How To Trade: Full Stop

[MacAttack]

If the "generals" are so important and move the markets how come the returns of so many mutual funds for example are such run-of-the-mill, boring amounts? I've never understood that. You hear follow the big money all the time, but their returns are usually no better than or even worse than the general indexes. (correct me if I'm wrong; I didn't do an extensive analysis).

Random though after more reading: maybe they mark it up on the last couple days of the month for example, so the public will get suckered into buying and the "generals" can unload their holdings to the public at an inflated price to make their numbers look better for that particular month. Their big goal is to beat the index % I think, so maybe they are so huge the best they can do is get about the same % as the indexes, but popping it up and down here and there allows them to maybe do a little better.
I'm getting tired and coming up with conspiracy theories now. Better stop reading for the night.

 

[DionysusToast]

MA - whilst their returns are indeed ****e. They set the bar fairly low in the first place with a beat the index' mentality.

So - they'll send you a nice shiny newsletter telling you how they are worth the 2.5% a year because they only lost 20% of your money when the market lost 30%. How nice of them.

What you have to bear in mind though - is these people don't daytrade. You wouldn't be attempting to replicate what they do, just try to increase the probability of your daytrades by identifying where they may be putting their money.

BTW - check your email ;-)

 

[dcraig1]

Indeed it is - for baisc screening, something like Tradestation can do it with zero programming skills.

There's screens on line too - like Finviz.

For more complex screens (which I do use), you need a bit of programming skills - but there are PLENTY of helpfuls souls on the interweb (like me) who will help you with this stuff if you use a mainstream retail trading tool (like Tradestation) and you ask.

Of course, you could program a scanner using C# etc but you want to be a trader, not a code. Most of my scans took less than an hour to get right and are in use on a daily basis.

So you think screening and/or RT scanning is the key to riches. How many pages did it take to get to this point?

It's no use just hand waving - you need to discuss concrete screens or scans. Lets see some examples instead of more pages of waffle. C'mon show us the money.

 

[DionysusToast]

Scans are an integral part of day trading in my opinion - unless you follow the same stocks day in day out, you need to scan.

Scans that I currently use:
- Yesterdays big movers up/down
- Volume spikes with up moves
- Retracements in uptrends - details & code in one of the threads on my sig
- pre-market/after hours movers
- intra-day rallies - stocks that are making consistent moves in 1 direction over a relatively short time frame

Most of my scans are just to put stocks on my list for daytrading. They are not the key - you still have to make a decision on what trade to take, although you can use historical precedents to give you some idea (which is what I liked about Wolffs book).

Now - these are not the scans that TE would use if he's 'following the generals'.

Most scans are filtered and I will look at the news too. If a stock is up in the pre-market but the story is related to a buy out, then it's not going to be worth trading as it'll just stay around the buy out price.

 

[sahajtrader]

... or is it the nurse who hands him his laptop couple of times a day, which he utilises to satisfy his delusions of being some "Expert"?

Some clues...

"Lesson No. 1328"
=> ?!!

"Most people think they know something about trading..."
=> erm so true... look in the mirror.

"There are a few KEY things that can prevent you form entering dream land territory"
=> like remembering to regularly take your medicines, but I'll hold your nurse responsible.

"I have but scathed the surface of what is required.."
=> and it stinks... clean up your sheet (or ring that bell)

 

[avasfx]

Scans are an integral part of day trading in my opinion - unless you follow the same stocks day in day out, you need to scan.

Scans that I currently use:
- Yesterdays big movers up/down
- Volume spikes with up moves
- Retracements in uptrends - details & code in one of the threads on my sig
- pre-market/after hours movers
- intra-day rallies - stocks that are making consistent moves in 1 direction over a relatively short time frame

Most of my scans are just to put stocks on my list for daytrading. They are not the key - you still have to make a decision on what trade to take, although you can use historical precedents to give you some idea (which is what I liked about Wolffs book).

Now - these are not the scans that TE would use if he's 'following the generals'.

Most scans are filtered and I will look at the news too. If a stock is up in the pre-market but the story is related to a buy out, then it's not going to be worth trading as it'll just stay around the buy out price.

Can’t fully agree with you DT about your scans and big boys trading.
How big boys are trading? How could they buy 10M stocks if stock is trading average 500k or 1M daily? They do it a few days. The reason is - they don’t want to move a stock, to make huge gap. But they are buying in round lots like 50000, 150000 etc. So the scans you have mentioned, which I’m also use, basically help determine where these big boys are. Very good tool is also time&sales for the past few days, where we can watch which volumes were, how much people were buying, in which lots. By that information we can assume that price will continue to move in the past direction, and big boys will continue buying the stock – which give us certainty that there will be movement. The same is true for the selling.
Alex

 

[avasfx]

OK then, what % of your trading account are YOU going to risk on each trade you place:?:

i don't really like to risk more than 1% daytrading. Swing trading is another song for me...

 

[The Expert]

i don't really like to risk more than 1% daytrading. Swing trading is another song for me...

So AV, say you have $50,000 in a daytrading A/C, which is very reasonable, and, at 1% per trade that means you are going to risk $500 per daytrade

So, lets see what this could mean for someone starting out:?:

Daily Target = $2,000

Risk per Trade = $500

Avg No of Trades Per Day = 5

Avg Winners = 1

Avg Losers = 4

If we are risking $500 per trade, then, what do we need to make on our winner to hit our daily target:?:

TE

 

[MacAttack]

So AV, say you have $50,000 in a daytrading A/C, which is very reasonable, and, at 1% per trade that means you are going to risk $500 per daytrade

So, lets see what this could mean for someone starting out:?:

Daily Target = $2,000

Risk per Trade = $500

Avg No of Trades Per Day = 5

Avg Winners = 1

Avg Losers = 4

If we are risking $500 per trade, then, what do we need to make on our winner to hit our daily target:?:

TE

Need to make $4,000 on the 1 winner.

 

[The Expert]

Need to make $4,000 on the 1 winner.

So if our average range target is 50 cent, how many shares must we buy?

 

[MacAttack]

So if our average range target is 50 cent, how many shares must we buy?

8000 shares.

 

[The Expert]

8000 shares.

If we trade 8000 shares then how many ticks for us to lose our $500 on a trade:?:

 

[MacAttack]

If we trade 8000 shares then how many ticks for us to lose our $500 on a trade:?:

Can only lose .0625 per trade. Not much.

 

[The Expert]

Can only lose .0625 per trade. Not much.

EXACTLY:clap:

1% is way toooooooo much for daytrading, especially on the losers:smart:

However, if you care to change the variables in the equation, you will see that each variable will affect the outcome

It is the variables that one needs to concentrate on, not the TA

TE

 

[MacAttack]

EXACTLY:clap:

1% is way toooooooo much for daytrading, especially on the losers:smart:

However, if you care to change the variables in the equation, you will see that each variable will affect the outcome

It is the variables that one needs to concentrate on, not the TA

TE

Good point.

 

[The Expert]

Good point.

Not so much good, but VALID

Change a few and post what you come up with:idea:

TE

 

[MacAttack]

Not so much good, but VALID

Change a few and post what you come up with:idea:

TE

2 winners, 3 losers you only need to make $1750 per win.
3 winners, 2 losers only requires $1000 per win.
5 winners, 0 losers $500 per win.

10 trades per day:
3 winners, 7 losers, $1833 per win.
5 winners, 5 losers, $900 per win.

Risk only $250 per trade:
1 winner, 4 losers, $3,000 per win.
2 winners, 3 losers, $1,375 per win.

 

[The Expert]

2 winners, 3 losers you only need to make $1750 per win.
3 winners, 2 losers only requires $1000 per win.
5 winners, 0 losers $500 per win.

10 trades per day:
3 winners, 7 losers, $1833 per win.
5 winners, 5 losers, $900 per win.

Risk only $250 per trade:
1 winner, 4 losers, $3,000 per win.
2 winners, 3 losers, $1,375 per win.

How about this:idea:

4 losers @ $80 = $320

1 Winner @ $2,320

What kind of variables will we require in order to make this happen:?:

The 4 losers should be no problem:whistling

The 1 winner should be possible

So, what is required to bank $2,000

TE

 

[MacAttack]

How about this:idea:

4 losers @ $80 = $320

1 Winner @ $2,320

What kind of variables will we require in order to make this happen:?:

The 4 losers should be no problem:whistling

The 1 winner should be possible

So, what is required to bank $2,000

TE

The variables to make it are already there. Lose $320, Win $2,320 = $2000 Profit.
Need to know our "average range target".
If it was 5 points for example I think we'd require 464 shares with a 0.17 stop.
The winner in your example is 7.25 times the size of the loser which is probably low odds.

 

[The Expert]

The variables to make it are already there. Lose $320, Win $2,320 = $2000 Profit.
Need to know our "average range target".
If it was 5 points for example I think we'd require 464 shares with a 0.17 stop.
The winner in your example is 7.25 times the size of the loser which is probably low odds.

There are other variables that have not been mentioned as of yet:idea:

What determines the odds of the 7.25 winner:?:

We must know EXACTLY what we are going to do, not what we MIGHT or MIGHT NOT do

TE