I actually agree with you @Sprout because that is exactly how I trade options, high R:R and low WR. This is an experiment at day trading. I came up with this from rereading some old threads, then paper tested and now going live in a small way. I want to let it play out, then if this is a failure, I either quit for good or will make adjustment in your direction. Thank you for the coaching.
Hi ironchef. Not being an options trader myself, can you tell me what the cost/fee structure is for a typical "much reduced size" trade? What kind of "move" do you need for NET breakeven? Just the garden variety day trade you do. I'm just curious. Thanks
My option trades are completely different and I won't talk about them here. To answer your questions: 1. For day trades, I trade names, i.e., individual stocks and there is zero commission @ Schwab, so other than bid/ask slippage, no cost/fee. As for slippages, I found the live trades were actually better than paper because on paper I used bid for sell and ask for buy. 2. What is the size? On paper, I used a notional $50K per trade. For live trades, I cut it down to under $1K per trade. I am trading for a free McDonald breakfast every day. 3. Looking at the statistics of my paper trades, most trades ended in small losses or small(er) gains. Profit came from catching one or two good runs every day. The 7 losing days (out of 50) came from not able to catch good runs. 4. Live trades data not sufficient to draw any conclusion but a glimmer of hope.
Do you trade one stock and follow it closely or do you watch multiple stocks and try to find the trend in particular one?
I trade stocks in my long term portfolio, about 10 stocks. I do switch targets when things are not going well. Sometimes trade more than 1 at the same time.