I'm starting this thread, because i'm confused why anyone would bother to trade boring stocks that are not likely to move more than 2 or 3% at the most. I know many people only trade NYSE stocks or grind stocks for dimes and quarters. Why do this when there are bigger fish to catch? Seems like commissions eat up all your profits. It seems to me that if you are good trader, why not trade the most volatile stocks that you can find. The bottom line is that if you are successful trader, you can time the market. So shouldn't you be trading the most volatile stocks? Generally these are high tech stocks or special situations. If you can correctly call a move, wouldn't you rather it be a $6 reversal on QLGC or a $3 trade on JNPR than a borring $.50 move on a nonvolatile stock. Or even trade $1 stocks with huge liquidity, like EXDS before it went under or even GX now. EXDS was routinely moving 20-30% a day. To me, the name of the game is being able to determine what the market is going to do next. Being able to call correctly the next 5% move in a stock. Let computers and arbs make a 1000 trades a day for $.02 profit. The big money belongs to the day trader that can call the big intraday moves in the volatile stocks.
A fine example of irony. Seriously, though, we all have different styles. Not everyone has the same goals, either.
"The big money belongs to the day trader that can call the big intraday moves in the volatile stocks." Can you do it? If so please enlighten us on how you call the big intraday moves as we need all the help we can get. tia
Sure wish I had loaded up on 10,000 shares of EXDS before it was halted for bankruptcy filing. I would be sittin pretty right now....pretty broke that is.
I know it's trite, but somehow it's apropos: There are old traders, there are bold traders, but there are very few old bold traders.
From what you said, you are trying to catch "big moves" in volatile stocks. You talked about special situations and predicting market direction. Maybe options trading is more suited for this style. With options, you could custom tailor your risk exposure and make plays on volatility as well as direction. Just my .02. On the other hand, small consistent profits such as one or two percent a year compounds wonderfully. Do the math and you'll see what I'm talking about. That's what I see daytrading as: small consistent percentage wins so that one can raise share size and trade bigger. It all comes down to philosophy I guess.
Silk, I'm not sure if you are actually trading what you are saying. Have you tried to trade these highly volatile stocks and correctly call "the next big move in the stock". I have been trying to trade these for some time now, and given that I am a lousy trader, it is extremely difficult to catch any significant moves in these stocks on a consistent basis without getting shaken out of your position just because of the very same volatility that you think makes these stocks attractive. Give me a nice slow stock that I can consistently make .25 on and I will take that over a highly volatile stock any day. I will sleep better knowing that I can more confidently forecast my income from trading rather than being on the roller coaster of the 30 point a day movers.
Maybe it's boring, I dont know... BUt today I caught a 90c avg move on 7500 ba, a 70c move on 6k beav, and a 65c move on 2400 dcn today. Call me crazy, but it's probably more money than you can reliably pull from some super volatile stock in a month of trading it looking for 10 pt moves. The big moves are just too hard. I'd rather just take a reliable 1-3% profit every day with small drawdowns. It's how I lsurvive as a trader. I recommend you look to the smaller moves, and strive for consistency.
Silk, Be ever mindful of the polarity that lies between risk and reward. Risk is almost always proportional to reward and visa versa. While it is true that you are more likely to catch bigger point swings in the naz stocks (glamour,bio's,tech) you also have to risk more. In the end there is really no difference (until you have a size problem) with catching a 1/2 pt move on a 1/4pt risk or a 1pt. move on 1/2pt risk, as long as you are maintaining the same risk per trade in terms of $ or % of equity. PEACE and good trading, Commisso