well, it was pointed out to me by someone that in 41 trades i only made $1.4 SPY points. that's 3.4c a trade. now the commissions on SPY are what? 2c per share one way? so thatd be 4c per trade? heck, even if its 2c roundtrip, still that only leaves 1.4c per trade. Hrmm, so what does that mean... On the surface I have a nice system with a profit factor of 2. But when we add in the reality of commissions I have nothing! Hrmmm. In other words the system's risk/reward characteristics are very good, BUT in absolute terms it's making very few dollars, not enough to counter commissions. Now why is it making so little $? Because I only take trades with very small risk (10c), so that makes my profits also very small (30c). In other words I'm operating on a very small scale, on very small numbers. And on such a scale, commissions absolutely kill the whole thing. So what's the solution?
well i tried the real thing today ES. and well the worst of fears came true. the patterns are different on ES than SPY. the lines "dont line up" like they do on SPY. i think this might be because of .25 minimum tick in ES. but then again i prolly suck regardless. i think its back to the drawing table.
It's not that some traders cannot trade... it's that they don't want to trade. Think outside that box. NihabaAshi
You wouldn't be spending this time if you didn't want to trade. At the same time it has to be a little disheartening to figure out that you're not going to be making much after commission. Amazing how that seems to end up being the case for a lot of traders...the only guy making any money is the broker. And if your broker is IB (one of my brokers as well), the commissions are dirt cheap in my opinion. Have you ever wondered by you feel you must use a stop of 10 cents (I think that's what I understood you to say)? It seems to me that this is a very tight stop. Without wishing to practice any psychology, are you fearful about losses? Is that why you've set the stop as tight as you have? Allow me to give you a little philosophy TKay. The times with the most potential are also the riskiest. But when they work, they are also the ones you could have used the tightest stop. Think about it. Now part of the problem you and other newer traders have is that you are looking for the so-called safer entry. The way you accomplish this is through using some type of intraday chart in which you wait for some type of formation. The problem with "safer" entries is that ironically they probably need more leeway in a sense. Where you have to get yourself to is to take these trades in which you can set some type of reasonable stop, which have huge potential. Here's a hint TKay: 30 cents is not huge potential. TKay...how would like to ride that SPY for 2-3 points? But you might need to use a little bigger stop. And if that 'frightens' you for some reason, reduce the size you're trading. I would suggest that you go back and instead of looking at chart formations, put your chart on let's say a 5 minute chart, and then look at those bigger moves. Look at how the bottom formed (or top), and what was necessary before the move actually took place. Go back and look for the last few months at all of the moves. Take a look at what the daily chart looked like, not just an intraday chart. Believe this...if you'll do this, you'll find that all of the move have things in common. They form and move in the same ways. Now you might have to sit longer than a day in the position. You might need a little bigger stop. But the commissions will become less of a factor. Now, I'm not personally much of a believer in intraday charts. But that's alright...if you do, then use them. But remember something...the whole goal, whatever you use, is get yourself in gear with the market...and then ride it...let it do it's thing for you. OldTrader
One of the truest things I have heard said on these boards in the last 4 years... Unfortunately many will try desperately and in vain to avoid the other half of the coin... Like constantly turning left to avoid their rights, they run in circles... Funny how you take the time to help kay and he dosen't even respond Reminds me of a quote I read somplace. Truth knocks on your door and you say go away, and so it does... PEACE to you Old One, Commisso