I'm a trainee at a SwiftTrade branch. As you probably know, we are encouraged to scalp stocks for quick 3-10 cent movements. The idea is that once we work our way up to trading thousands of shares, the profits come quickly. I want to try something different and would like your opinion. Over the past two months, I've seen many trends and ranges where much more profit can be made if one would just sit on the trade for 30mins to two hours, instead of 30 seconds to 10 minutes. Right now, a lot of people including myself get shaken out in the small retracements simply because we're chasing nickels and dimes, leaving us with a small profit as the stock resumes its trend. What I would like to do when I detect a trend is to get into a trade with just a part of my buying power, and if it goes my way, let it sort itself out through the brief retracements, the midway consolidations, etc. And while that's happening, go look for opportunities in other stocks. With ranges, trade them only if they're wide (at least a 10 cent move in either direction). Now this is heavily discouraged at the office, but I figure that this way, I'll get larger profits per trade, will save on fees, and when I work my way up to tens of thousands of shares, have a more efficient strategy. I've been trading for only two months so your input is appreciated.
Why is that strategy "heavily discouraged" at the office? I suspect that Swiftrade focuses primarily on rebates.
Some branches do, but not this one. It's discouraged because they want us to make money through small price movements by using huge volume. If you punch in 5,000 shares in a stock and it goes your way by three cents, that's $150 in a span of a few minutes or even seconds. My thinking is, if a stock is in a trend, then punch in with fewer shares, but stay in longer. Widen your stop loss and ride through the retracements. This way, you can catch 15-20+ cent moves at a time. You also don't need to be staring at the stock all day long. You can look for other opportunities in other stocks while that trade is doing its thing.
I like doing one day trades. Like today for example, IRBT fell to under 13 i bought @ 12.99 and sold @ what it is right now 13.25. I like buying stocks that fall hard in one day, it usually bounces up from the lows of the day. I too aim for a quick .10/.20 profit.