Going for prop money

Something for me to ponder tomorrow: overtrading.

Though most NYSE stocks are open to me now, I'm trading a very restricted set based on volume and volatility. In essence, I have a small handful of stocks that I watch constantly, looking for entries.

I envision defining some strict criteria for entry, and then using some scanners like trade-ideas to help me locate these. That would let me be very choosy about when I am in the market.

But I don't think I'm there right now. I wonder to what extent I am overtrading by these standards, and to what extent this is to be expected, given my current constraints. If I only have a few stocks to trade, and need to make a certain amount of money each day, then maybe I need to take trades that I would otherwise avoid (relying on speed and low-cost to get me out if things go against me). I also wonder to what extent I really am overtrading, simply because I am constantly watching the stocks and my own hopes, expectations, and boredom influence my judgement.

*sigh*

I will keep trying to find a mentor at the firm, so I can find out how they've dealt with this.
 
As long as you first divide the value of the volatility into the % of equity you're willing to lose, this definition of R could work because you're imposing a cap on your losses (unless the market gaps past your stop) based on your equity curve. If you're just defining R based on a % of volatility in price, you'll lose in the long run as you are not (1) beginning your money management by managing your drawdowns and (2) determining your entry tactic based on logical price points. You need to be able to adjust R as your account equity changes...and you appear to have only half of this equation down by capping your losses at $6/day. Still, this is a big improvement over most. May I ask why you weren't doing this from the beginning? Your exits are another matter and you haven't discussed your trading model, so I'll leave it at that.

Reading over this thread, I'm not at all sure that you have a plan for each trade, much less an overall business plan for your trading. And I'm not convinced the prop firm has offered any real training in these areas. They are essential for your success. I'm presuming a lot, perhaps. I'm feeling as though you might be the person who needs to blow an account or two in order to learn -- there is nothing wrong with this. It's a great way to learn if you have the capital and don't have a family or other obligations. In any case, a mentor won't be in a position to help you until you learn how to plan your business and your trades and have a viable, well defined trading model.

Not trying to be negative. Just realistic. Take these words with a grain of salt.

Good Luck
 
theSnaggle,

It's a complicated thing, this stoploss. At the moment, I don't have equity, so there's nothing to lose there. But I do have a maximum amount I can lose per day. I'm targeting a max loss per trade of about $6 (based on max 4 trades per half day), so now I'm trying to figure out how to go about making that stick :)

My reasoning is that for each stock and each trade, there will need to be a certain amount of movement which is required before I get out. This is the amount that needs to be risked, R, and varies with the volatility of the stock. Is that not right?

With this and my stoploss target of $6/trade, I will come up with the maximum number of shares that I can use.

Maybe I have my terms confused. Perhaps I should use R' for the per-share risk, and R for the total amount risked (R' * #shares)?


Plan for each trade? Business plan? No and no, but I'm working on it. I was hoping to learn enough to create these, and I did make the first steps earlier today.

And yeah, today was my first big down day in a while, and it really highlighted some deficiencies in my trading! Hope I can take a couple small lessons like this instead of blowing up my account entirely...
 
Just a few comments:

You're being used. You're cannon fodder. You're a money machine for your employer.

Take your money, leave, and take the time to find a better situation.

Quite acting like a victim.

If you want to be a professional, this isn't the way to get there.


Good luck,
Steve
 
Steve: thanks for your insight. You've obviously read this thread and were undeterred by the striking similarity of your comments to those of earlier posters. It was thoughtful of you to conserve space by removing anything which might appear to be helpful. Initially, I was confused by the lack of specifics, but so masterly was the rest of your post that I realize I must treat it like a koan and read the words that were not written. At any rate, it is a brilliant and valuable contribution, and I thank you profoundly.
 
Another miserable day. Started off gunshy and timid, but gained confidence after a number of good, profitable trades. I took more shares and made some more money.

Until lunch, when the volume dropped off and I left for more interesting stuff. I was too skittish to trade, though. Would flatten at any whiff of danger and so missed some huge moves. Of course, every now and then I wouldn't be able to get flat and would take a loss, so my mornings profit just got eaten up.

Forgot to write down my stats, but I ended the day up about $1. Wheee.
 
Third down day in a row. Spent the day chasing crap, getting stopped out before big moves which I was too skitting to buy back in for. Feels like nothing I do is right which is seriously hurting my trading and is bleeding into the rest of my life.

I need this long weekend to regain some perspective and get my head into shape. Pick some dead simple signals which have worked before and follow them faithfully. Don't care if I only make $10, don't care if I have to trade for credits - I need something positive.

#shares: 7200
trades: 28
adj net: -12.49
gross: -8.00
 
Quote from foible:

Third down day in a row. Spent the day chasing crap, getting stopped out before big moves which I was too skitting to buy back in for. Feels like nothing I do is right which is seriously hurting my trading and is bleeding into the rest of my life.

I need this long weekend to regain some perspective and get my head into shape. Pick some dead simple signals which have worked before and follow them faithfully. Don't care if I only make $10, don't care if I have to trade for credits - I need something positive.

#shares: 7200
trades: 28
adj net: -12.49
gross: -8.00
More...


Seems like you are on the right track. The only concern I have is that your begining might have been too good. I have often seen people come into our company and do really well of the bat (first 2 weeks) only to start loosing everyday after that. Your trainer should be able to tell you this. They are usually worried about people who do too well of the bat. It takes about 2-3 months to figure out if you will be a good trader. There is a defining moment and usually you can pinpoint it, specifically to a 3 day period. Don't worry about it too much till mid februry. Just come in do your best and hope you can meet the milestones. It dosn't really matter though, once you hit that point reaching the milostenes is really easy. You can do all of them within one months time skipping most of them.

Good luck in 2006.

Mike
 
Swiftmike,

Thanks dude, I really appreciate that. It's nice to have someone break the monotonous litany of "you suck" that's going on in my head. :)

Have a great 2006!
 
Hello. There is nothing wrong with learning to trade with 100 share lots. These posters act like they were trading like Soros or Cohen from day one.
Forget about a mentor; mentor yourself. Anyway, only a fool would train you to compete with them tommorrow without some self-serving reason to do so. Imagine moving into a small town and asking the local plumber to teach you his trade so that you could set up shop.
 
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