Can I make money doing X?

One of the most common questions I see asked by new traders in blog comments and on message boards is “Can I make money doing X?”, where X is a style of trading. Do any of these sound familiar?

Can I make money scalping the ES?

Can I make money buying breakouts?

Can I make money buying pullbacks?

Can I make money trading earnings releases?

Can I make money trading afterhours?

Can I make money selling options?

Can I make money buying options?

Can I make money using fundamental analysis?

Can I make money using technical analysis?

Can I make money with an automated trading system?

Can I make money trading discretionary?

The answer to all these question (and any others I’ve left off) is yes. New traders often underestimate how large and diverse the financial markets actually are. For each type of trading strategy, there are thousands of people who use it successfully and thousands more who use it unsuccessfully. There is no such thing as the “best” strategy, they are all different, but potentially viable. What is more important is finding a style that fits your personality and your situation. By situation, I mean your time and capital restraints, as well as personality. Obviously if you have a $10,000 account, then a trendfollowing system designed to work across 20 different commodity markets would not work for you. Likewise, if you work a full time job, then scalping the emini’s intraday would not be the best pick.

The important thing is to pick a strategy that fits with your situation and devote yourself to it. The worst thing you can do is constantly jump around from strategy to strategy every time you experience a drawdown. Not only will you be unprofitable, but you will never spend enough time on any single strategy to learn its nuances and how best to trade it. I see this all too often on blogs, a trader starts swing trading stocks, then has a bad month or two and switches to day trading stocks. After another rough patch they decide maybe they should try futures, etc. etc. All the while looking for the “perfect” strategy they often overlook opportunities to learn from and refine whatever their previous strategy was.

- John