My first day trading.

[Thecaptaindaytrader]

take profits early, you are still a winner

Just remember that even if you sell early with a profit, you are still a winner, and if you see the stock coming down, get out, you can always get back in at a lower price if it all sets up. Remember that lots of small profits will all add up to a lot of nice money

The captain day trader

 

[dtcracker]

Tim, Thank you again for the advice. I will try to apply it as best I can.

What exactly do you mean by cutting my position size? First let me state that 0.01% of my account is $1. Ok now let’s work with some round numbers. Because, like you, my maths is poor. So let’s say I want to go long on ABC at $10 for 100 shares. So every move in the stock by one penny equals $1 to me. So should I limit my loss to $1 and get out if it falls to $9.99? Usually the stocks I'm in move back and forth a couple of cents every second. Or should I just be in for 1/10th of a share (0.01% of my account)?

As far as reducing the number of stocks on my watch list I think I actually have the opposite problem. But I'm just starting so I'm not really sure. Right now I only have about 5 in there and tomorrow I might only trade on 1, but it is only the end of my second day. Do you think that is too many or too little?

Thank you for the links. I do have a news feed through realtick that I watch but I'll look into the services of the briefing website to see if it is any better. I knew about their economic calendar but never looked into their services before. I will add the market watch calendar to my favorites. It looks like it will make a good addition. Here are some more if anyone new like me is reading. Hopefully they will help.

Quote.com U.S. Markets - Stocks

Bloomberg.com: Economic Calendar

Briefing.com: Economic Calendar


Thecaptain, that is a very good point. One that I have heard repeated numerous times. Never be afraid to admit you are wrong. In the book I referenced earlier, Stock Market Wizards, many of the "wizards" were very adamant that they had no problem exiting a position and taking the other side if they thought they were wrong. It is definitely something I will work on.

Well today was my third day. I don't want to turn this post into some kind of blog so I will try to keep it short. Today I made some money. About 580 after commissions and fees. The big difference today was how unemotional I was and how I tried to stick to executing the basic parts of my plan as well as I could. I don't expect to win every day, but hopefully with the help I have received here I will be able to survive. Thanks again to everyone who has helped me for the last couple of days. Expect to see more questions from me. At least until I become a billionaire or wipe out. Whichever comes first.

 

[Chorlton]

Remember that lots of small profits will all add up to a lot of nice money

The captain day trader

True.... but the downside is that you won't ever take a BIG profit if you only take small profits...

Also, depending on the type of strategy being employed sometimes a few BIG wins are required to achieve a positive expectancy from the system being traded. Example being a longer-term Trend Following type of strategy.

Just my 2cents,

Chorlton

 

[nine]

A good 2c that points out the necessity of understanding both what you want to do and the tradeoffs.

I don't get big wins. Mainly my wins are 2 to 2.5 times my losses. In return I get a win rate of over 70%. But I have to give up the big ones ... often I get out and then watch the market go 2 or 3 times as far as my target. It took quite a while to accept that and that's the price for being a trend chunker rather than a trend follower.


ps. Captain day trader is just spamming us with his blog address (almost enough to make one want to be a moderator (almost)).

 

[timsk]

What exactly do you mean by cutting my position size? First let me state that 0.01% of my account is $1. Ok now let’s work with some round numbers. Because, like you, my maths is poor. So let’s say I want to go long on ABC at $10 for 100 shares. So every move in the stock by one penny equals $1 to me. So should I limit my loss to $1 and get out if it falls to $9.99? Usually the stocks I'm in move back and forth a couple of cents every second. Or should I just be in for 1/10th of a share (0.01% of my account)?

As far as reducing the number of stocks on my watch list I think I actually have the opposite problem. But I'm just starting so I'm not really sure. Right now I only have about 5 in there and tomorrow I might only trade on 1, but it is only the end of my second day. Do you think that is too many or too little?

Hi dtcracker,
Position size is the number of shares traded. Start VERY small and add more when your results warrant it.

Attached is a chart that I use which I've modified for you, based on the info' that you've provided. I always factor volatility into my position sizing and for that I use ATR. The 'Max Stop' is set at 1.5 times the ATR (set to the default of 14 periods). THIS MAY BE TOO WIDE OR TOO NARROW FOR YOU AND YOUR STYLE OF TRADING. Sorry to 'shout', but this is very important. It may be that you can trade with a much smaller ATR setting or, conversely, you may require a much wider setting.

Anyway, the idea is that you look at the ATR reading on your chart and then at a glance you can see the quantity of shares you can trade, the maximum share value (without margin), the maximum stop and target. The point about Value is that suppose you're looking at AAPL, for example, trading around $170.00 per share. At a glance you can see that you can trade a max' of 50 shares.

The target is based on 1.5 times the max' stop which, again, may be inappropriate to you and your style of trading. This offers a R:R of 1.5:1. Some people wouldn't take a trade that offered a R:R of less that 3:1, but these figures are easily changed. The max stop is set at $25, i.e. 0.25% of a $10,000 account. I suggest you start with this and build up as your confidence and experience grows. More to the point, as your results warrant it.

There are all kinds of electronic versions of this chart on the net which go into all sorts of fancy calculations if you're into that sort of thing. I like this because it's instant and easy.
Let me know if anything isn't clear.
HTH
Tim.