By Kevin M
A few weeks back a comment was placed on this site by a visitor who’s url address included the letters “tv”. Since I’m always on the lookout for new and interesting career and business ideas, I had to follow up on this profile. If he was involved in television in any way, that might be a career profile worth looking for a story in. But upon following up through his website, I found out he certainly does have a most interesting career, but one that has absolutely nothing to do with television.
His career? Day trading.
It never crossed my mind to consider day trading to be a career of any sort. I’ve mostly tended to think of it as an investment scheme of some type, and not one for the faint of heart. (That part is most definitely true—see the “Disclaimer” from his website below if you have any doubts.)
I emailed Chris Dunn through his website, The Blog of Chris Dunn, Chronicles of a Day Trader, then arranged a phone interview in which I received a detailed education on what day trading is and what it isn’t.
A different approach
I had certain reservations after reviewing his website since it isn’t my intent to write about investment programs on OutOfYourRut. But, what drew me immediately was Chris’s description of his life’s work as essentially a business. I have no experience as a day trader, and therefore I’m in no position to give a truly objective assessment on the realities of day trading. But like most of the human race, I have certain preconceived notions of what’s involved and I can say without reservation that I’d never associated day trading as a business.
Not only is Chris a regular day trader, but he also is involved in a training program for would-be traders. A typical day for him is split between trading for his own account, usually for 1 ½ to 2 hours in the morning, spending much of the rest of the day on the training side of his business.
We spoke for over an hour and what impressed me is the respect in his voice for the power and risk involved in the stock market. He’s a young man already earning a living from the market, and yet he has a deep appreciation for the damage that the financial markets can inflict, a concept’s that’s often lacking in the mainstream financial community.
Chris warns that 95% of people lose money day trading—how’s that for shameless promotion of his craft! He came into day trading during his brief tenure in the mortgage business, where a coworker made $2300 in less than 15 minutes. Chris tried to follow his lead, then promptly lost $5000—but it whet his appetite to go deeper. He began trading in 2002, but the money became more serious in 2007, ironically the year the markets turned.
For what it’s worth, Chris does not have a college degree, and learned day trading by doing it. He says you can day trade anywhere there’s a good internet connection, and he plans on doing some extended overseas travel in the not too distant future, laptop in tow of course.
The parameters
Chris seems to be as aware of the risks in day trading, as well as in the markets in general, as anyone I’ve ever spoken with. Part of what motivated him in approaching the market through day trading is what he calls the “buy and hope” mentality often associated with stock market investing. Ultimately there are so many variables involved in stock securities that hope often seems to be all there is on long term plays.
He fully expects to lose. His target however is a 60/40 win-loss ratio, in which inevitable losses are offset by more frequent gains. Much like sales (and every other business) then, the day trading business is also a numbers game.
Interestingly, Chris maintains that volatility is a plus when day trading. He made more money after the market began to slide in 2007 than he in earlier years when the markets were on an elevator ride up.
One way he minimizes risk is by not holding overnight positions. After all, you can’t know what’s happening while you’re asleep. He also recommends starting with a simulated account until you’re comfortable with what you’re doing, and showing a trend of successful trades.
Citing “slippage” as a risk with smaller, less liquid securities, he makes it a practice to trade in the larger, more liquid markets. You can trade in stocks, commodities, currencies and indexes. He favors trading the indexes for size and liquidity, since thinly traded securities can see substantial trading ranges in a matter of hours.
Day trading is not a business for someone tight on funds. The minimum to open a stock trading account is $25,000, however if you trade e-mini futures as Chris does, the minimum is $5000. There is great leverage (RISK) involved; $1000 controls $50,000 worth of investments, so the potential to lose more than your investment is very real.
”Simple, but not easy”
Chris characterizes day trading as “simple but not easy”. “It’s a work-a-day process, a discipline, and not a get rich quick scheme.”
“You have to master your emotions,” he advises, “You learn who you are when you trade—and money affects who you are. Discipline has to control emotions—emotions are where money is lost. You can’t get caught up in emotions by chasing the market.”
He claims you can earn money in both up and down markets, by going long or short. But you can also lose more than your investment so you need to know what your doing and how to prevent that. Trading in the larger, more stable and more liquid markets is a big key.
One other point he cautions on is that day trading is not for everyone! “The worst traders are successful business men who have big egos, but you have to check your ego at the door. Housewives actually tend to be better at it.”
The training program
Based on his experience, Chris strongly recommends that you don’t engage in day trading until you’ve had training. He offers a training program, complete with ongoing training even after the basic program is completed.
The basic program takes two to six weeks to effectively learn the program, which includes 40-50 hours of video. System and software are included, as well as interactive webinars.
You start with a simulated account until you can prove that it can be done, and only then do you start trading live.
The program also stresses exercises to develop self-discipline and trading psychology.
Even with his own training program, Chris cautions that “There’s no ‘holy grail’ in trading systems”.
If you’re well capitalized, and have some money to take chances with—money you can afford to lose—and you’re looking for a way actually work in and with the markets, this could be a way to do it.
You can get more information on Chris Dunn’s training program at Emini Academy.
Disclaimer
U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
Kevin,
Thanks for the post on trading… I think some of your readers could benefit from the e-mini day trading opportunity. Keep up the great work!
- Chris Dunn
Though internet has given individuals more space to understand and implement various stock market investments, most investors are actually scared to invest online as they don’t see reliability from such sources. But in fact a lot of online trading is successfully running, of course with great competition! Investors should study and learn how to invest. Your Market Experience will tells you how to invest.