How are you ahead 20 cents if you buy the stock at $10. That statement, and the thought process behind it is wrong. As for your probabilities, I'd revisit that as your numbers are 100% wrong. You fail to include scratches, stocks that don't move, slippage and mistakes. Perhaps you should take a course on probability and statistics before you trade. You're not ready yet. Jeff
I pay 2 cents per 100 shares. I don't think there are actually any fees incurred by broker/dealers other than ecn and sec fees when a trade is placed. So any traditional broker simply charges a commission for what they offer. The prop firms are not technically brokerage houses. You trade their money and usually put up a deposit to insure your losses. You split the profits and usually take all of the losses. Depending on the deposit and payout ratio the "commissions" they charge will vary. I chose a firm with a lower payout to get the 2 cent commission. They aren't making any money on the trades, just the profits. There is a lot of info on ET about prop firms, so look around. Be sure to research the company because they do not carry the usual funds protection and customer service that brokers offer.
The quote about me saying there is a 10 cent hard stop was in response to someone saying I was an insurance company with no hedge in case of a hurricane. In my first post I clearly stated that I put a stop on every order. I have gotten stopped out at swing highs and lows, that's the way it goes. I have learned the hard way not to hold on to losers, or at least to know when to get out. What I mean is I have to be willing to get stopped out multiple times and keep going. Because this is a counter trend strategy, it works best in a choppy market. Yesterday afternoon was trend straight up for 2 hours, so I got stopped out 6 times in a row for a $60 loss. But I then traded it back to break even by the close. So if I can break even in a trending market, I will make a lot in the choppy markets. Today after the fed announcement, I was getting 4-5 cent profits no problem in the choppiness. Then around 3 it started trending way up and then crashed down, so I gave some of it back.
No that's just an example. I get huge buying power but for now have never traded more than 200-300 shares of XLF. I'm trying to scalp a few cents on each trade and do that all day. The XLF and QQQQ bounce around all day and if you throw up an order anywhere near the current price, you usually get filled.
If I understand you correctly, you are saying that to buy at 10, it would have to trade through it and then the bid would be 9.99. Yes that is technically correct. However when something is trading 200 million shares a day, it is very easy to buy on the bid. Often many orders come after you in the que, so you won't be that last to get filled. I have gotten many fills on the exact swing highs and lows. There is one slight problem I'm trying to work out a solution to. For the life of me, I have not figured out why Sterling trader does not have a one-sends-other order feature. So instead I have to place a buy at 10 and then place a stop limit order with a stop price of 9.99 (to make sure I get filled) and a limit price of 10.03. It has cost me a few times when I got a good fill and didn't immediately sell because the stop limit wasn't triggered yet. This shouldn't be a problem when I try to automate this. Thanks for the response.
I have some questions for you. How the heck do you get a $0.20 discount on the shares by adding liquidity? If I were you, my simple strategy would be to always put my limit on the bid until it's filled, and adjust the ask as it moves until it's filled. I'm pretty sure both would assure reasonable pricing if you're "given" 0.20 on the entry. Which firm are you with?
A stupid approach. Going for 2-3 cents with a 10 cent stop is for losers. 4:1 risk to reward? Good luck. Do you really think you can win 4 times in a row and then lose once and wipe out everything you made over the long haul day in and day out? Good traders are at least half as right. You, with this approach are going to lose it all 4 times faster than you think.
Didn't he say he got $0.20 for adding liquidity? He can buy sell and lose even $0.10 with this, but I may have misunderstood him.
where's the strategy? you are merely stating your preference to add liquidity than to remove with quick profit target.....is that it? this is not a strategy............it's just a dull risk/reward mangement at best. you can't just add liquidity all the time......people hit bids/offers for a reason.