I think there is hope for options and futures traders, but I'm not talking about scalping. Historically there weren't many stock only daytraders that were outsiders paying commissions. That came on big during the bull market. But, as long as their have been standardized exchange traded options ( since the 70's ) there have been proffessional independent options traders, even off the floor paying commissions.
stock trading: monthly return
- Thread starter Nemsy
- Start date
Let me clarify.....we WERE NOT going for pennies. Personally, my average gains and losses were closer to about a dollar. Better months, less losers, better gains, etc. But at the end of the day (month really), the totals ended up being as stated. This included some home runs and some disasters. They tend to even out. One morning I came in long a stock called Vertical Net. (VERT). It opened up about 9 pts. I sold when I was up 12. Home run? I thought so, but was disappointed I didn't have the patience to hold longer. It was up 70 points that day. Today? Last I looked it was at about 50 cents!!! At least I wasn't an investor!!!!
Oh, and my (our) average holding time was WAY more than 20 minutes.
Originally posted by rs7
Let me clarify.....we WERE NOT going for pennies. Personally, my average gains and losses were closer to about a dollar. Better months, less losers, better gains, etc. But at the end of the day (month really), the totals ended up being as stated. This included some home runs and some disasters. They tend to even out. One morning I came in long a stock called Vertical Net. (VERT). It opened up about 9 pts. I sold when I was up 12. Home run? I thought so, but was disappointed I didn't have the patience to hold longer. It was up 70 points that day. Today? Last I looked it was at about 50 cents!!! At least I wasn't an investor!!!!
Oh, and my (our) average holding time was WAY more than 20 minutes.
i see- 11 cents expectation after all is tallied up, that makes sense.
i used to beat myself up for getting out early too, but after a while i realized those extra profits are usually a mirage. They look like you could have grabbed them by waiting longer, but you don't see all the hidden times sticking around too long would have cost you.
short term traders are better off exploiting the high probability event and stepping out of harms way. a precision edge dissolves after x amount of time. sticking around is for the positional crowd
I agree for the most part...however....I have always believed that just as you should have a reason to get INTO a trade, you should have a reason to close the trade. Now for some people it is a profit (or loss) target. For some, it is perhaps time, whatever. But IMHO, if there is no reason to get out, why get out? Let the runners win (am I the first to say this?)
The patient sniper approach does work. I traded QCOM on Tuesday and Wednesday for momentum (long) and netted $3K for myself with 2-3000 share positions. After the momentum died out, I stopped trading and went home. The key to making money in this market is to be super selective and find stocks with good volatility (these days, a point range is considered good). You only trade when stocks exhibit good momentum speed (to the upside or downside), otherwise you wait.
Also, you should not exit a position just because you're impatient to hold it anymore. You wait until your stops are hit or the reasons for entering the trade are no longer valid, then you exit. Otherwise you hold it for as long as it takes. The only exception is if the position is using alot of your buying power and preventing you from taking advantage of other opportunities. THEN you can liquidate your position. To liquidate a position because you're bored of watching it is nonsense.
Also, you should not exit a position just because you're impatient to hold it anymore. You wait until your stops are hit or the reasons for entering the trade are no longer valid, then you exit. Otherwise you hold it for as long as it takes. The only exception is if the position is using alot of your buying power and preventing you from taking advantage of other opportunities. THEN you can liquidate your position. To liquidate a position because you're bored of watching it is nonsense.
By the way, I made more than a 300% return last month. My capital contribution to the prop firm was 5K and I have 300K in buying power. Last month, I netted 17K. Does this count as a 300% return on my capital contribution? Can I open a fund and claim a 300% return in the month of May (my other months are also good)? Does this mean I can get interviewed for the next Market Wizards book?
Yes your return on capital invested (ROIC) was +300%. BTW that is a monthly figure so the annual rate is......loads.
Your profit from operations was 17k / 300k = 5.6% pm which is good.
Problem is, you are operating at 17.85 asset to borrowing ratio so you are in a high risk business. Just in case you didn't know that.
Originally posted by Mike777
Problem is, you are operating at 17.85 asset to borrowing ratio so you are in a high risk business. Just in case you didn't know that.
But at any given time, I never use up more than $150K in buying power for more than 10-30 minutes. The rest of the time, my positions are flat. Also, I never go out with any stock overnight. Does this alter my risk profile favorably?
Yes it does but I get stuck on quantifying that. Normal risk analysis (like a bank would use) will evaluate all of your secured and unsecured borrowing. Most lending is against assets such as buildings, inventory, capital equipment etc. If you only drawdown your borrowing for short periods and can liquidate your assets immediatley then in theory you are less risk. I guess this is why floor traders enjoy so much leverage.
However, you have to look at the disaster scenario, say a nuke bomb went off in NY (god forbid) you would lose much more than your invested capital. But then so what. You and everyone else I guess.
Good luck.
