Advantage of looking at your trades as a Sequence vs one shots

KCalhoun said:
The main goal in doing multiple trades is to minimize upfront risk / cost of stops for initial entries that fail.

These initial trades either stop out small or produce an unrealized profit, that's used for the main trades in the sequence, your 2nd/3rd entries.

Amateur one shot: buy 1k shares at 22.6, gets stopped out 22.2 for $400 stop.

Vs

Experienced trader: buy 100 shares at 22.6, gets stopped out 22.2 for $40 stop. Re-enters 2nd time at 22.6, this time it works, scales in 200 shares at 23.1 and again 200sh at 23.4, sells all at 23.9

That's how I trade
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A couple of things...

First, your example is not apples to apples.
You have "One shot" trading 1000 shares, while "Experienced" is trading 500 shares.

Lets equalize the number of shares at 500.
The loss one shot incurs on the first attempt is $200. There are no changes to the "experienced" numbers.

With that out of the way,

The plan carried by "one shot"...

500 x 22.6 = $11300
Exit 500 @ 22.2 = $11100
Gross loss = ($200)

Now then if "one shot" takes the trade a second time, which is exactly what "experienced" did...

500 x 22.6 = $11300

Exit 500 @ 23.9 = $11950
Profit = $650

First attempt loss = ($200)

Gross profit = $450


The plan carried out by "experienced"...
100 x 22.6 = $2260
200 x 23.1 = $4620
200 x 23.4 = $4680
Total = $11560

Exit 500 @23.9 = $11950
Profit = $390

First attempt loss = ($40)

Gross profit = $350


So the glaring take-away is...... wait for it...
1) one shot used less capital and made more profit!!

You might also want to rethink your use of "experienced trader" moniker when creating these scenarios.
 
Good points, the main takeaway is, do you do single or multiple trades as your main trading strategy?

There's many different ways to approach it. From what I've seen it makes more sense to do multiple trades with smaller risk per trade, vs one big trade.

Seriously how many experienced day traders do 1 big trade per day only?

In starting the thread I was expecting to see an intelligent discussion on how you all scale, re-enter and do multiple trades, like any experienced trader does.

Not a debate re whether position sizing and scaling in and out is of merit. Sigh. Ask Any professional trader. Maybe I'm on the wrong forum lol.
 
KCalhoun said:
Good points, the main takeaway is, do you do single or multiple trades as your main trading strategy?

There's many different ways to approach it. From what I've seen it makes more sense to do multiple trades with smaller risk per trade, vs one big trade.

Seriously how many experienced day traders do 1 big trade per day only?
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1) This is a matter of semantics... when the first attempt trade was exited/stopped with a loss, it was one trade done. Your define of what is a trade may be different.

2) The numbers have shown the capital being used is less, therefore by default, a 100% loss would be less risk! Elsewhere, I mentioned you are stuck on monetary value. In this case the first attempt loss of $200 is greater than the first attempt loss of $40. However, the execution is more of a determinant of the risk.

3) Trade signals and triggers determine what trades are undertaken in a day.
 
KCalhoun said:
In starting the thread I was expecting to see an intelligent discussion on how you all scale, re-enter and do multiple trades, like any experienced trader does.

Not a debate re whether position sizing and scaling in and out is of merit. Sigh. Ask Any professional trader. Maybe I'm on the wrong forum lol.
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Actually the subject is the advantages of sequences vs one shot. So far you haven't explained the advantages.

You lose less when you're stopped out and make less on successful trades, however at the end of the day the one-shot (full position entry & exit) makes more money. Where is the advantage?
 
deaddog said:
Actually the subject is the advantages of sequences vs one shot. So far you haven't explained the advantages.

You lose less when you're stopped out and make less on successful trades, however at the end of the day the one-shot (full position entry & exit) makes more money. Where is the advantage?
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Big one shot trades also lose more money when they're wrong. Multiple entries are like hedging your bets and giving yourself more attempts to get winners.

Law of large numbers.
 
KCalhoun said:
Big one shot trades also lose more money when they're wrong. Multiple entries are like hedging your bets and giving yourself more attempts to get winners.

Law of large numbers
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I don't disagree. But using your own example the one shot trader makes more money.
 
My experience as a stock trend trader.
If trading small size, this allows for a greater number of opportunities and allows to grab more opportunities because of time. In other words, as time moves on you have more balls in play.
This only works if you are very careful in selecting high probabilities. High probability being the market is bullish, the stock according to your criteria is the pick of a bunch, carefully screened.
With time, holding a large portfolio of small sizes, it's easier to stay in the trade for longer because each individual risk is smaller.

The markets over the years keep rising, the bias is upward, you can't profit from this if you are not in.
Jumping in and out becomes tiresome, most stocks require time to work out.
On drawdowns, these become opportunities to add to positions, not exiting on drawdowns but entering with incremental small positions.
 
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