[Update: did some more scalping. Is this a bad thing? I think so.] Dec 30, 2010: Net of sales: $190, Net of commissions: $166 Average profit per share traded (sell 1, buy 1 = 2 shares): $0.037 % on capital used: 0.75% % index gain (as of writing): 0.28% Trade size: 300
Hey man. Looks like you have been learning a lot since I last read this. It would also appear that you are learning some of the problems with scalping stocks on a retail account. You have slippage, commissions, and all sorts of other problems. I've said it before, but my biggest advice to you is to start trading index, commodity, or currency futures. Those are trading vehicles. Scalping stocks for a penny or two is a losing game IMO. I understand your reluctance to switch. Everyone starts off with stocks. We think that's what traders trade. But stocks are for purchasing ownership of a company. There are other vehicles for short term speculative gains. Trading is trading no matter the market. So why not pick one that has less obstacles. You also have the advantage of trading a single instrument every single day. Trust me, that is an advantage. Every instrument has its own personality. You won't gain that edge trading different stocks everyday.
I think I *should* be able to make money on a daily basis without scalping in stocks. I believe if I can't get this working consistently, then I have no hope. Maybe others will agree with me? By the way, I only trade one stock and you are VERY correct about different stocks having different personalities. Scary!
The biggest problem I see with your future trading career is a lack of motivation. You already do pretty well for yourself. You already have capital and you are looking to trade to avoid the daily grind. You can definitely get to the point where you don't have to trade much to make a lot of money. But getting to that point takes years. Until then you are going to have to spend countless hours staring at charts and making notes. It seems like you are giving this a couple month trial. I would bet almost anything that you can't find out if you will make it in a couple months. Trading is a profession. The top individuals in almost every profession are rich. That's what you have to do to make a lot of money trading. You need to be at the top of the profession. Do you think you can outsmart millions of traders worldwide with only a couple of months work? On the plus side you are obviously intelligent. If you put in the work that everyone else has you could probably succeed in this field. IMO your field is less important than your potential, your drive, and your work ethic. An intelligent hard working person would do well in whatever field they are in. Your previous income shows that you have the potential to be a successful trader. But do you have the drive and desire to be a professional in this field? There are no get rich schemes in this world.
I don't really care about getting rich. What is rich? I want to be rich in time and don't want to be worried about the basics. Big car or house, those would be nice things but not essential. For me, the most important thing is time. You can only raise your rates so much. As you have pointed out, I am considered by some in my profession to be very good at what I do. However, I am humble enough to know that there are super talented people in my field who get paid north of 1 million annually and do much better than I could. In the end, I want to develop a consistent income through trading. This may or may not spell the end of all other forms of income. However, it is the only one I have in my hand with the potential to outlast any technological or societal change (barring guns, ammo and orange juice time.) If there is any guarantee in software, it is that good software takes 10 years... I'm sure there is an analogue in trading... A good bankruptcy takes 10 years? I'll remember to stop trading after 9. Thanks for your message, hope you can see my point of view!
Dec 31, 2010: Net of sales: -$85, Net of commissions: -$121 Average profit per share traded (sell 1, buy 1 = 2 shares): -$0.017 % on capital used: -0.55% % index gain: -0.77% Trade size: 300 What a day. I scalped a bit in the morning while waiting for some direction. Scalping was ok and I had no problems there. But then I thought I had a setup and instead, it was a fake out. Had I stuck with the trade however, I would have been positive but I was not sure about the day's direction. It's hard to imagine the market just slowly floating upward based on nothing, but that is what occurred after the fakeout. An hour or so before the EOD meltdown in ^RUT, I put in a short order as I was expecting a meltdown. It could have just as easily been a meltup though. Unfortunately, I was exhausted and didn't want to wait until the end of the day to take a nap so I took the trade off. Needless to say, it would have made the day very high in the positive. I still don't quite understand why some days it melts down and somedays it melts up at the end. I read an explanation somewhere about delayed orders but it didn't seem to explain it for me. All in all, it was a pretty helpless feeling day! Notes for improvement: * Get a proper night's sleep * Figure out whether I am attempting to develop trading balls or a trading strategy. Leaning towards former at the moment.
Jan 3, 2011: Net of sales: $674, Net of commissions: $634.50 Average profit per share traded (sell 1, buy 1 = 2 shares): 0.08 % on capital used: 2.9% % index gain (as of writing): 1.9% Trade size: 300 It was pretty much impossible to lose money today. I followed the trend up, followed the trend partially down. Interesting to note that I did not catch the majority of the index move today however. Partially, this was due to me not switching orders when the trend changed. I missed a large trade due to this omission. I still find myself afraid to lose money sometimes even though it's just paper money. Need to iron that out. Days like today are easier to build confidence though. Also interesting to note is the average profit per share traded is still tiny (0.08). I need to get that up there. Thinking about improving this number while trading did help me stick to a minimum amount of trades today but we will see. Still early days.
SWITCH to real monies. NOW. I know few will disagree with me. may be bite my head off but - profit per share is 0.08 ???? and you are scared in sim ??? take my advice. trade even smaller size. risk 40-50 bucks a trade thats all. trade very high volume, low volatile stocks. Study stocks relationship to futures (premarket). enter when you see a trend starting. Reverse everytime you get the trend wrong. And start getting comfortable with trying other stocks. as others have said, screen time is key and a variety of stocks will help you extremely. If you are serious about trading, you will have to take it to realmoney and feel some ULTRA high anxiety. If you come in to real trading with full size from paper trading (after you have been profitable there) you will not know what hit you.
I can see value in what you are saying but it has only been 9 trading days. Probably once I am comfortable with paper I will move on to the method you are suggesting.