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Average Gain per trade?
- Thread starter c_verm
- Start date
Don,
You bring up some very interesting points. I believe the average profitable Bright trader makes 1-3 cents per share net of all costs. Correct me if I am wrong.
Some people say that is is crazy trading for such a small gain and you are much better off looking for a quarter to a point while using a stop of .25-.40. But if we were to take a look at their numbers at the end of the month I have discovered that they too average 1-3 cents per share traded more often than not. So I guess it all comes down to personal style.
I think the scalper has an advantage in that he has many more opportunities throughout the day than the longer time frame trader. The drawback to scalping is that one big loss (ie. .25 cents) can can ruin your day.
One thing I have never been able to get out of you is how much you are willing to risk on a trade where you are trying to scalp a nickel or a dime. Your standard response had always been "read the tape" but surely you must have an uncle point somewhere? Or at least what you think is a reasonable uncle point for normally capitalized traders (not billions like yourself... lol). If you were to apply the standard bit about 2:1 risk to reward your would be getting out every time a stock went against you 2-5 cents. This makes a high winning percentage pretty difficult. No?
Cheers,
Daryn
You bring up some very interesting points. I believe the average profitable Bright trader makes 1-3 cents per share net of all costs. Correct me if I am wrong.
Some people say that is is crazy trading for such a small gain and you are much better off looking for a quarter to a point while using a stop of .25-.40. But if we were to take a look at their numbers at the end of the month I have discovered that they too average 1-3 cents per share traded more often than not. So I guess it all comes down to personal style.
I think the scalper has an advantage in that he has many more opportunities throughout the day than the longer time frame trader. The drawback to scalping is that one big loss (ie. .25 cents) can can ruin your day.
One thing I have never been able to get out of you is how much you are willing to risk on a trade where you are trying to scalp a nickel or a dime. Your standard response had always been "read the tape" but surely you must have an uncle point somewhere? Or at least what you think is a reasonable uncle point for normally capitalized traders (not billions like yourself... lol). If you were to apply the standard bit about 2:1 risk to reward your would be getting out every time a stock went against you 2-5 cents. This makes a high winning percentage pretty difficult. No?
Cheers,
Daryn
Quote from ElvisOnMargin:
How can you make 7 trades a day with a $5 K capital and the PDT rules? You know about the PDT rule, don't you? Maybe you mean that you trade in 5K chunks? But even then, if you had a sufficiently funded day-trading account you could trade $30+ stocks in 1000-1500 shares sizes (and that's very conservative) and it does not jibes with the rest of your statement to the effect that you can "only afford" to trade sub-$5 stocks in 1000-1500 shares size.
Unless you have a cash account that your broker lets you daytrade (or a prop account, but where is your leverage?), what gives?
Not criticizing, just trying to get some clarifications...
Elvis
Im not sure what the PDT rule is?? I am a rookie as you can see. But yes I doe trade my cash account only. I am a conserviative trader and do not like leverage yet. I would rather learn with out leverage. That is why i ony trade 1000 - 1500 shares of a $5 stocks or cheaper.
Could you explain what the PDT Rule is?
Quote from c_verm:
Im not sure what the PDT rule is?? I am a rookie as you can see. But yes I doe trade my cash account only. I am a conserviative trader and do not like leverage yet. I would rather learn with out leverage. That is why i ony trade 1000 - 1500 shares of a $5 stocks or cheaper.
Could you explain what the PDT Rule is?
http://www.nasdr.com/filings/rf00_03.asp
Quote from c_verm:
Im not sure what the PDT rule is?? I am a rookie as you can see. But yes I doe trade my cash account only. I am a conserviative trader and do not like leverage yet. I would rather learn with out leverage. That is why i ony trade 1000 - 1500 shares of a $5 stocks or cheaper.
Could you explain what the PDT Rule is?
PDT = "Pattern Day Trader" rule. Sounds a bit like some sort of label for sociopath's, but it merely means that if you trade in and out of a stock several times per week, you must follow those rules. You get 4 to 1 margin vs. only 2 to 1 margin, but you must keep a minimum of $25,000 in your account.
I always thought this was a bit of a weird compromise from the regulators. They were worried about Retail Customer "day traders" losing money, so they doubled the amount of margin they could use, and insisted that they put up more money (which could be lost)....
In any event, this only applies to customers of brokerage firms, not professional traders.
Don
Quote from Daryn:
Don,
You bring up some very interesting points. I believe the average profitable Bright trader makes 1-3 cents per share net of all costs. Correct me if I am wrong.
Some people say that is is crazy trading for such a small gain and you are much better off looking for a quarter to a point while using a stop of .25-.40. But if we were to take a look at their numbers at the end of the month I have discovered that they too average 1-3 cents per share traded more often than not. So I guess it all comes down to personal style.
I think the scalper has an advantage in that he has many more opportunities throughout the day than the longer time frame trader. The drawback to scalping is that one big loss (ie. .25 cents) can can ruin your day.
One thing I have never been able to get out of you is how much you are willing to risk on a trade where you are trying to scalp a nickel or a dime. Your standard response had always been "read the tape" but surely you must have an uncle point somewhere? Or at least what you think is a reasonable uncle point for normally capitalized traders (not billions like yourself... lol). If you were to apply the standard bit about 2:1 risk to reward your would be getting out every time a stock went against you 2-5 cents. This makes a high winning percentage pretty difficult. No?
Cheers,
Daryn
Hi Daryn...I look at the number of trades much like the number of hands that may be dealt in a decent blackjack game. I bet more when there is an edge, and bet less (fewer shares) or stay out all together when I don't see a "perceived" winning opportunity.
We shoot for about a 70% winning ratio, and try to keep the losses as low as possible. As you mentioned above, it can all average out to a few pennies at the end of the day, which pretty much explains why we want lower costs (larger share size = lower costs in most cases), and although we must "pick our entry points" and "exit points" well, we shouldn't get bogged down when we lose.....remember, it's just one hand of many that we will be dealt that day.
More money at end of day (net) = Good
Less money at end of day (net) = Bad.
If you have a winning game, play bigger size and more often. If you don't have a winning game...then stay the heck out!
......and there are many "winning games."
Don
Is there a fine for trading more than the pdt rule?? To me it doent make sense ? Its less risky to trade with cash than it is to trade on margin? Why do they force use to trade on margin?