Making money from trading is a real job not a gambling game in a casino, many retail traders are making money consistently from their homes. So nobody can tell you that it is impossible!
In this article, I will give you some advice, tips and tools to help you set up your trading strategy.
How to Make Money with Only One Trade per Day?
Yes, it is possible to take one trade per day and make money in the long term. To achieve this, you need to set up a very good strategy starting from your mindset to closing positions.
Here is a list of bullet points that you need to consider seriously in order to achieve your purpose:
- Mindset is very important, you need to start your day with the conviction that you will succeed in your day trading. If you start your day with a negative energy, I am sure that you will not follow your strategy instructions word by word, so I advise you to go back to sleep because you will only blow up your trading account in minutes or hours.
- You need to have a good broker – by your side- who can give you a real edge in trading. Here are some features that you can check when you are searching for a broker:
- Low commission. You will find a lot of brokers with attractive commissions, but beware of hidden fees like platforms and data fees or even exchanges fees.
- You need to check the minimum deposit to open an account with the broker. If you are trading futures, you will find brokers with a minimum deposit of $500. However, it is very risky to trade in a live account with only $500 in the balance. I think that if you are a beginner, you will need at least 10k to start.
- There is a bunch of funding and withdrawing methods like wire transfer, check, ACH, visa card and PayPal. In Futures, Stocks and Options brokers, there is no visa card or PayPal for funding or withdrawing as there is only wire transfer for traders outside the USA. But in forex it’s the opposite, all the funding and withdrawing methods are allowed.
- No hidden fees.
Example: If you are trading the E-mini S&P 500 futures, you will see that it has two different day trading margins; one with $500 whereas the other with $300. So if you choose the second margin, the commission that you will pay per contract will be higher.
- You need to check the broker regulations. One of the best regulations is the National Futures Association (NFA).
- Your broker needs to have a 24/5 (hour/day) support email or live chat, and a reasonable time respond.
- A good trading platform. Some brokers will offer you a lot of platforms from which you can choose the most suitable for your trading style, but don’t forget that almost all the trading platforms have a monthly fee or they charge a small fee by each contract you trade.
- If you are trading futures, you need to check the minimum day trading margin for the specific contract that you are trading; because some brokers may apply different day trading margins.
- You need to choose the right platform suitable for your trading style.
- You need to understand the market moves before starting in trading with real money.
- You need to find which market you are willing to trade. For beginners, it is very risky to choose volatile markets because it has the potential not only to scale up your balance but also to crash it very fast.
- Practice, practice and practice. It’s the key to make money in trading, and it represents 80% of your success. (practice in demo account first)
- Create a good strategy, then test it for at least three years in historical data.
- When you trade in a live account with real money, you will need to stick to your strategy and not to improvise.
The data must be accurate, fast and reliable. But it is not the case with some data feed providers.
Here is a list of some issues to consider with the data feed providers:
- One of the biggest problems with data, is that you are not getting the prices that you are trading.
Example: I am trading the E-mini S&P 500 future market and the current price is at 2850.25 ask with 510 limits on it. When I send my market order to buy 2 contracts at 2850.25 ask, my order is executed at 2851.00; which is a very huge gap. (Inacceptable)
First, I was thinking that a High Frequency Trader was trading ahead of my market order. But in reality my platform was not getting the data on time.
(This problem is very common in forex industry)
- The Data is printed in the wrong side. This is the worst thing that can happen to a trader, especially if you are an automated one.
Example: we analyze the Euro Stoxx from two different data feed providers at the same time, then we find out that one data feed provider printed a lot of trades in the wrong side.
There are a lot of data feed in the industry of trading. To facilitate the task for you, here is a small list of the best data feed providers in 2018:
- IQ Feed
If you are trading using only charts (bar, tick, renko,..), then you can use the basic subscription with the data feed provider.
If you are, on the other hand, trading stocks and futures using the depth of market, you will need an expensive data feed which is accurate, fast and reliable.
There are a lot of free and paid platforms for trading Stocks, options, Futures or Forex markets. To be able to find the right platform which gives you all the helpful tools to build your golden strategy, you need to filter the platforms according to some important features.
Here is a list of the most important criteria that can guide you to choose the right platform for your trading strategy:
- Your platform must give you a demo account even if you don’t have a real account. These days, most platforms have demo account or paper account. This will help you familiarize with the platform and not risk your money in a live account.
- Your platform must give you a replay data mode because it’s very essential in testing manual or automated strategies. Without this, you can never know how well your strategy did in the past days, months or even years (Historical data is provided by the data feed reseller).
- Your platform must display the exchange data very fast and accurately. However, some platforms may have a lot of freezing issues.
Example: Supposing that you are trading the S&P 500 at 1164.75, then the price moves few ticks but the platform is still showing you the same price (1164.75). This is one of the biggest problems that you must be aware of.
- Your platform must have 24/5 live chat, email support or phone numbers, and the time for responding must not exceed minutes. Because when your platform goes down (and it will goes down one day for sure. Even exchanges can go down don’t be surprised) you will need a very fast support to deal with your problem.
- Your platform must have a lot of types of charts, like bar chart and tick chart. Because the charts can give you a better view of the markets. There is a bunch of paid charts but for beginners they can start with free charts.
- Your platform must give you access to all know indicators in the markets.
- If you are a pure chart trader, your platform must give you the possibility to trade directly in the chart. Because it will minimize the number of windows in your screen and also help you concentrate better on your trading strategy.
- If you want to build a trading strategy with the order flow, your platform must give an access of the depth of markets (DOM).
- If you want to build a trading strategy that combine multiple contract (leg) for hedging or arbitrage, your platform must have access to all important exchanges in the world.
Example for arbitrage, you will need a contract that is traded in many exchanges (at least two exchanges).
- Low platform commission is very important, because it can help you sky rock your balance. Especially, if you are a scalper or you trade more than 10 contracts per day.
Don’t forget that sometimes there is brokerage commission + platform commission.
- Your platform must have a good reputation among the majority of the traders (no less than 200 good feedback). You don’t want to risk your capital with a platform that have a lot of issue with many traders.
- Your platform must provide to you the methods for automated trading through scripts. Example if you find your golden strategy, but for some reasons you can’t trade it manually (like the psychology of the trader, the market is moving very fast and you can’t deal with it or simple you don’t have time to sit down in front of your computer for hours) you can try to automat your strategy.
- Your platform must give you the option to choose between all the existent data-feed providers in the market, because there is some low quality data to avoid. And there is some data-feed providers specialize in automation trading.
Quality trades vs quantity trades
When you are a beginner in trading, you need to focus in producing quality trades over quantity trades. So when you master the creation of quality trades for at least six month, then you can scale it up by rising the quantity of your contract.
To create quality trades you need to focus in practicing, 7 hours per day at least. (Demo account)
So, how to create a quality trades?
I will tell you how I setup my quality trades in the E-mini S&P 500 future market.
I am a day trader who use only the depth of market to open and exist the market. Over the years I watched the depth of market (DOM) and tested many strategies on it, solely to identify the absorption, the icebergs, the manipulation, the quote stuffing and more only by reading the order flow through the DOM.
I usually sit down in front of my screen two hours after the US opening bell, to identify a trend and I will trade with it.
Here is the points that I am looking for, only in the depth of market (no chart), to open a position in the E-mini S&P 500:
- First I identify the levels of support and resistance, (only in depth of market)
- When the price is close to support or resistance, then I am focusing in absorptions and icebergs.
- And in the same time I have my eyes in the bid ask limits, to see which one is adding or removing a lot of limits (to spot the manipulation).
- So when the price cross over the support or the resistance, I will wait the confirmation from the absorption and the icebergs both in the same time.
Then when I get my confirmation, I will open my position with market orders (always), because the price can go very fast and I will not catch it if I am using limit orders.
- So to close my position I am not using stop orders or take profits, instead I am using the same steps which I used to open a position and always with market orders.
I am using this strategy because it is 80% accurate in the first two hours after the US opening bell, and it gives me a very nice result. So this is one of my quality trades in the E-mini S&P 500 future market.
The psychology of the traders
Before a trader go to live trading with real money, he needs to check his ability to handle the stress created by opening and closing positions. And also to handle the stress created by the fear of losing the money.
Most of the retail traders fails in trading within six months max, because they can’t stick with the strategy they created due to the extreme stress they handle. And most of stress problems are created by emotions.
They are a lot of courses in the internet that can help you deal with your emotions, but it is expensive and not all the courses are 100% accurate.
But noting can help you deal with your emotions, even the best coach in the world if you are trading with money that you are afraid to loose.