Quote from DESTRO_PRIME:
NYSE + pair trade only + breakouts and a little bit of scalping now and then
I'm still low volume per day but i'm expecting to increase it greatly once I'm more consistant
I'm in negotiations with a few firms so hopefully I'll have it all sorted out by this friday
Low volume is a must until returns are consistent - do not let anyone change your mind and it is better to pay a bigger % of profits to prop firm that will accomodate you than to try and meet targets set by others - pressure can result in lack of focus, and lack of focus in daytrading can be very costly.
I have done Nasdaq sector daytrading - needs a good few screens to spot potential opps, but can be very fast trades.
I have found NYSE stocks much easier - with smaller DR's they are not as volatile and are perfect for small lot trading with wider stops less lilkely to be hit than Nasdaq trades.
This might help you understand the relationship between volume, risk and returns for a realistic trading plan - 100 round trip trades with a $10K prop firm capital outlay, should work out something like this, before prop firms cut:
NYSE Trades = 100
Max Stop = 0.40
LW Ratio = 60 / 40
R/R Ratio = 2.25
Commisions = $200 (preferred!)
Drawdown = $4,800
Gross Profit = $7,200
Net Profit = $2,200
Return = 22%
Once this 22% return is consistent for 5 x 100 rt's, the plan can then be modified by varying one element at a time - if you vary too many elements the 22% might slip back - and this is poor trading, as the average returns of the plan must never drop back, they should only ever increase - else a trader is just wasting his/her time.
Sidenote - the majority of traders look at the same signals, and as the majority of traders lose, it may be wise to not make "common" trade signals a major part of the trading plan.
If the majority of traders made money - then yes, by all means follow the crowd - but it can be a big mistake to rely too much on breakout trades, as if you get some big confidence and increase size from 200 to 1000, and apply this to all trades incl. breakouts, the % return might drop back rapidly - but that is the whole idea of having the trading data to analyize - the data tells you what you are doing right, and doing wrong, and if a trader continues to do wrong, well, they won't stay trading for too long!
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