been trading 5 yrs now. I've been doing very well, but my problem was that one bad trade that cost me the whole month. Since then I've dropped my BP 5 or 10 times less. from 500k to 50k. I've decided to limit my risk by dropping my BP to 50k. I trade the most volatile stocks (active stocks that move over 10% a day). Mostly stocks under 10$. more expensive stocks are just not worth it for me, unless moving crazy. I have doubled my BP last month and I'm on my way to doing the same thing this month. My plan is to move up my BP by 50% after 2 mths of 25%+ return on my BP. Obviously I have exceeded that return by alot. I'm sure it will be harder to earn this return as my BP increases and size increases. I should be at 75k BP next mth. There is advantages and disadvantages to having my BP at 50k. But I think the advantages (risk) outweight the disadanvantages. Sometimes the opportunity comes @ once on multiple stocks and I cant take advantage of it, or sometimes good opportunity on expensive stocks and I can only get real small size. I'm willing to sacrifice that. It feels really good making this kind of return and knowing I cant loose more that 50,000$ I'd like to get some feedback from traders with experience.
You may want to poke around some of other discussions on this site. I think you need to think about what your positive expectancy for your system is. Two issues, if you trade with lots of potential drawdown, ie futures, you should expect much upside as well. (sharpe ratio) What is your risk of a blowout with these swings given a worst case scenario. Second what is the optimal BP-buying power or use of capital. Others can articulate this better than me. If you have $1,000,000 in BP should you use it. I have equity in my house, should I get a loan and buy gold in the hopes of it outperforming the loan? This are tough but important questions. Sounds like you are a prop trader so that you should focus on profitability as opposed to leverage. Now if you have a way to return 100% per month with no drawdown let me know where to send the check.
I am not experienced. I have only been trading/investing since June of 'o6. But for every losing position I have, which I dump quickly, I have 7 winning positions, that increase in value in T+1 day (and until liquidation, whether in 2 days, or 8 months) after purchase. What I do suspect about trading the more volatile stocks, which carry the wildest short term risk and reward, is that I don't think the risk/reward profile can be managed in a similar fashion; that is, I don't think I could even come close to a 7 to 1 winner/loser profile. I respect those traders that have devised ways to consistently obtain 50%+ returns on a net basis trading such volatile equities, given what I see as a higher risk profile (in terms of % of winners, even if the winners gain more than a lower beta winning position does). What I would find amazing is someone who can do such a thing in a bear market, and not just a bull or upwards trending one.
50k is fine..you can actually do very well with 50k buying power..my problem is with you trading stocks under 10...makes no sense to me but if it works for you then thats great...i trade stocks 15 and up.in fact,i cannot remember the last time i traded a stock under 15 bucks. you are missing out on some great movers,ie..fslr-wfr-tsl-grow and the list goes on.
You shouldn't have to ask or plead ignorance. The poster should have the courtesy of writing a post that is easily understood by all. I've been trading over 15 years and I have no idea what BP is. This reminds me of a very in depth, detailed forum post regarding some fairly complex data mining. A poster asking for help kept on writing "sth" without a period. Imagine, reasonably well written post regarding math, and throwing in sth throughout your post AND not explaining that you are too lazy to write out "something". I'm not implying that the original poster (OP) is lazy. This is different in that BP clearly stands out as an acronym, rather than a part of a math equation or variable like "sth" would.
I didn't quite understand it all, but if you have $50k and earn $25k, it seems to me that would be a 50% return, which is still real good for 1 month.