Fas/faz - 5/11
- Thread starter scot.mcpherson
- Start date
You know what else I need to do? I need to stop daytrading altogether...I have made a rule to not enter a position without having one daytrade left, but I need to curb that even more. I need to let them accumulate so that I don't have that pressure to hold on "just a little longer". If something goes south, I can get out, and get into the opposite position without worrying about no DTs left, because I should always have three and "intend" to never use them.
yeah, I literally looked away for a moment...no joke... and it was down to 9.08 or something like that. I can't remember the actual price, but I said Holy Shit!!! I am still holding it though, and intend to hold it overnight. Tomorrow is friday so unless some bad news occurs tonight, I am hoping it will continue climbing at least for a portion of tomorrow. I'll probably swap to FAZ for a weekend hold. This downturn will cause FAZ to make a nice gap up on monday I think.
EDIT: I'll be watching the after hours market closely tonight though for any indicators of bad things to happen.
Ya it popped bakc up nicely, so I am happy to hold it. Not a sharp upturn, just back to its baseline high for the end of the day, that tells me it's going to gap up tomorrow if there is no bad news tonight.
No, it's cuz until very recently, FAZ didn't have the overall volume that FAS has had. FAS's runup in volume started a couple of months earlier, and so is nearer its normal volume. Volume today is less than yesterday's.
A better indicator if you watch volume might be XLF. It was 81% today.
If the daytrading restriction is being an issue, you might want to consider trading futures. I trade mostly futures, so I can tell you it can be risky, but If you can master it, you'll enjoy the reward.
from what I understand the day trading limitations still apply
ahh well my broker requires $10k, a lot more than I have right now. Perhaps in the future.
This is where I think the SEC is totally nuts. Trading stocks actually gives the trader *better* control over risk. After all, you can trade as little as 1 share of stock and the risk to your account is negligible if the trade goes against you. You can size it arbitrarily small in general.
With futures, the smallest increment you can trade is 1 contract. A 1% move in, say the YM contract is about 8000 * 0.01 * $5 per point which is $400.
Suppose you have a $10K account and your trading plan says your max risk on any single trade is 1%. So that's $100.
Now suppose that based on your TA of the current price action, a stop should be placed 1% away on YM. How can you follow your trading plan with YM in this situation? You can't.
Yet for a stock it's totally different. Say a stock is trading at around $10 and your TA says to place the stop 1% away. That's $0.10, so based on your trading plan's max risk of $100 you could trade 1000 shares of this stock. Say it was a $100/share stock; then it'd be 100 shares. See how easily it scales?
The SEC has said that day trading stocks is dangerous and you need at least $25K to qualify. Yet I just proved that day trading stocks can be very safe as long as you have risk rules in place. But they didn't say you couldn't trade index futures. So now you have guys opening accounts with $5K and trading futures. What's 1% of $5K? $50! How many contracts can you trade at once to meet this risk rule in your trading plan?
I won't bother answering the question.
With futures, the smallest increment you can trade is 1 contract. A 1% move in, say the YM contract is about 8000 * 0.01 * $5 per point which is $400.
Suppose you have a $10K account and your trading plan says your max risk on any single trade is 1%. So that's $100.
Now suppose that based on your TA of the current price action, a stop should be placed 1% away on YM. How can you follow your trading plan with YM in this situation? You can't.
Yet for a stock it's totally different. Say a stock is trading at around $10 and your TA says to place the stop 1% away. That's $0.10, so based on your trading plan's max risk of $100 you could trade 1000 shares of this stock. Say it was a $100/share stock; then it'd be 100 shares. See how easily it scales?
The SEC has said that day trading stocks is dangerous and you need at least $25K to qualify. Yet I just proved that day trading stocks can be very safe as long as you have risk rules in place. But they didn't say you couldn't trade index futures. So now you have guys opening accounts with $5K and trading futures. What's 1% of $5K? $50! How many contracts can you trade at once to meet this risk rule in your trading plan?
I won't bother answering the question.