No. What you thought is the average "daily" range. Not the true range. The ATR formula is a little more complicated because it takes the previous bar's values into consideration: Excerpt: The true range is the greatest of the following: The difference between the current high and the current low The difference between the current high and the previous close The difference between the current low and the previous close Un-excerpt.
You are way underfunded. The market is not volatile enough to have any movement for where you can grow your money fast. Comeback when you have a bigger stake.
Treat trading like a business. Write a detailed business plan that you could take to the bank and borrow the money to run your business. Detail how you plan to take money out of the market. Be specific, Set measurable goals. Have a set of Operating Instructions. (trading instructions that someone else can follow.) Be realistic. Specify who is responsible for every move your business makes and what the consequences are when rules are not followed. Like trading a great number of small businesses fail because they are undercapitalized, donât have a good business plan and are poorly managed. Take your time. Know exactly what youâre going to do before you do it.
Here is what i would do with $4000: First of all it is very important to watch stocks long term, 10-day, and daily graph and really understand the different sort of breakouts (to the upside) that can occur. A good example is the way Ford has traded over the last 6 months. Notice how it was in a strong long term trend, then started to trade in a tighter and tighter range, around 11 and then broke up and out of that range at the end of February leading to about a 20% move or so. What I would do if I were you would be to create a simple screen, try the one at Google finance, and screen for stocks with a low price <4, decent volume >100000, and throw in a few other variables like inst. ownership, avg. volume, 52wk price move, etc. and run it at around 9:40-9:50 eastern. The goal would be to look through the stocks that the screener came up with and look for long term and short term graphs that kind of looked like Fords when it was breaking out. If you are conseravtive and intelligent and your broker lets you put in orders for 10ths of pennies. You should be able to catch moves of 10-40% every once in awhile while limiting losses. Good Luck.
Don't think of your $2k as money you wouldn't miss if you lost it. It has to be oh so very precious. You gotta hold on tight. Cherish that $2k, my man. You've got to break a sweat to hold on to it. Don't be scared but be very rational and concerned.
I like this last bit of advice...if you don't cherish your funds, you will inevitably lose them. No doubt about it. Preserve what you have at all costs.
TZ gives an excellent & brilliantly funny scenario 1⦠Scene 2, Act1: The poster boy again turns to ET for advice (??-xxx-$-$) Has the following choices: a. Stumbles along and finds books by Larry Williamsâ¦loses his 2K b. Decides to take up Poker on Pokerstars to increase his stake to daytrade âas it only takes â5 min to learn, but a lifetime to..â - loses his 2K c. Moves to Hawaii and rotates his time from surfing to sim-trading & developing a long term business plan Im pretty sure what TZ would chooseâ¦
Re-phrased choice C: Moves to Hawaii sipping mai-taiâs and rotates his time from surfing to sim-trading & developing a long term business planâ¦with a strong probability of meeting beach girl to take the âedge offâ while working hard to find his âedgeâ on those long-late night sim trading sessions!
1) Get a (second) job 2) Save as much money as you can for a couple of years 3) At night, read on trading and study the markets You may still fail then, but at least, if you succeed, you will make some money - nothing more frustrating than having a good spell with a micro-account. Best trading, Jorge