Tony, I sincerely want to thank you for sharing and ask that you continue to do it. I don't post much, but I'm sure that there are hundreds of us (if not thousands) that truly appreciate the time you spend on these boards. Kevin
Great discussion. The name of the game for me is to be in the game most of the time and play what the market gives me. If trading conditions look choppy, I'll scalp. If they change, even in the same day, I'll look for half point, point, or point & a half. I do intraday & swing trades depending on market conditions. I've had failures throughout my learning curve trying out different strategies and I've learned what works for me. I've tried just scalping, then just swinging, then just intraday position trading. Ultimately I've become decent enough in all such that I can adapt to market conditions pretty well. Trying to get blood from a stone doesn't work, as doesn't getting 2 points on a choppy Friday or Monday pre-holiday. One thing we all have to be wary of is forcing our style on the market, instead we should adapt to the market. In my eyes, trading is a dynamic art and those who are too rigid will eventually be broken. Like the new AMEX advertising slogan says: Opportunity Made Fresh Daily. How great is that! Take what the market gives you, whether it be the crumbs or half the loaf. Everyday the market gives you something; it's there for the taking. Good Trading.
well.. im not a 2 mil a year trader yet.. but what tony is describing is something i went through personally.. i began my trading career nov 1999 as something of a spread trader/scalper.. my strategy worked very well for me, but i was taking a huge number of trades every day, so even if i ended the day with 1500 or 2000 net, i was paying almost that much in commissions.. of course, i didnt care how much the commissions cost as long as i was making money.. some things began to change that made me switch strategies.. the market maker who provided many of the discount brokers auto executions changed their policy.. also, decimals were coming and i felt sure that the spreads would collapse or be imposible to trade.. so, i opened an account with a direct access broker and started trading nasdaq stocks.. this began the most painful year of my life.. everything i knew about trading only produced small winners.. but i wasnt able to control my losses as easily as before.. i would end the day up 50 dollars (gross) and have 1k in commission costs.. the thing about taking 100 trades a day is that every time a trade works out, it convinces you that your approach is correct.. honestly, the entire time i was in that painful death spiral, i really did think i was about to turn the corner and become profitable again.. only after i reached a point where my account was demolished, my confidence was gone and heck, i didnt even want to get out of bed in the morning.. then i was humble enough to listen to some people who could help me get back on track.. i think most people trading 1:1 are discretionary traders.. the downside of this is that when something in the market changes that affects your approach, instead of being able to objectively identify changes in the market, there is a tendency to think "i made a mistake".. to think "i can figure this out and my strategy will work again" when in fact there is very little chance for success.. consistent profits give way to consistent losses and the spiral begins.. the habits of trading 100 times a day, and blaming yourself when trades dont work out add fuel to the fire until finally you crash and burn.. at least, thats the way it happened to me.. =) <---(yes, i can at least smile about it now) of course, everyones situation is different.. and just because someone is a discretionary trader with a 1:1 comm/profit ratio doesnt mean that they will eventually blow up.. but its much easier for that type of trader to blow up.. in my opinion =) -qwik
Hitman, I'm not a big fan of papertrading myself. I just suggested it so you could convince yourself that , while it is painful to take a four figure loss once in a while, it's not the end of the world if you're regularly having five figure days.
I have to agree with qwiktrade, I believe the 1:1 ratio works very well when market or regulatory conditions do not change. The fractions to decimals was a great example. It didn't matter whether or not the market was in a bear, bull or sideways market one could always make money. Then came the politicians and the SEC and decimals basically killed spread and NASDAQ scalped trading. I believe scalp trading the Listed as with what the Hitman does is most vulnerable to regulatory changes in the market such as opening the specialist book. Time will tell but I believe Hitman does have an open mind and will change his style (which he may soon have too) in order for him to continue to be successful. This will in turn will make him a better and more confident trader.
What an interesting topic! I have to say that I understand the points made by both Hitman and Tony. I think both styles have their advantages and drawbacks but I'm not convinced yet which is the better overall strategy. Actually, the trader who is able to combine the best of the three (scalp, intraday position and swing/position) probably will be able to achieve the best results. Personally I am currently generating the most $ from scalping but I am only slightly above a 1:1 ratio. The part of my game that I would like to work on next in intraday position trades. However, coming from a scalping mindframe, it is very difficult for me to hold a stock that is performing well for any length of time. I always seem to find myself saying what a great scalp this would make. Next thing you know I have taken a profit/small loss. I think scalping can draw an individual in because once you get the hang of it there is an opportunity to be right on a very high percentage of your trades. I haven't developed the methodology yet to be comfortable holding positions (unless they are hedged) for any length of time. Does anyone have any thoughts on this? DarynC P.S Sorry for making a mess of your thread Dave!
DarynC, In regard to holding your positions longer than for just a scalp you need to think about why you entered the trade in the first place and how it is progressing. One thing that I've had a hard time overcoming has been letting nice winners turn into losers. There is that gray area between getting shaken out and hanging on. Once you start "trading in the zone" (to borrow a phrase I've heard alot), it gets easier to hang on when a trade takes out some paper profit or has you paper negative. Allowing yourself to go negative while still remaining cool while you wait things out is a critical skill in my opinion. The idea that your trades should go in your favor from the very first tick and never look back is naive. The market is too dynamic to make things that easy. That's exactly how I think many traders fail, because they lock in a quick loss after quick loss, just to have the trades go their way anyway. However, this is not to say that you should let losers run. The key is to not get shaken out because "the specialist spreads you" or "a big bid (or offer) shows up". If I'm trading counter-trend, I'll take a scalp. If I'm with the trend and there is no sign of slowing or a reversal and we're not near support or resistance, I'll let it run a bit. Sometimes I'll just take some profits off the table when things went well & try to let some of the position run. I tend to enter a full position and scale out as it makes some nice moves. The key is to be flexible and adapt to market conditions. Just my 2¢. PS. - The actual amount of a scalp depends upon the stock & its normal daily range & volatility. So 30¢ or 40¢ might be a nice move for one stock while that might be a couple of ticks in another.
Sorry to dispoint everyone, but there will only be a sparce update for Friday. I even have the trade sheets in front of me, but the day was really slow, and the weekend has been really hard, actually slept for over 12 straight hours last night. But a brief on Friday, I went heavy long in Biotechs early, the BTK looked like it was going to breakout, but never did, so I exited positions with both small losses and gains on individual stocks. Other than that, I played Oils and Oil Servicers for intraday highs and lows. Ended up being in the slowest movers of the group netting me very little after commissions. Again for all those interested, I was flat... entire week has for the most part been blah. I thought Friday, would be a great day, I believe when I was long in Biotechs, I also held some other individual stocks long and short based on chart patterns. At my peak I was in over 20 positions, and up on every single one, had the market broken out I would have at least made a point on half of the stocks I was in. Ended up that I was slowly paired my positions out based on the chart patterns for flat, small loss or gain. I've enjoyed reading the posts on this thread after the Stockkbroker fiasco... wasn't even me who wrote in his thread, and he goes after me, people always looking for a scape goat. But the discussions here have been great, not always about my style of trading, but interesting to see different peoples strategies, and am glad things haven't got personal in the discussions... people can get personal, when they are dealing with money.
Daytraderdave, Just my take on things: I think people get rather emotional/heated when money is concerned because there a helluva lot of people on the net who say "Oh I make $x a year and have this that and the other" with very little to back it up. So when people come on here and say I played this stock for this much and caught this bounce here, etc they could just be plucking it out of the air after catching a few news stories. But to have the cold hard P&L means that you are true to your word or you are taking way way too much trouble to write a bogus journal. Also when you give entry and exits it allows less experienced traders (ie me) to see what you are doing and what your thinking is. We aren't trying to steal your system!! And I very much doubt that anyone has a 100% original system that hasn't been publised in a book somewhere. So please don't take this as an attack but more of an explanation of why I think people want to see "what ya got" regards Stephen