I slept 3 hours yesturday and crashed a bit today.
Then I woke up and it hit me !
I know I over trade, but that is because I want to make money and the market only gives it to me couple of 5-20 cent moves a day. To achieve a cumilitive 1$ per share is a task in it self that is only done a few days of the month.
There are times when I'm sure things will go my way, we hit clear resistance and the spy does too. It feels like there is a free 10 cent move. A high probability trade. So I take it, and make 10 cents. Then I try to add to that and take less probability trades.
If every day I see 1 perfect entry (with a 10 cent gain) to keep my win % up. I could only take that one trade. Instead of spreading my 10,000 shares over 100 trades (100 trades x 100 shares), I do it one time on the perfect set up
By being cautious, and limiting my risk with low investment, I am actually taking on more risk by taking mediocre trades.
A typical day for me is 100 trades of 100 share (I consider it paper trading). 1-3 of those trades I could bet my life on. The rest I see as 50-50s but are actually under 50 50
My previous results are worse then a new comer because I will take any trade that presents it self and assume, that if I see even the slightest reason to buy, I take it assuming that if I'm correct 60% of the time and use good stop loses Ill be up for the day.
Could that be why I was having difficulty ? Could it be that simple, under exposed and over trading with too high expectations?
I Can be more picky
So I ask you,
How many trades do you make a day ? me 100
How many shares do you buy? me 100 at a time
What is your target for the day ? A billion dollars!
What percent of your time do you spend not "in the market"? me 90%
Now will buying 10,000 shares create liquidity problems, that is to say, will it be the same as buying and selling 100 shares ? or will i have to take 1 cent lose due to slippage?
or will accumulating 10000 shares take the whole range of my swing (entry to target)?
Some slippage is OK, as I will be able to be fully focused on the one trade and enter at the perfect place and have a tighter stop lose.
I'm curious how often the pros trade and what there goal is per share and frequency of trading.
It has little to do with frequency of trading or how many shares you trade. It also has little to do with how awesome a setup looks, or how sure you are that it is going to work. There are no guarantees, great looking setups will fail a certain percentage of the time, and awful looking setups will win a certain percentage of the time. It comes down to Expectancy. How has the 100 share setup behaved in the last 6 months? How did the 10000 share setup behave in the past 12 months? Determine the expectancy of each of these approaches, and then make the decision on which will work best for you.
Personally, I prefer to take more trades, and risk less on each of these trades, rather then take few trades and risk more on each of these fewer trades. This way you are spreading your risk over a large sample, and therefore each trade carries less weight in your overall performance, and thus carry less psychological pressure as well. You also give yourself more chances to be wrong, and still be in the game. Ignoring the technical details of commissions etc, If you want to risk $1000 max loss per day, and spread that amount over the average daily number of trades in your method, If you know you will get 100 setups for the day, you can take 10 losses in a row, and still know you have 90 more chances to make money. If you know you will get only 2 trades in a day, and the 1st trade is a loss, I guarantee you, you will start 2nd guessing yourself, and screw up the management of the 2nd trade when it shows up. Why? because now the 2nd trade carries so much weight in your trading method that, that 1 trade alone will determine if you win or lose for the day. This will certainly affect one's trading psychology.
Obviously your personality comes into play as well? Some may feel bored waiting for 2 trades a day, and others may feel 100 trades a day is way too hectic. Personally I look for trading methods that will generate between 10 to 20 trades per day. This gives me a nice manageable number of opportunities to spread my trading risk over, a manageable amount of trading activity for my personality, and manageable commissions, etc.
Last edited by monpere; January 20th, 2012 at 01:37 PM.
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10 to 20 trades a day sounds like a good compronise. But I think the more i trade the worse my win %. I did try the system. and this is what i found:
It really helped me with money management I had time to calculate win lose ratios on the fly. this on its own is worth it. I also found that i had some time to do alot of the work i woudl typically do at night in the day time.
Also it let me add things to look for in to my entry. originally i was trading the spy,fas qqq ect by seeing how each is reacting to each other. Then i breifly stated looking at stocks ignoring the spy.
Now i can look at both and having difficulty gudging how much weight to put on what. But just the fact that i have time to think about such questions is a positive,
Also the relation to a single stock and the spy is being learnt.
Im adjusting my stops. better and actually learning the reprocusions of not pulling out in time. This is something that was in my face when i was doing 100 trades a day but never got the time to play around with it .
But i must say it is boring as heck! But hey its money !
I did find myself over trading again but not like i used to. maybe i did 10-20 trades instead 1 or 100. At this point that time finding new trades would of been better of finding 1 more perfect trade.
I was in stocks for way longer ! even though my stops were TIGHTER and target was the was same i would not get stoped out as often.
It was not a perfect day. I broke even. considering there was so many new things going on (not used to stocks, combing strtegies with looking at spy playing with stops) I am not disapointed.
I did at one point place 2 trades at teh same time on different stocks. Im not sure what happened. but one of them got away (i use manual stops) This caused i big negative on my day. I think after this is when i started over trading again.
But again it was my first day. alot was learnt and to break even Is teh best place to start. now i can actually keep track of my trades !
Juts curious why some one stoped trading at a prop firm cause he was posting on a forum but ill read his thread and see
I would agree that trading more often has it advantages if you are organised. It lets you look over your statistics at the end of the day and know that they have some merit as there is a large number to look at.
But when I trade that often, there is no way i can keep track of the trades. I don't have time to even look properly place my stop loses and look at risk to reward ratios. On top of that I cant seem to keep track of how much was made or lost on each trade. Maybe I'm doing something wrong I don't know. My finger finds it self on the sell or bye button and opening my calculator leads to price running away. Typically when i trade 200 trades a day i am out within a few seconds if things don't go exactly my way.
Some one mentioned that by trading more often they limit there loss.
I disagree. my stops were much tighter when I trade less as I have time to pick my exact entry. So iwas actually risking less cents per stock.
The thread about the prop firm scalper is very interesting. In many ways I am similar to him. But in too many ways I am not.
Firstly I must say that this is the first time i read something about level II that makes some sense. Everything I read I either saying its useless or its the holey grail.
This guy has given me new insight in to things as he uses it as part of his entry only.
Also I tried this before and gave up on it but his post showed me that using on the spy is hopeless. I will have another look now that i am trading individual stocks.
Unfortunately he is much to advanced for me. And I have seen a number of things that I lack. It really is discouraging to see some one who knows so much more then me still struggling. But maybe the stuff he knows is all useless.
One thing I did notice was volume. Every one loves volume.
I see volume no my charts and they do happen at key areas that i am looking at. but besides that there is no use for them. There is no trade in my opinion.
But he seems to screen for stocks that are in play.
Something I was scared to do as in my opinion this is high risk.