Day trading

The impact I've noticed in futures is not as much as seems to be the case in stocks, but it's enough that the "free money" from scalping is rapidly diminishing. Even if you can out-trade algos, competition from them reduces your execution edge. There is still the riskier money from trading intraday trends and reversals, but that is a lower quality (although more scalable) income stream.

Bottom line - you no longer have a free income boost per annum from picking off stale orders or sitting 1 tick inside the bid & offer. Now your income is *solely* your directional plays. That makes daytrading riskier and less profitable than it used to be.

Having said that, I'm having a decent year with my daytrading, just not as lucrative as before. There's a clear downward trend in the scalping opportunities out there. If you are an experienced trader with sufficient capital, it's probably now more profitable to focus 100% on speculating and investing. And you just improve each year at that, whereas as a daytrader you can't really get any better after say 3-4 years experience. Overnight stuff is easier to monitor, more interesting, and more scalable.

Given that the typical new daytrader does not have the skills or experience to make directional plays profitably, it will be much harder to enter. It normally takes 6-12 months to get decent at directional intraday trading. In the past, you could earn money for those first 1-2 years via scalping, and then directional punts would move up to become 50-70% of your earnings as you gained experience. Now, new traders faced 1-2 years of bleeding instead of steady profits before they pick it up. Most won't have the $$$ or will to survive that long.

Overall I would not recommend anyone go into daytrading now. Learn to invest or learn to position trade instead, those are immune to competition due to recurring flaws in human nature. Unfortunately for the lone wolf trader, it is virtually impossible to invest or speculate by yourself if you are small fry. Even the best can't do much with 10k, whereas in the past 10k was enough to make 1 mill+ in a few years as a good daytrader. So, you need to get into a trading firm nowadays as a noob IMO. That may be irritating, and more difficult to get into, but ultimately it's a faster learning curve to have mentors and colleagues than to go it solo.

Let's face it, scalping was like floor-trading, a profession with a structural edge that paid way more than the skills required to do it were truly worth. It was a perfect candidate for automation. It's not really "true" trading, more like a profitable video game. Overall I don't think I'll be shedding any tears for its slow demise.

TRADER WAY

1. We accumulate information--buying books, going to seminars and researching.
2. We begin to trade with our 'new' knowledge.
3. We consistently 'donate' and then realize we may need more knowledge or information.
4. We accumulate more information.
5. We switch the commodities we are currently following.
6. We go back into the market and trade with our 'updated' knowledge.
7. We get 'beat up' again and begin to lose some of our confidence. Fear starts setting in.
8. We start to listen to 'outside news' & other traders.
9. We go back into the market and continue to donate.
10. We switch commodities again.
11. We search for more information.
12. We go back into the market and continue to donate.
13. We get 'overconfident' & market humbles us.
14. We start to understand that trading success fully is going to take more time and more knowledge then we anticipated.

Most People Will Give up at this Point as they Realize Work is Involved

15. We get serious and start concentrating on learning a 'real' methodology.
16. We trade our methodology with some success, but realize that something is missing.
17. We begin to understand the need for having rules to apply our methodology.
18. We take a sabbatical from trading to develop and research our trading rules.
19. We start trading again, this time with rules and find some success, but overall we still hesitate when it comes time to execute. We start trading again, this time with rules and find some success, but overall we still hesitate when it comes time to execute.
20. We add, subtract and modify rules as we see a need to be more proficient with our rules.
21. We go back into the market and continue to donate.We go back into the market and continue to donate.
22. We start to take responsibility for our trading results as we understand that our success is in us, not the methodology.
23. We continue to trade and become more proficient with our methodology and our rules.
24. As we trade we still have a tendency to violate our rips and our results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market and trade.
28. Our trading results are getting better, but we are still hesitating in executing our rules.
29. We now see the importance of following our rules as we see the results of our trades when we don't follow them.
30. We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear) and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more about ourselves.
32. We master our methodology and trading rules.
33. We begin to consistently make money. We begin to consistently make money.
34. We get a little overconfident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our contract size.
37. We are making more money then we ever dreamed to be possible.
38. We go on with our lives and accomplish many of the goals we had always dreamed of