Suppose, you are a prop trader with very low commissions. Trading a single or a few (but the same) NASDAQ stocks all the time. I am kind of at a turning point in my development. I thought I found my place for a while scalping the high volume low volatilitly stocks like WCOM/SUNW. Still the 1 dollar or more moves in stocks like NVDA keep pulling me like like a magnet. Therefore the following question. Question: Which stock has the most potential to bring a savvy quick trader unholy amounts of real coinage in a short time period? (and why) I appreciate any kind of advice. Bachelier ps. I haven't ruled out the ol' liquid blue chips yet. ps. ps. Another way to state my question would be; should I stay with the old tactics or not/Should I change the winning team for a potentially even more winning team?
Bach, Couple of questions for ya'. One, when you say low commissions just exactly what do you mean by low? Cuz low commissions is a relative thing. Some would consider .5 cents per share low, but I wouldn't. It's decent but not low. Where am I going with this you ask? One more question first, what type of risk parameters are you operating under? The reason for my first question is because if your commission structure is set up to give you an advantage trading highly liquid, reasonable volatility stocks ie.) CSCO, SUNW, et al then it is foolish not to exploit this advantage. Having a very low commission rate gives you a competitive advantage in such stocks as SUNW because you can exploit the smaller moves that many traders may have to ignore simply as noise because their commission structure is prohibitive. If this is your situation than making more money for you is simply a matter of trading greater volume and not a matter of taking greater risks. The risk parameter question is important because it can be constraining. Trading a stock like NVDA is a whole different risk/reward equation. Sure it has 20 to 30 or more cent 1 minute candles but don't assume that you can trade them as effectively as you might think. In order to enjoy the benefits of these types of moves you are going to have to accept the inevitable downside of these types of stocks. This means putting yourself in harms way and you and your firm may not be willing to accept these risks. Truth is ... some people can trade "slow movers", some can trade"fast movers", and some can trade both but don't assume that success with one style will automatically translate into success with another. It takes time, go slow, and be prepared for some pain. MACD
MACD, Low commissions in my case are the exchange/ecn fees + SEC fees. Risk parameters are pretty tight. They are tailor made though, so could be adjusted. I certainly thought about the cost advantage in the CSCO's. Real life shows though, that a LOT of traders are trying to exploit this advantage, untill it's not much of an advantage anymore. If you watch the level 2 carefully you will know what I mean. Trading greater volume is what I do already, but I could go higher, which is exactly what I would do if I would choose to stay with for instance SUNW. Problem is, as positions get larger, it becomes tougher to get decent fills. going from 500 to 1000 is much easier than going from 3000 to 6000. I guess you are right trading the fast movers is gonna be a large transition. Do you think it is worthwhile though? Is there a large enough profit potential to take the pain? Does anyone have experience with this?
Gee, Kat, TradeRX, whatever you want to be called, what is your problem? didn´t get enough attention as a child?
Bach, I guess you can't beat your commission structure! As far as whether or not trading more volitile stocks is worth the risk, I guess you need to ask yourself whether or not you have really peaked trading less volatile stocks and high volume. If you think you have, well by all means step it up. Big thing is going to be the learning curve, your going to have to learn how to dance with these girls and that can be a helluva challenge. On the plus side of course, if you find yourself on the wrong side of these bad boys you can ditch quick and often and your commissions aren't going to kill you.
if you were to pin me down i'd have to say i pull bout 2.5 points a day out NVDA. i reiterate ...i OWN that bugger. i know her well. hehe
Brother Pussy, I am happy you like NVDA, it is a nice stock. What methodology do you recommend for trading it? Love... Your Brother, Candle
candle, thanks for asking, i keep it simple as you have often suggested, basically when it's going down i short it, and when it's going up i buy it. working for me very well. not the holly grail but at present it's making me $$$. what is working for you? edit: i will expand, the key as i see it is you must get in on the trend early, and ride that mother for all she's worth. dont get shaken out on a wiggle, but exit as soon as it begins to retrace. that's how i do so well.
Brother Pussy, Thank you for that clarification. In future I will try your strategy of buying things when they are going up (and vice versa for shorts). It seems a sensible approach. With all my Love, Candle