Stuff I've wondered about

Discussion in 'Trading' started by IronFist, Jul 21, 2006.

  1. Aok


    Whatever works. Farmers dont dig up their crops every two weeks. Then again, we're all dead in the long run. Have rules to get you in, and out when your position moves against you.

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    #21     Jul 21, 2006
  2. I'm not saying I would never hold long term positions. I have some now that I've been holding since I started trading in 1/05.

    Does anyone know the difference between stocks on the different exchanges?
    #22     Jul 21, 2006


    Actually 0.20 in a trade of 1-2 weeks can yield some decent profits, a lot depends on the price of a stock. If you're in multiple positions of 5-10K shares you can do okay. Example, this week I had 15K shares of a $5+ stock and made 0.15 in 4 days. Closed out a 8 day trade yesterday and made 0.40 on another $5 stock. It can add up. So NO ... one isn't a retard or new to trading if they take such profits, especially with the swings we've had.
    #23     Jul 21, 2006
  4. Hopefully your paper trading to date includes risk management for your positions. Real or paper, it's not uncommon to have a good setup rapidly turn against you once you're in the trade. You must have a plan to deal with that exact scenario in order to protect your trading capital. If you're doing a realistic simulation (i.e., one that includes order execution, etc.) then the only substantial difference will be if you manage your trades differently when actual money is on the line.
    #24     Jul 21, 2006
  5. Aok



    There are many ways to skin a cat. Look at this chart of Intel. Day range was 56 cents. I dont know about you, but I cannot buy the low print and sell the high.

    So in order to "scalp" your .20 you must have a move of at least twenty cents and be able to trade 1000 shares right? Range and volume.

    Or not!

    Look at Intels volume per 5 minutes. In the millions. Look at the price. Below $20. So even using retail leverage if you had 50k account (and you'll need at least 25k if you dont go pro(p)) you could trade 5000 shares easy and then you'd only need to scalp .04 cents for your $200

    Smaller range, GREATER volume. Or bigger range, smaller volume.

    Mix and match to find a style that will let you pull the trigger and sleep at night.

    Nasdaq, Nyse, Amex exchanges have different rules. Short sell requirements for example. Time allowable to fill ordersis another. Reread my first post to you. First rule, know the rules. And remember the rules are made by other people for them to screw you over. Act accordingly. Either become like them. Or dont play in a loaded dice game. Know the rules.

    #25     Jul 21, 2006
  6. ============
    Answered right under your numbers.IronFi

    Most of my comments are limited to ES, emini derivatives;
    HOWever,glad i learned to trade wth cash stocks, mostly unleveraged.:cool:

    Big , BIG,BIG,difference,starting real trading & using simulator-papertrading;
    all of which is helpful. Wisdom is profitable to direct.
    #26     Jul 21, 2006
  7. alanm


    Quote from IronFist:
    Is there a significant difference between stocks on the different markets? Why would someone only trade NYSE stocks but not AMEX, for example?

    Some strategies are tailored specifically for a specialist-driven market (NYSE/AMEX) as opposed to a MM market (NASDAQ). Most people don't like to trade AMEX at all because of the rampant specialist abuse that is still present there. You should probably stick to NASDAQ as a newbie - trading a specialist market (NYSE) requires additional skills and experience.
    #27     Jul 22, 2006
  8. Aok



    Except for ETF. Even there you must be careful.

    Open orders "strategy" on Nyse. See the rest of what alanm mentioned.

    #28     Jul 22, 2006
  9. sprstpd


    If you do not want to elect mark-to-market accounting (so you can avoid thinking about wash-sale ramifications), then one way of avoiding wash sale rule is to not trade any security you traded before Dec 1st of that trading year. Trade different securities for the month of December, then stop trading these different securities in the month of January the next year. Even if you had wash sales during the year, they wouldn't affect your taxes if you adhere to this method. Ideally you could trade securities in December that were correlated with your usual trading list.

    If you are a noob I suggest you not trade futures and instead stick to ETFs or specific stocks. Even though there are cost savings associated with futures, 1 contract usually controls more money than 100 shares of a stock. At the beginning, you want to control your burn rate - staying small is the best way to do that. When you gain confidence in your trading, then up the size.
    #29     Jul 22, 2006
  10. LowRisk


    I've been day trading for almost 7 years now and I have never met a consistently profitable trader who doesn't scalp. I myself make over 300 trades a day with about 250,000 shares. I don't make a lot of money but I make more than most people (traders included). Currently I'm running a gross positive streak which is going to reach its first anniversary in 3 weeks. I've had about 20 net down days (because of commission) during the same span. And none of the down days was greater than $300. I have a good theory on why consistently profitable traders scalp or why scalping produces consistently profitable traders.

    All good traders have a good methodology. Too bad having acquired a good methodology doesn¡¯t make all traders good traders! The difference lies in the theory of probability and of course the almighty money (risk) management. If you flip a fair coin 10 times, you may get 10 heads in a row. But if you flip it 10,000 times, more or less you¡¯ll get heads and tails half and half. Now think how a casino makes its fortune. A casino has a built in house edge in every game that is available to gamblers. But the house is very nervous if a person with a million dollars wants to bet it all on one single blackjack hand because though the casino may have 1 to 5 percent edge in the game, the outcome of one hand can be anyone¡¯s guess. Casinos¡¯ dream customers are ¡°whales¡± who play it big and play it OFTEN. Only in the long run does the house advantage reveal itself. A million dollar customer is very welcome if he plays $10,000 hand many times over. He may not even be let play if he wants to bet it all on one hand.

    Same thing can be said about trading. If you already possess a good trading system, it means you have an advantage over the market. Good money management will enhance your edge and may sometimes turn a not so good system into one. Now many people say trading is like gambling. Guess what? They were right. Except in this case since you own the edge, you ARE the HOUSE. And since you get to initiate every single trade, you¡¯re forcing the big whale, the market into playing lots and lots of hands. High frequency trading helps you maintain that edge and you¡¯ll never have to commit to that one million dollar hand. Don¡¯t let other people¡¯s success fool you into thinking that the only way to riches is to play a few very high staked hands. Those people were either very good or very lucky. No offense, but you¡¯re unlikely to be either one. Have realistic goals and expectations towards daytrading and you¡¯ll at least enjoy the ride if not successful. Best of Luck.

    P.S. Try a prop firm if you are serious. Online discount brokers are for cheap investors.
    #30     Jul 22, 2006