Learning Day Trading

In day trading, is it unreasonable to expect a 3% weekly return?

I have dabbled with the idea of day trading and feel that with a 3% weekly return on investment I will be able to reach my financial goals with in 5 years. I know that most will lose money in this pursuit but I am not really looking for major hits with each transaction. Just a modest return. Is 3% a lofty goal or should I be looking to "let it ride"?

Public Comments

1. Day trading is speculating. It is not sound investment practice. If you speculate then you will make a fortune and then you will lose your shirt. Investing money has nothing to do with feeling or dabbling with the idea. You need to work with facts. What facts do you have that show you will make 3% per week?
2. If you made 3%/week every week, you would turn $1,000 into $4,600 in one year. The pros expect about 11%/year. That's 0.20% per week. Turning $1,000 into $1,002 is an average week.
3. 3% of profit a week is about 156% profit per year. You'd have to be an extraordinarily gifted trader and have a lot of luck in order to make this kind of money. I'd say your expectation of 3% profit per week is wildly optimistic. As an amateur, you are more likely to loose 3% per week than gain 3%.
4. I would tell you that is lofty, to consistently pull that you have to be darned good--there might be a week you return 10% followed by 3 weeks you lose 10%. Speculating is NOT investing, it is a hobby that can make or lose you money. It is risk capital that you should be doing this with. My advice would be to start reading technical analysis books and work with a broker at first. One that will take some time with you--help you understand. You will have to pay a commision greater than what you will online but you will have a teacher to help you. When you are comfortable go online with it.
5. Trading isn't investing. You have to understand if you really have the successful trader's mindset before you take up day trading. I've done that myself, but didn't make it to achieve 3% consistent profitability. I usually made much less, rarely 3%. Some weeks, I gave back some as I ended in the red. I found out that in order to trade well, I better not set a fixed target/goal but let the market tells me how much to make instead. Not every week is good to trade. There are times that you should take a break as it isn't worth trading when the market is too quiet, and if you set a fixed percentage goal, you're going to make wrong decisions and lose. It isn't easy for beginner traders to win in this game. Like others have suggested, you do need to pay the price to either learn the necessary lessons through the hard way (which can be very costly if not a wipe out of your account), from some day trading training schools and coaches (which can be costly, but worth it over time), books, magazines, and seminars (which are less costly, but you may not be able to easily tell what will work for you and what not). Other than the necessary trainings, there are other factors that can affect whether you can trade well through day trading - For example, if you have to produce consistent income to support yourself/your family, day trading is going to be difficult for you because the mounting pressure to produce weekly income will often get you emotional in a position and cost you a lot in each mistakes. You have to realize that you are trading against professional traders who can trade without such burden behind their mind - they could easily accept small losses quickly as part of the game and then move on, while you might feel like vomitting blood on such a loss. Unlike some of the nay-sayers who answered and wanted you to believe that investing is less risky than the speculative day trading, the latter actually only exposes your capital to risk in the smallest possible timeframe, eliminating overnight risks. However, your risk comes in other forms that can be sufficient to ruin you financially if you don't know what you are doing. If you don't yet understand what I meant, you are too new to day trading, and need to start somewhere, but not to immediately day trade. If you really really want to take up day trading, my advice is to first paper trade for at least a month without committing any real cash. If you can't even paper trade profitably (which should have eliminated your emotional factors), you truly aren't ready yet. If paper trade sounds too boring to you and you insist on seeing your capital at work even if you can't yet prove yourself that you can make it in day trading, I would suggest you an alternative - please consider swing trading (trade in and out of positions which last for a few days to weeks, if not longer) using much smaller position size than you would in day trading. If you think you want to trade 1000 shares of something, for example, trade only 100 shares in your swing trade. And now that a longer timeframe is used to measure your result, please give yourself at least 3-6 months of consistent profitability before attempting to switch into day trading. This is to give yourself more chance to cool your mind and learn the correct trading skills and mindset to be a successful trader on a much longer timeframe before tackling the more difficult day trading game. Some day traders strongly believe that swing trading is riskier than day trading and vice versa. I am not going to get into a debate on who's correct. What is important to you is only which works better for you. Practically, I tried both myself and found that I do better in swing trading and I manage to incur about the same amount of risk (I used options to protect my equity positions, and also employed some option strategies without holding on to the underlying stocks, risking 10-20% of my captial at most at all time). Risk management is of utmost important to ensure long term success in trading. In a certain way, day trading is more like a full time job though you can often take breaks whenever you want, whereas swing trading is more like you are the boss. If both earns about the same return for me, why should I take out the full time job? I now swing trade most of the time, day trade only when I stay home and have nothing better to do.
6. It depends on what type of trading you are doing, scalpers work for very low percentages, swing traderes expect a little higher return, position traders expect a lot more. So if you want to be a day trader (scalper or swing) you better be nimble and be prepared to take profits any way and amount amount you can. Position traders, although may do day trades, for the most part they don't have to be as nimble and with discipline wait for the higher percentage return. But all traders know that you can never get hurt taking a profit. Most traders increase their investing capital at least 20% return for the year, if not they go on vacation. A good discipline trader will never invest 100% of their capital at any one time and will never invest 100% of their invested capital into any one position. As long as you win 60% of your trades, you will do well. Remember it's not always making money but protecting what you have.
7. It is possible, but by no means guaranteed, for an experienced day trader to return an average of 3% per week. You need to bare in mind that if at the end of a quarter a day trader has acheived an average 3% return per week, this will be will be an average made up of winning weeks and losing weeks. No day trader on earth has only winning weeks.