Sure, if you aim for 1.0% move, it is only natural to have a 0.25-0.35% stop. But you will also have to risk smaller fraction of your capital per each trade. If you risk 1.5% of your equity in a swing trade, perhaps you should risk no more than 0.5% in a day trade.
I should deffinitely do that, perhaps I could risk 0.1% of my equity per day trade - then I have to lose 50 times in a row to lose 5% of my equity, which will be a cheap way to find out if I can make it.
Those are decent numbers. Stick with your program. But if you are also looking for some intraday action, daytrading equities is a very tough business. I'd suggest that you look at Index Futures. Especially ER, the Russell 2000. You'll find it a lot easier focusing on one instrument, and by getting a feel for how the indexes move every moment, it willl help your swing trading. As a long-time swing trader, that's the path I took, and it has been a good one. The two approaches complement each other nicely. Good luck.
I wouldn't use the entire $500,000 to day trade. I would allocate a fifth of that to do so. Even though theres a lot of volatily in today's market (which is obviously good for trading) there is still no sense of direction of the overall market. IMO it can go dramatically up or down, thereby making it rather difficult and risky. When you get used to placing your stop losses and so forth, then allocate more money. Starting with $500,000 right of the bat is too aggresive, unless you have a net worth over a couple million or so. It's money that you may potentially lose, and should be able to afford to do so. Good luck!
This is kinda like saying "Well I can drive a car pretty well, should I race in NASCAR?" .... I've done both, and even though i wasnt too good at either one, swing trading was easier.
Thanks a lot lindq, I might focus on one instrument at first, this will help me be more selective in my trades and refine my strategy. Do you stick to one instrument (an index future) or you also day trade stocks?
Open an options account, throw the entire wad on your first trade. If you are right you'll be a millionaire, if you screw up it's hello quarter million. A good way to visualize the mindset you'll need comes from the movie True Grit. Rooster Cogburn is facing 8 bad guys when one of them calls him a "one eyed fat man". With that a riled "Duke" yell out "FILL YOUR HANDS YOU SON OF A BITCH", puts the reins in his teeth, kicks the horse in the ribs and charges the villians. With 6-shooter and lever action rifle ablazing he mows 'em all down. Yes sir, trading shorter time frames takes some intestinal fortitude. Good luck. Rennick out
I still swing trade stocks. But like you, I wanted more intraday action, as my swing trade setups were not everyday. My first instinct, like yours, was to move a few stocks to an intraday picture. I didn't like it. I found that even more than on daily charts, the equities were being pushed around heavily by the market, and were very unpredictable on short timeframes. So I started watching ES and ER minute charts to help with entries and exits, and that drew me eventually to throwing out the equities intraday, and putting my attention fully to ER. My attitude was/is, why screw around with the equities that are being pushed around by the market. Why not trade the market itself? So at this point I do on average 2-3 index trades a day with some successful setups based on 1 min bars, and take a few longer positions in equities. As I said, you may find, as I do, that they are mutually supportive. And on intraday bars, I like the "feel" of the way the indexes move, much more than equities. And with much greater liquidity, getting out is much easier if the market moves against you. Try it, I think you'll like it. One contract with tight stops to begin, and don't start without a system in mind. Backtesting really helps here. At least 1 min bars over 6 months. Start by looking at sharp peaks and valleys intraday. And specific times of day are interesting as well. Good luck.