Dear Traders! One thing that should be in the first place for everyone considering trading as anything more than a hobby- A Business plan. Well, here is mine (only the money management part) so if anyone would like to share some thoughts about it (like, weather I stand a chance at all with it he he) is more than welcome! Alex P.S. I am truly sorry if this doesn't belong to this message board Starting equity : (risking 2% on every trade and losing it, Datek as a broker) 4 000$ - 100 - 20 comissions = 3880$ - 77,5 - 20 =3782,5$ - 75,65 - 20 =3686,85$ - 73,7 - 20 =3593,15$ - 71,86 - 20 =3501,29$ So this would be the 5-losing-trades outcome. The stocks I plan to trade are the NYSE issues like (AMD AOL C DIS HD JNJ JPM PFE WFC etc). So my stops would be as follows : -1$/sh -,775 (after 1st loss) -,7565 (after 2nd loss) -,737 (after 3rd loss) -,719 (after 4th loss) etc Doable or not!?
neo_hr: âI am truly sorry if this doesn't belong to this message board.â What are you kidding! We need more posts like yours, Alex. Planning is the foundation of successful trading. If new traders followed your lead and formulated a strict plan, then more might stand a chance of surviving. I applaud your diligence. A trader can take the plan further and define all the possible set-ups that one may encounter within one's system and all the possible reactions. How will you lock in profit? How will you manage losses? How will you manage gains? How will you deal with yourself when you trade against your plan? How will you know when to stop trading and evaluate your performance? Will you vary the risk per trade percentage dependent on specific conditions? IMHO, these are just a sample of the many questions a trader should attempt to answer in a business plan before he trades aggressively. It doesnât need to be perfect, though. The plan should evolve with the trader. It will be in a perpetual state of development, to one extent or another, much like the trader himself. The degree to which each of us finds success in trading is a function of our trade management and the further one goes in specifying responses to each situation then the greater is his chance of realizing solvency.
why use Datek, I was a very frustrated Datek user, spent a fortune in commissions with them trading the QQQ and received some incredibly slow executions, thank God I found IB, low commissions and instant executions via ECN and daily reports, not to mention their simple executuion platform, instant cancellations etc, I could go on forever.
JS, I agree on IB but one thing sucks-BUYING POWER UPDATES!!! Originally I wanted to start out as a daytrader but than SEC "killed me". OK, I think to myself, I can still daytrade 3 times in 5 days or I can swingtrade but than IB announced T+3 rule (3 business days update. OK, im still thinking weather to go IB or Datek... got both accts though Cheers!
For what I do and how I trade, RJT.com is a much better broker than Datek. $5.00 trades and , I think, better execution. Never have a problem with them blowing stops and usually get good fills. In case anyone cares. And i agree that this is a great place for a discussion of personal business plans for trading. DJC
Alex, Switch to IB, the T3 thing is just for cash accounts. With $4k it would be better to pay $1 minnimum than the 9.95 Datek charges. You'll also get faster executions. You will be able to daytrade once on Monday, Tuesday, Wednesday, than you'll have to wait two days. You can also trade the gaps. This is how often you can trade under the new regulations: On Monday, you can sell the position you entered on Friday, then you can buy and sell a single stock once. Before the end of day you can buy another stock, sell on Tueasday, buy and sell the same stock, at the end of day buy stock, sell on Wednesday, buy and sell the same stock once, then buy stock at the end of day and sell on Thursday, buy on Thursday and sell on Friday, buy on Friday and sell on Monday. That's a total of 8 trades a week (god, does this suck). All of them can be done at 2:1 margin. That's 8 trades, three of which are intraday, and for a single stock. You should use the full 2:1 margin for theese or rather, as close to it as possible without generating a margin call. Intraday trades tend to be safer, so as long as you pick your stocks carefully you should be able to get close to 2:1. The other 5 trades would be overnight, these are more risky, but becouse there is no hard limit for the number of round trips you can do overnight, and you are only limited by the number of nights, using IB you can buy 4 or 5 (or more, figure this out) different issues at the end of each day.) This will limit risk, and will again enable you to get closer to the 2:1 margin. As far as stops are concerned, it makes no sense to adjust them based on what the stop was when you did your last trade. Your stops should be adjusted to give you the best possilbe profit/loss ratio. You should figure out what the best stop would be by looking at the charts, not at how your account balance has changed. Just my opinion. voodoo
THERE WE GO! Thx, man thats the answer I have been looking for. Crystal clear... ! I have been looking to check if this is true as you stated in this post of yours but havent had a decent reply from IB, Datek, other brokers but also not from other members on this or other boards. Seems to me everyone has his or her (for that matter ) oppinion so if this how you seeit IS true than it could be "the answer to my prayers" he he. No, seriously, thank you once again and good luck! Alex
"As far as stops are concerned, it makes no sense to adjust them based on what the stop was when you did your last trade. Your stops should be adjusted to give you the best possilbe profit/loss ratio. You should figure out what the best stop would be by looking at the charts, not at how your account balance has changed. " ------------------------------------------- Yes i know but I was adjusting my stop loss according to my acct balance because I want to adhere to "2% rule". So, the way I see it, if I can risk 2% on a trade that means that my stop can only be so far away. 4000$ - 2% =80$ ----------------------- If I trade 100 shares (have to w. IB on the NYSE) that makes my stop .8$ / sh. On the next one its loewr etc, do U agree?! ALex
Only if you buy 100 shares of $40 stock. You should obviously chose stock depending on your ability to predict what it will do, and the potential to profit from it, not on the share price alone. So if you chose to set your stop at 2%, it should obviously be 2% of the price of the stock you bought, not 2% of your equity. Also, after each day you should go over your trades, and see what the results would be if you picked different stop and exit strategies. See which combinations work best for the particular entrance criteria you are using. voodoo