere I want; I don’t need to be plugged into some multi-monitor trading desk all day. I actually get to live my life on my own terms; free and flexible. Ultimately, this style of trading and the life it lets me lead, allows me to enjoy the fruits of my trading much more than day trading ever could.
Day Trading Won’t Give You A Great Lifestyle
In Hollywood movies, day traders are often portrayed as young rich guys living a fast-paced life of fast cars, big houses and risky behavior that seems to always end up working out somehow. Hence, when someone first gets interested in trading this is usually pretty close to the image they have in their minds of what day trading will be like and what it will offer them.
My issue with this is that it’s basically completely wrong and totally misleading. Also, this misrepresentation of reality causes many traders to blow out numerous accounts and lose a lot of money before they figure out they need to take a different approach.
Do you like sitting in a chair all day staring at your computer screen? Well, this is basically what day traders do. You literally have to be at your computer for 6-8 hours a day to properly execute most day trading strategies. You have to take many, many trades in order to see the edge (potentially) play out over the course of hundreds and thousands of trades. Even if you manage to do this, most day trading systems require you endure a lot of losses simply because it’s a numbers game, not a high-probability edge like higher-time frame trading can provide.
The very reason we become traders is to make money and ENJOY a lifestyle that is different from a 9 to 5 office job where you are essentially a slave-drone worker to a company all day. If you choose to be a day trader you are basically a slave to the screens all day and your head is filled with information overload, stress, pressure and on and on, not much different than that 9 to 5 office job except that you might actually make money at the office!
Here’s How a Trader Gets a Great Lifestyle
When you make the shift from day trading / constant chart-watching to a higher time frame, end of day trading approach, a lot of things quickly change.
You suddenly gain a massive amount of time (which you’ll need to fill), your trading mindset becomes better and clearer and you are now moving closer to becoming a successful trader.
I recently wrote an article on how to trade like a hedge fund manager and in that article I discussed how hedge fund traders are not day-trading. They are not sitting there taking a 5 minute view of the market trying to duck in and out of it all day, to them that is just stupid, and it should seem that way to you too.
Trading higher time frames means you don’t have to be checking the charts all the time. You can spend just 30 minutes a day, trading from a coffee shop or wherever, it’s up to you. The point is, when it comes to lifestyle, the end-of-day trader wins easily against the day trader, it’s not even close.
You Won’t Make More Money Day Trading
A lot of newbie traders believe they will make more money day-trading than position or swing trading the higher time frames. It seems logical; you trade more you make more, right? WRONG. It’s so wrong that it makes me mad just thinking about the misinformation that is spread online, enticing beginners into day-trading, which is why I’m writing this article!
Here’s Why You’ll Make More Money If You Don’t Day Trade
Have you ever met a profitable, successful day trader like you see in the movies? No? Me either. There’s a good reason for this, it’s nearly impossible to achieve great success day-trading, let alone maintain that success over time.
Day-trading involves dealing with a lot of meaningless lower time frame market noise. This noise that is essentially random price movement on short time frame charts, is something that can easily slice your trading account into a million pieces that quickly flow down the ‘drain’ and out of your account.
As mentioned earlier, spreads, broker fees, etc. rack up very quickly when you’re day trading. Every transaction you make in the market costs you money, so when you’re trading 30 – 100 times a month (or more) those seemingly small costs will add up to a significant sum of money over the course of a year.
However, that is just the tip of the iceberg, so to speak. You’re going to have a lot of losing trades with a day trading method. In fact, most day trading strategies involve poor risk reward scenarios, like 1:1 or less. This is because you’re aiming for small wins when you’re day trading, also known as “scalping the market”, so you’re not holding trades long enough for them to turn into big winners. With small risk rewards of 1:1 or worse, just to breakeven you need to win more than 50% of the time, to offset spreads and commissions, this is very hard to do with a day-trading system that falls prey to the random market noise and intraday “churn” of the price action in the market.
If you decide to trade end-of-day strategies, higher time frames and focus on the daily chart time frame like I teach in my courses and members area, you’re going to have an easier time making money because you are not fighting the intraday churn of meaningless market noise. Instead, you are waiting strategically for a high-probability price action signal to form in confluence with the surrounding market context. These signals will produce bigger movements since you’re on the higher time frames. Also, since the higher time frames carry more weight, you’re more likely to get a win on any given daily chart signal compared to any given 5 or 1 minute chart signal. This means, you’re risk reward can become more favorable now, think 1:2, 1:3 or even higher! Hence, you do not have to trade as much nor do you have to win as much (as with day trading) to actually make a profit!
I don’t know about you but I am all about DOING LESS TO GET MORE!
You’re Not Going to Be Able to Quit Your Day Job and Day Trade All Day
A lot of traders seem to get the fantasy in their heads that they will simply be able to quit their day job and start day trading all day and somehow magically make money. This is not reality. Sadly, I know quite a few traders who quit their day jobs too soon because they thought they could make money day trading, only to find that not only were they not making any money anymore, they were now losing money from day trading!
How to Trade Around Your Day Job
Thankfully, there is a perfectly effective way to maintain your current job while you are trading. I’ve written many articles about trading with a day job, but the most important thing to know is that not only does higher time frame trading allow you to trade around your current schedule, but doing so will actually accelerate your trading progress for a number of reasons…
A day job is a natural distraction from the market, and may people need this because they simply become addicted to the charts otherwise. It’s important to realize that not only is day-trading very difficult to profit at but even if you manage to do so, the temptation from constantly being in front of the chart is just too much for most people to handle.
Your goal should be to make a trading routine wherein you are checking the markets sometime in the morning for 15 – 20 minutes and sometime in the evening / before bed for 15 – 20 minutes. Once you have learned how to trade properly, there really is no need to spend more than 1 hour per day looking at your charts. In fact, I would argue that after about 45 minutes to an hour a day, each additional minute you spend analyzing the charts will negatively impact your long-term trading success.
Don’t think about “quitting your job” right now. Instead, utilize your job to keep the income flowing steadily (this will help maintain a clear and calm mindset that you need for trading) and also to maintain a natural distraction from the intraday market noise that costs many traders their trading accounts. IF you are ever able to quit your job and become a “full time” trader, you will know when the time comes. Whatever you do, don’t go quitting because you “think” you can make money trading. Wait until you’ve BEEN making money consistently for one year or more.
Day Trading Does Not Give You More Opportunities
One of the most widespread misconceptions about day trading is that it provides traders with “more opportunities” (to make money). Sure, I won’t argue that you will enter more trades as a day trader, but are those really good opportunities to profit? I would say no, they are not.
In my opinion, an “opportunity” is something that will likely lead to something positive for you, and the greater “opportunities” people speak of in regards to to day trading are certainly not all positive. Hence, the higher quantity of ‘opportunities’ that day trading offers is not at all what it seems. I look at it as more opportunities to lose your money!
The Real Opportunities in the Market
The opportunities that a higher time frame, swing trader has are much, much better than those of the day trading variety.
Not only are the trading opportunities on the daily chart much higher probability than those on small time frames, they are also much better for your mind and your body. You are not sitting all day slouched over in a chair frantically combing the 1 minute charts for your signal to pop up. This is mentally and physically draining! Instead, an end of day trader simply follows their routine, checking the higher time frame charts at their predesignated times each day, for 20-30 minutes. They execute their trading plan and then walk away.
This is an opportunity to live the life you have always dreamed, and in my opinion, ONLY higher time frame trading affords you such an opportunity.
If there was any doubt as to why I am not a day trader, today’s lesson should have removed it from your mind. However, I didn’t just write this lesson to tell you why I don’t day trade, I wrote it to (hopefully) convince you not to day trade either. My number one concern is helping traders and teaching trading concepts that actually work. I don’t want you to lose money unnecessarily, so I don’t want you to day trade.
Trading the daily chart time frame in an end-of-day manner provides you with the best possible shot at making money over the long-run as a trader. I can tell you without a doubt, from 18 years of live market trading experience, if you go down the day trading route you are taking a huge detour that is only going to push you far off the path that will lead you to successful long-term trading.
If you are interested in learning more about the end-of-day trading approach discussed in today’s article and exactly how it all works and how I trade, you will learn this and a lot more in my trading courses. The concepts and strategies I teach in my price action trading course are the exact same ones that I use today and hopefully they will change the way you think about and trade the market as well as improve your results and ultimately give you the lifestyle you’ve always dreamed of.
To learn more about why I dislike day trading and how I currently trade with an end-of-day approach and higher time frames, you may like to check out these lessons:
- Why I Hate Day Trading
- Why You Should Trade End-of-Day, Not Intraday
- Watching Intraday Charts Will Harm Your Trading Results
Are you totally new to the world of forex trading? Get started on the right track with our beginner’s trading course
Check out some of my price action videos to see more in-depth tutorials!
If you aren’t yet a member of our private trading group and would like to learn more about becoming a member, visit the Professional Trading Course Page Here.
What did you think of this lesson? Please leave your comments & feedback below!
58 Comments Leave a Comment
Thanks boss,truely Truth of the article’s teaching,to me see and believe is better,I ran away from local times after experiencing all these things, and am more comfortable now as am high time.
The thing is, in lower charts you probably put very tight stop losses which perhaps from 10pips to 30pips. For me, it adds to your risk of losing or odds of losing. Because first and foremost, you do not only anticipating your odds of winning but also the odds of losing. With tight stop loses, you are more prone to being prematurely stopped-out due to unexpected/ unannounced volatility. Doesnt make sense to me. I prefer end of day trading using Daily charts to position my trade with favorable risk-reward, I can widen my stop loss to avoid getting prematurely stopped out.
Thanks Nial. Always educative
Second time I read this article but it is always refreshing to me. You see, why would you even want to make billions in one day. well thus you. the stress in ”day trading” is not easy at all. Take an example, the daily time frame formed a perfect pinbar ready for the market to take off in another direction and you are also using H1 OR 3o minute and so on, may be following a trend there. I bit you before the market breaks that trend that you are following to obey the pinbar on the daily time you may never get any key signal that tells you the trend is about breaking. Just like a subset in a universal set, so be it. smaller time frames are found within daily time and so if you use a smaller time frame with a SL within, you are within the universal set and market can play you like A BALL and move on. Even some times weekly signals are very much respected by the market than you expect. in such cases if you see for example a pinbar sell signal on the weekly but in the course of the week on daily time you may get a pinbar buy signal which usually happens just shortly and then obey the weekly sell one. Higher time frames are very safe and comforting to trade. you only need to remmember using smaller position size that gives way for wider SL, that is all. Thanks Nail.
Hi..I wan to ask in this market always gap up and gap down a lot..it involves a lot of risk.if day trade we could avoid this ,right?
How about H4? You also teach us to trade H4 on YouTube. I watch all your video. I like it very much. Some of traders calmly wait for H4 setup, enter and close it after few days. Not regularly watch the screen, we have mobile mt4 version nowadays. I think this is just for an experience traders that are really understand the concept of trading. Want to hear what you say about H4 TF. Tq
I totally agree with you there from my learning experience, now I plot my S/R zones on monthly chart , I have zones already plotted and saved once on all pairs I trade , so no need to be plotting S/R once done the first time.
Then when trading I look at weekly and daily for trend and for plotting trend line also use fibonacci on weekly and daily charts.
I then looking at daily again and 4 hours charts for recent price activities, candles stick patterns, recent highs and lows and determining my biases from there, working especially on 4 hours chart.
I usually decide during weekend what position to look forward to be taking at a targeted area for the coming week, so my trading during the week will be waiting for price to reach those areas and looking for specific candlestick patterns.
When I have decided to enter a trade, I then look at 1 hour chart for specific candle Print, especially after a re-test.
once I am in a trade I am looking and monitoring at 1 hours chart after almost but not always every hour at the previous candles that had been completed to see if the market is in favour of my biases, and manually move stop loss to lockin profits when necessary, this only take me only a few minutes of most hours. I never go beyond 1 hour chart.
Thank you so much Mr Nial, I can’t wait to be your student once I have an enough money.
what time of day would i trade if i live in a different part of the world.
Thanks. How would i know ‘ HIGHER TIME FRAMES’ . Please help.
End of day trading occurs around the same time New York USA closes for the day.
A very strong article! Thanks for your help.
My understanding is that bankers trade the 1 hour charts and may wait a week or more for the right set up. And these guys have advantages that retail traders do not. Respectfully, those claiming that it doesn’t matter what time frame you trade on clearly do not understand probability or random variables. Over the long run you are certain to lose trading on white noise. At best you can break even (highly unlikely) but you will certainly never accumulate wealth. Thank you Nial for the expertise and honesty that you share. Cheers.
Great comment John, I agree.
Hi Nial I like this article very much but my problem is since we live in different parts of the world for me am in Africa which is the right time for me to place my trades
This shouldn’t be a great worry friend. when/what time do the candle sticks/bars/market close for the day and start a new day? Am in Ghana, with different seasons we have 9:00pm and 10:00pm time changes. so you can trade after 9 or 10 depending on the season or early morning at 8:00am or some minutes to 8 when markets relax and continue. all times are GMT :00. Reason Nail emphasized on ”end of day….” is that, WHEN bars or candle sticks are complete for the day, they give you a clue of the possible direction of the market.
In my humble opinion, it is not logically acceptable if profitable trading is claimed to a certain time frame. That is misslead. So trading is not about relax, frequency, etc but how do you make profit consistently from market. It will be more relevant to talk about momentum in any time frames, event tick chart, that requires different technical approach.
When your paying a spread and commission, a tick chart vs a daily chart makes a very big difference, the lower the time frame the more you trade and more you churn your account due to costs, slippage and so on.
Guys if you don’t believe Nial about high frequency day trading and its cost, just open an account where you can actually see commission (brokers offer these accounts for scalpers)
and see for yourself after a couple of months. You also take into account that you are going to use much bigger position sizes due to tight stops so cost is very high.
100 trades per month x $10 (transaction cost per 1 lot) x 12 months = $12.000
that’s a very nice startup account you just blew thru commissions and broker likes you :)
Great stuff. Really appreciate it.
Trading IS all about relax and frequency, because it’s that what makes our psychology, our mindset, became more accurate to the real well successed trading. Who thinks that what matters is the ideal aproach relatively to the time frame, is ignorating the mind part, and the risk management part. Strategy must be the last concern about trading.
Hi Nial, one more excellent article, congrats. Since I start reading your blog, my entire carrer has chaged, for the best! I stoped lose money constantly, my life style has been better, i’ve got more free time to spent with my family, go to the church, and to study about trading psychology reading Mark Douglas books, and also a lot of your articles spread by the blog. So, thank you, and God bless you. Cheers
You’ve convinced me! And what a time to write his article! when only a couple of days ago I dropped even the 4hr in favour of the daily, because I’m sick of ditching my babies for chart checking, and I’m tired of the stress and financially fatal market noise in time frames under the daily! I’m actually up over 50% this year starting feb and realise if I want to keep that and grow it I need to switch quickly to the daily. Thank you so much for your course, it’s the best one around. You are absolutely 100% correct in what you’ve written here. Cheers!
I couldn’t agree more. Brilliant article. Traders take note.
I thought it will be more profitable and relaxing if I trade only 1 to 2 trade a month with weekly and monthly time frame? But It will be frustrating and more stressfull to wait very long time to make a trade, more over when we got loss trades.
Waiting can be a little frustrating for beginners, but it will compensate over time. We have to be patient, like Nial teaches. He is the proof that patient traders are more profitable.
am glad that you taught about what has been given me nightmare, ever since I started trading.thanks because I will put all that you discussed into practice in order to better my chances of becoming a successful trader.once more ,thanks alot.
Not true, it depends on your strategy, some strategies work fine on day trading and some are not…I know someone works on 5 minutes chart and sometimes on 1 minute chart for years and he is profitable.
I politely disagree, what I’ve written about here is in fact true. I would be very interested to compare the results of these person who is trading 1 minute and 5 minute charts, to another person who is trading higher time-frames.
scalping is merely gambling.
I quit day trading just now, nice article for beginners and losers
What about H4 charts? With a good pin bar strategy you can also make money there.
Interesting and educative as always. But what you did not mention is that you need larger stop losses (funds) to trade daily or higher timeframes. And also you may not see a trade setup for days or even weeks. To me i think the higher timeframes are for investors. So those of us with little funds have to trade daily to build our accounts. Thank you
Emeka. Wider stops does not make any difference because we just reduce the position size (wider stop = less lots, and tighter stop = more lots, yet we can still risk the same $ amount)
This kind of thought is what Nial always fight against. We can adjust our lots when we trade higher timeframes. But I think when a trader make an argument like that, he is thinking in a very small account, like 100$ or 200$. And in fact, with an account like that, even the smallest lots will increase his risk if he trades high time frames. So, if the trader has some few dollars, he should save more money, until he gets an ideal amount to get started, instead day trading trying increase his capital, which is pure illusion.
Take this… day trader stops 10 pips profits 10 pips, spread 2 pips and you just paid 20% to the broker. Swings 100 pips stops same thing we pay 2%
Exactly Simon, great comparison of costs, this is one of my points, I agree.
I have been both a day trader and a swing trader. But my equity curve headed up only when I switched from day trading to higher time frames trading and swing trading style. Now my trading performance and confidence level have increased, l closed every month in profit as a swing trader and a higher time frames trader. Thank you Nail
Hi Thanks Super
Always making sense, good coach and mentor.
Thanks ,good piece for both newbies and old traders.
Agree with you 100%. Trading is a lot like hunting. You cannot start firing bullets at every little movement you hear in the jungle. You have to wait before something interesting comes along, and even after all the wait, you can still miss the target shot. But that is the nature of the beast. You start waiting again with a clear head making sure you have bullets left for the next hunt.
Hehe what a comparison nice
I agree with u sir and this is ur article of very amazing i like swing trader and i like use larger frame times coz i just use weekly for charting and daily and four hours for trading by entry but I ask u plz if u ok
1 r u just technical only or fundamentals both ?
2 how to use swing trading with fundamentals ?
3 what u use frame times for charting and trading by entry ?
It takes me more than an hour to do it.
Taking notes takes a lot of time. The more you trade, the more time it takes to take notes. It is very tedious and hardly anyone likes to do it.
It forces me to trade less.
The second thing, when you start with a small bill, you can not buy everything. It’s difficult to set SL well on expensive pairs, which is why I choose cheap ones, such as AUD / JPY.
HUGE support for you, Nial, and I second all the comments so far. The common misconception in Forex trading is “quick wins and living a lifestyle” like the “old” tobacco ads in the 70’s and 80’s. Living the life…. Making money takes time and effort and the best “time” is slowly. I also tried lower time frames to fit around my work but I kept on missing the entries and it is very distracting. Daily time frames / swing trading is far less stressful and more accurate. Lower the lot size to manage the risk. You need bucket and buckets of patience though, because a good trade setup can take 5 – 10 days to materialize. Maybe that is a good article to write about next time, “How long does a Swing Trade setup take to materialize”. Regards
Truly day trading is difficult,very difficult but not impossible.The forex market is very unique and nothing like impossible exist in it.
Day trading gives you higher probability I agree but if you can create the edge needed for day trading,you don’t have to sit and watch the chart all day
I am a day trader and I trade averagely 2 hours daily and to top it all, I am making consistent profit.
Making money day trading is difficult and not impossible. All you have to do is create the edge for yourself and master it.
Day trading does NOT give you a higher probability, in fact day traders lose more money than any other type of trader, further day traders churn the account by paying commission and crossing the markets spread constantly.
If you understand price action as you say you do, you can trade from any time frame and it doesn’t mean you have to stair at the charts all day.It like saying if you go to another country your never going to understand the language,this is not true,but if you stay longer enough you will start speaking the same language.
The only thing that harms your trading is yourself.Not The markets
Hope this MSG find you well
I disagree David. The smaller time-frames are not the same as higher time frames, the short time-frame has far more random noise and their is far less weight behind the signals.
I believe nail was talking to beginner’s such as myself,
I starting of trading 1hr and H4 time frames and it was working out very well and making good profits for me… then I thought that if I switch to small times frames it would be the same but I was totally wrong as it is time consuming and stressfull, price action moves fast and unpredictable….
thank you very much for sharing this Nial its been an eye opener
Hi Nial, I am grateful for these eye opening insights. I have been trading for about a year now and just like you expressed, it has been ups and downs with wins and losses. I hope to regulate my trades with day trading henceforth and furnish this forum with testimonials in the nearest future.
In the beginning I was daytrading and became very nervous. I thought, I had to S/B to lock my profit.
It went well, but I did it the wrong way.
Now you learned me your way. I will start to try it.
Maarten van Dijk
I’m convinced that is the best approach to the market. But it will require higher equity I think
I agree, I was reading about the same thing in Walter Peter’s Naked trading, I’m def moving to the daily chart. Thanks Nail.
This is by far the best piece of trading strategy you have every written. Every newbie should give it a go, first on demo. You will be surprised by the results. Forget about traders telling you that you should trade a time frame that suits your personality whatever that means. If you are trading forex just for the thrill and adrenaline it gives you like gamblers on a slot machine, fine. But if you are trading lower time frames to make money, then forget it. More trades = less profit, period. So, well done Coach !
hi , can you please tell me how you rate supply and demand trading, iv’e read its the way the banks trade is there any truth in this ? many thanks , GEORGE .