Cents Per Share.

Discussion in 'Stocks' started by Craig66, Jul 5, 2012.

  1. Craig66


    I've seen this used on this site a couple of times to quantify profitability, why do people use this measure as opposed to other well known performance measures? (Sharpe ratio etc).

  2. Truthfully the reason is because traders who actually make money in this game arent statistical / backtesty hence they really aren't aware / don't really care about those calculations. And that is your ans
  3. Daal


    The sharpe ratio for profitable trading systems that have lots of opportunities during the day is huge. It gets to a point where its more meaningful to talk about actual profits
  4. The reason for cents per share is simply that serious traders need to make a living, and the easiest way to calculate is by pennies per share. All the rest in "nice" - but when you need to draw out $10k or more each week/month, then it matters.

    It also helps with your basic "cost accounting" - to keep your costs under control. If you make 3 cents per share, pay .25 in and out, keep 2.5 cents per share x 5 million shares per month.... keeps it simple.


  5. This 83% profit margin is sheer fantasy.

    But the basic point is correct...
    In 2012, anybody serious thinks in terms of doing VOLUME...
    And when you do volume it's all about your profit margin in cents/share.
  6. It's also a handy metric to chart edge decay. When the edge (after all fees) goes from .0020/share down to .0005/share or less, either someone is nibbling on your pie or the opportunities are starting to dwindle. Over the long run, it's kind of a handy metric to figure out which trades you should be allocating more of your capital to as well.
  7. Craig66


    Interesting replies.
    BTW - I tried to ask this question on the Quantitative Finance Stack Exchange site and the question was instantly down-voted and closed for being (paraphrasing) a 'stupid question'.