Making Money With More Unprofitable Days Than Profitable Days

I few people emailed asking if I can explain how a trader can have more unprofitable days than profitable days and still make money.

First let me say, my trading is more of a portfolio style than day trading. I started trading and designing client portfolios in 1996, then in 1998 I decided to day trade full time for a living.

Originally, day trading was much easier than it is today. Back then stocks moved in 1/8ths, we were able to short on downticks when others couldn’t, we were provided as much margin as we wanted and the execution systems were years ahead of the other market participants. That being said, you can understand how we were able to make money and not know a thing about how the market really operates.

Nowadays, the playing field is much more level and my trading is more of a portfolio swing trading style (holding positions for multiple days at a time), but when I catch a good move I will hold it until it runs out of momentum. I’m almost always long and short simultaneously, but I don’t seek to be delta neutral. I just try to find a few ETFs I feel are poised to go lower and a few I think are ready to go higher.

My new approach is more reserved since I let the portfolio “breath”. Besides, I don’t need to make money everyday, although it sure would be nice. My philosophy is, “there are approximately 20 trading days in the month, if I can break even on fifteen and have five good days I’m on my way to making money” . Following this philosophy reduces much of the stress inherent with trying to pull money out of the market everyday.

Mike Matousek, CMT
Portfolio Manager for ETF Updater
www.etfupdater.com