How New Day Trader Made 38.75 Percent in 10 days (1 Hour a Day)
After learning the DTA strategy, trader goes live with no losing days
Danyel Pérez Novoa was a new trader, who after studying for several months and practicing daily deposited $3,000 into a futures day trading account and commenced live trading. Live trading is making actual day trades with real money, as opposed to practicing in a demo account or paper trading. After his first 10 days, Danyel had no losing days, a 38.75 percent return — recouping much of his initial deposit made just days earlier — and traded for only about an hour a day (see Best Times to Day Trade the Stock Market).
Danyel's story is highly relatable for most new day traders. He liked the idea of day trading, but was busy with other jobs and only had a couple hours a day (maximum) to day trade during the week. And like most new day traders he didn't know where to start. There is a lot to becoming a successful day trader, and establishing consistency over the long run (and Danyel is just starting out, but on the right track). There are three factors which allowed Danyel to excel so quickly: the right education, the right market (which for many many people is based on ease to learn and minimal capital requirements) and the right mindset.
Finding the Right Day Trading Education
There is a lot of day trading information out there. As a new day trader, it's hard to sort through all this "clutter" because with minimal knowledge it's hard to distinguish the good from the bad.
Danyel did the right thing. He knew he wanted help, so he did a lot of research to find it. He ultimately chose to approach The Day Trading Academy (DTA) for his education, due to the positive reviews he found online.
Finding the right education source — whether it is a person, a website, a course or a book — is just one step though. "The proof is in the pudding." As you learn, see if what you are doing is really of value. If it is, then it's up to you to put in the work to make what you learn pay off. Danyel saw the value of what he was being taught, and liked the strategies being presented to him, as he discusses in this video interview. He then capitalized on it, putting in the time and practice to make it work for him.
Knowing isn't the same as being able to implement — he put in a lot of hours of training and practice (see below) in order to foster this initial profitability.
Trading the Right Market (for You)
Danyel had limited time, and several thousand dollars to start trading with. The several thousand dollar cap ruled out the stock market, as day trading stocks requires a minimum of $25,000. One of the closest thing to trading stocks is trading a stock index futures contract, in this case the S&P 500 E-Minis (ES).
Trading ES contracts provide many benefits. Since most people know what the S&P 500 index is (or at least have some idea what it is) the concept of trading its daily ups and downs are relatively straightforward. While it is recommended traders begin day trading with several thousand dollars, to day trade a single ES contract only requires $400 to $500 in margin (varies by broker). Each tick — the smallest movement the contract can make — is worth $12.50. With day trading one contract making 8 to 12 ticks on a single trade isn't uncommon, representing a $100 to $150 gain (or loss).
DTA traders typically make several trades a day (when trading two hours or less). This is a sizable percentage profit/loss on only a few thousand dollars. Because of this, with a profitable strategy in hand, the futures market is very popular among day traders (see How Much Money Can I Make Day Trading Futures?).
Day trading forex is another possibility requiring a relatively small initial deposit. Danyel chose one market and stuck with it. While traders may eventually trade different markets, in the beginning, master one before considering trading others.
Having the Right Mindset
Knowing a strategy is one thing, trading it profitably is another. To be successful you need to practice a strategy enough to believe in it. You have to know it works and trust that it will produce profits overall, even when there are losing trades — possible several in a row.
Danyel had losing trades, but over the course of each day, the profits covered the losses, and then some. Losing trades, and losing days will occur. These usually deter most day traders from trading a strategy, so they never develop consistency. They are continually jumping from one strategy to another.
Danyel makes a profitable transition to live trading because he had practiced enough to trust the strategy he was taught. Through practicing two hours a day during the week and several hours each weekend (for 5 months) before going live, he also learned how to adapt the strategy to changing market conditions. This is key; strategies are everywhere, but there aren't many successful traders (compared to those that fail). Effectively practicing a strategy in various market conditions is pivotal. By practicing every day for 5 months, in various conditions, Danyel has set himself up to be profitable in diverse market conditions.
Most traders never practice for that long — they actually don't practice at all. They jump in unprepared and set themselves up for failure.
Trading with confidence produces an entirely different mindset than one which is clouded by unrealistic expectations, anxieties (such as trading not to lose or loss aversion) and concerns over whether a strategy will continue to work or not.
Traders who opt to trade on their own, without guidance, undertake the same path. They must develop a strategy and practice implementing it. Practicing and ensuring profitability for three to six months before going live is recommended.
The right strategy matters, but good (and bad) strategies are everywhere. The right education teaches you how to adapt the strategy, and your mentality, to changing market conditions. The DTA initially introduces traders to some indicators which can aid them in reading the trends and tendencies of the market. Ultimately it isn't the indicators that make money though; they can't trade for you. The trader must practice — for several months — reading price action, executing trades, changing expectations on the fly, noticing daily tendencies, monitoring changes in volatility, managing risk, and exiting profitable trades.
No matter the education source you choose, give it several months. If after several months you aren't seeing progress (and you are actually doing what is asked of you), then that educational source may not be the best fit for you. Also, trade a market that matches your interests and time and capital constraints. Finally, approach trading with the right mindset. The right mindset is only cultivated through practice, and gaining confidence in what you are doing. The best strategy in the world won't do any good if you haven't practiced how to use it and how to adapt (it and you) to changing market conditions.
For more information on The Day Trading Academy you can check out the DTA YouTube channel.
Sources: Information for this article was attained from the resources linked to within the article, and from interviews with those involved.