Don's Openings, Part 6 2003

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Quote from Don Bright:



We never look at "return on investment"...since it doesn't apply to trading (how much is your time worth, your expertise, your training, etc.?). Since our people may "use" (not "abuose")a $mil or two during the opening, but only have $25K in their accounts.....they are making money based on their labor, not their capital.

If someone makes $5k per month doing openings, with $25K in their account, are they really making 20% per month? (pretty good, but a false interpretation).

If you trade with $5,000 and make a 100% ROI, then you you'll find it pretty tough to survive on $$3500 per year (after taxes). You get the idea.

Traders are rewarded (paid) for their labor, not simply the amount of money they have. The money is simply the fuel/tool that allows them to generate an income.

Don
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Terrible answer Don. I'm embarrassed for you. When someone jumps through hoops to avoid answering a question I can only assume they either have something to hide, or they are not all that 'Bright.' Or perhaps I am being too harsh and for some unknown reason you happen to be out of sorts at the moment.

Let me rephrase the question in the hope of getting an answer:

If a skilled retail trader with a US$50k account pursues OO strategy, generally what sort of average monthly return might he expect?

Alternatively, how much capital has Lescor needed at his disposal (cash + prop leverage) to generate his US$6k per month.
 
Don answered the post absolutely correctly.

Today.... ho hum yawn..

PDG +.07
BMC +.01

Got out of both real quick.


Then, post open,

AFL -.03
NEM -.03
KO +.02

We are really burnin' it up here..

:p
 
I thought Don's answer was very good. But as a retail trader lack of capital will limit the number of opening trades one can do and will effect total money earned. That is one reason Don likes to pump the open's, cause most traders will need to trade at his prop firm and pay him a $1,000 training fee.

I trade retail at IB and have been doing open only orders for awhile. PM me with any questions, i would be happy to give the details.
 
Don's answer is correct for a trader using prefessional leverage. Return on capital would be a misleading figure since the leverage is such a big part of it and varies widely from person to person. The size of my account doesn't matter a whole lot either, since I would trade the same if I had $25 or $100k. I trade the firm's money and they give me as much as I need (within reason).

But to answer your question, I generally keep about $50k in my account, but that's because I hold a lot of long term positions and I feel more comfortable with some cash behind them. I need $20 million in buying power to enter all my opening orders, and I'd say about a million to handle the fills I get.

This strategy and how I trade it has been consistent for me with very small drawdowns and several big days. That's why I'm sticking to it with smaller size, riding out the storm. It does require all my concentration for the first 20-30 minutes of the day though, so I have to consider the opportunity cost if things stay stuck in the mud for too long.
 
Quote from axehawk:

Don or Lescor,

Do you guys ever wait for the stock to open, drift further away from the gap, then get in to avoid getting shaken out?
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I'm wrapped up in a dozen or so positions so it is hard for me to watch for the open and read the tape on a stock I don't have a position in at the same time. If I want to play a stock that has news and I think will be whippy on the open, sometimes I'll put in 100 shares so it's in my position window and I can watch it closer and get in with the full size later.

I'll also bail part of my position in a loser quickly and get back in at a better price when I think the shake out is over.
 
Thanks lescor, Don, and others, for bringing to the surface
and reviewing these aspects of trading the Open.

A talkabout of the whys and wherefores here and there
outside of just the technical aspects or the daily results
really help to fit more of the puzzle pieces together of
the Open strategy. :)
 
Quote from BlueHorseshoe:



Terrible answer Don. I'm embarrassed for you. When someone jumps through hoops to avoid answering a question I can only assume they either have something to hide, or they are not all that 'Bright.' Or perhaps I am being too harsh and for some unknown reason you happen to be out of sorts at the moment.
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You are out line talking to Don like that. If you don't understand professional leverage, than that's your problem. Real traders deal in $$$ earned. Investors and academics deal in % returns.

By slamming him, do you think he is going to offer you any advice?

FYI, he's probably answered the ROI question (as it pertains to trading) a hundred times on this board.

Axe
 
just wrapped up my worst performing month for OO in littel over a year:

Sept= 12 wins 18 losses 1 scratch loss -.06
basically i paid commissions or about -.68, but am interested to see what it turns about to be with commision rebates under new structure.... i flucutuated share size from 2000s to 500s by end of the month so probably "costed" me $5-600 to trade OO for Sept.

I did check my records and did have a worse month when i was learning when i lost -.31 but actually had a winning record that month of 16-13-3
i suppose its a small victory that despite having more losers this month, with good exits i was able to basically scratch whereas when i was learning i could still lose money even when i had a winning percentage on the month.... lately ill take what i can get, so dont pi$$ on my parade!
 
Quote from BlueHorseshoe:



Terrible answer Don. I'm embarrassed for you. When someone jumps through hoops to avoid answering a question I can only assume they either have something to hide, or they are not all that 'Bright.' Or perhaps I am being too harsh and for some unknown reason you happen to be out of sorts at the moment.

Let me rephrase the question in the hope of getting an answer:

If a skilled retail trader with a US$50k account pursues OO strategy, generally what sort of average monthly return might he expect?

Alternatively, how much capital has Lescor needed at his disposal (cash + prop leverage) to generate his US$6k per month.
More...

Excuse me?? I answered the question directly and correctly. If you don't understand the difference between Investing and trading, leverage and customer margin, and the use of capital I am extremely sorry.

To answer your rephrased question: No trader should expect anything with $50k, period! It takes much more than that to make a living trading, using the OO strategy is simply a small part of an overall daily regimine.

I'm not sure what Lescor is doing, but I can try to "back into" the numbers.

On OO exclusively, we have traders who make that amount that (once again) "use" large amounts of capital, whether they have $10K or $100K in their portion of the sub-account. 2,000-4,000 shares per order, getting filled on 2 or 3 of 20 per morning....something like that.

I'm sorry if I sound harsh, but I think your response to me was out of line.

If you care to discuss this further, on the phone, so we are sure not to misunderstand each other, I am always here. If I misunderstood your response, I repeat my apologies.

Don
 
Quote from egusc:

I thought Don's answer was very good. But as a retail trader lack of capital will limit the number of opening trades one can do and will effect total money earned. That is one reason Don likes to pump the open's, cause most traders will need to trade at his prop firm and pay him a $1,000 training fee.

I trade retail at IB and have been doing open only orders for awhile. PM me with any questions, i would be happy to give the details.
More...

That is valid...I do like to see traders come to our firm and also to improve their trading skills. I am guilty as charged!

Don
 
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