E48, the way I look at it, is, how much would you be happy to make each day so that you can have a nice comfortable lifestyle and enjoy most of your days doing things that you like.
If you are not a dreamer, and have silly high notions, or one of the "keep up with the Jones's gang", then $500 per day should suffice.
That means, for 2 hours work, which is all I am interested in during daylight hours, you will need to work out how many trades you will need to do to achieve this, your required capital, your max risk, your win/loss ratio.
We will look at daytrading.
As a starting point, capital is of course the most important, but lets say you have the $25k for pattern rule, plus another $5k buffer, so you have $30 k total - this is the very minimum and is going to limit you greatly to what stocks you can day.
To keep things very simple, we will never risk anymore than $100 max per trade - 0.33% - with an average loss of $50 per trade, or 0.16%.
This means, your average size trades for max loss will have to be the following..we always take worse case loss..
100 shares @ $1.00 stop
200 @ 0.50 stop
300 @ 0.33 stop
400 @ 0.25 stop
500 @ 0.20 stop
1000 @ 0.10 stop
This is fine, but what about stock price!
Trading capital = 30k x 4 = $120k
AAPL..last price..$110.78
100 shares = 11,780
500 shsres = 55,390
1000 shares = 110,780
So, we are fine to daytrade apple up to 1000 shares, but do you think you could trade a 0.10 stop on appl
The more realistic stop is 0.25, and even at that you need to be very good, so that is 400 shares max.
I don't have my adr spreadsheet up, but lets say aapl realistic tradeable adr is 0.50.
Each trade is therefore 400 x 0.50 = $200
To make say $400 in 2 hours daytrading aapl, you will need to do have..
2 winners..no losers
3 winners..1 loser
4 winners..2 losers
5 winners..3 losers
Which is more realistic, and what can you do to keep your stress low and still go for your target of say $400 per day for aapl?
J_S
If you are not a dreamer, and have silly high notions, or one of the "keep up with the Jones's gang", then $500 per day should suffice.
That means, for 2 hours work, which is all I am interested in during daylight hours, you will need to work out how many trades you will need to do to achieve this, your required capital, your max risk, your win/loss ratio.
We will look at daytrading.
As a starting point, capital is of course the most important, but lets say you have the $25k for pattern rule, plus another $5k buffer, so you have $30 k total - this is the very minimum and is going to limit you greatly to what stocks you can day.
To keep things very simple, we will never risk anymore than $100 max per trade - 0.33% - with an average loss of $50 per trade, or 0.16%.
This means, your average size trades for max loss will have to be the following..we always take worse case loss..
100 shares @ $1.00 stop
200 @ 0.50 stop
300 @ 0.33 stop
400 @ 0.25 stop
500 @ 0.20 stop
1000 @ 0.10 stop
This is fine, but what about stock price!
Trading capital = 30k x 4 = $120k
AAPL..last price..$110.78
100 shares = 11,780
500 shsres = 55,390
1000 shares = 110,780
So, we are fine to daytrade apple up to 1000 shares, but do you think you could trade a 0.10 stop on appl
The more realistic stop is 0.25, and even at that you need to be very good, so that is 400 shares max.
I don't have my adr spreadsheet up, but lets say aapl realistic tradeable adr is 0.50.
Each trade is therefore 400 x 0.50 = $200
To make say $400 in 2 hours daytrading aapl, you will need to do have..
2 winners..no losers
3 winners..1 loser
4 winners..2 losers
5 winners..3 losers
Which is more realistic, and what can you do to keep your stress low and still go for your target of say $400 per day for aapl?
J_S
