logo Trader Mom @ Home

Trade for a living

Sign up for my latest trading ideas. Free!

Which strategy do you prefer?

Posted by Satuki On June - 4 - 2009

It would be ideal if a day trader could make an average of 300 dollars every day. It would add up to 6000+ a month (22 trading days). Here are 2 possible scenarios.

  1. You make realized 300 dollars every day.
  2. You have a 5-6 big winning days when you make 1000+ per day and stay flat on the other days.

 

The first is actually super hard since it requires you to be very accurate in you trading.  No mistake is allowed.  The second one is relatively easier. It basically tests you on 3 key trading elements

 

  1. Your ability to repeatedly open a position
  2. Your ability to stay above the water when the market does not move as you expected
  3. Your ability to milk a winner for as long as humanly possible

 

For the first element, one might get discouraged to open a position if she has been stung by a particular stock a few times in the past.  There is a Chinese saying.  If you are bitten by a snake once, you will be scared of a rope for the next 10 years.   A rope (anything) resembles a snake.  There is a lot of truth in it.  So we need to overcome this “snake” inside us.

 

It is also important to have a deep discount broker such as TradeStation, Interactive Brokers, MB Trading or Lightspeed Trading.  For active trading, you can not use Etrade, Fidelity or anything alike since their commissions are so high that you would hesitate to get out of a possible losing position.

 

Due to my inability to go long so far, most of my short positions have been decimated.  Take a look at my portfolio. Red numbers are all over the place.   However, what is my total loss (including commissions) after all these trades from the past 4 days? A whopping total of 144! A small winner will take care of the loss easily.

 

The other 2 elements are boiled down to “cut your losers and hold on your winners” which is key to your having 5-6 big winning days and staying flat on the other days every month.

 

Which one do you think is more suitable for you?


Extremely hard work and a few solid trading books are what you need to become a successful trader. There is no shortcut! By the way, you can always check out my portfolio, in which I post my trades real time.


Would you like to become an active trader like me? Would you like to receive the latest trading ideas or other updates from my blog? Then join hundreds of others on my mailing list below. It is totally free and easy to opt-out.

Enter your email address:

Most Commented Posts

Trading
  • I can only speak for myself of course so here goes.

    As you say making money every day is unrealistic. So take that option right off the table.
    So that leaves us with making money some days and losing money some days. I consistently make money 65% of the days in a month, but my monthly profits can varify dramtically. What I've found is it comes down to 2 things:

    1. How many winning/losing days you have in a month
    2. How much you make on winning days vs how much you lose on losing days.

    For example, say there's 20 trading days in a month and you make money 65% of those days.
    that gives you 13 winning days vs 7 losing days.

    Say you make $500 on up days and lose $500 on down days. At the end of the month your up $3,000. Of course, the $500 is an average so you'll have days where you make or lose more than $500.

    For it seems the key is to limiting losses on losing days because big days just seem to fall into place. Take this week, I lost money mon, tues, and wens (not fun). The combined losses were $1500, right at $500/average. Today though I made $1850. Having 3 losing days in a row is unusal for me and I'm pretty confident in winning 65% of the days so I knew I could overcome those losses rather easily. I just didn't know I would do it it one day.

    The other thing is the market is not the same everyday or every month. The summer, for example, is often much slower with fewer opportunities. So there are times when my daily goals are higher or lower depending on the market. Because of that I'm being fairly conservative right. At a different time I might be willing to lose $1000/day on average.

    But overall I strive to have my average winning days be larger than my average losing days. Ironically the less losing days you have the harder it is to achieve that. My best month ever I was up 22K. I won 18 days and lost 3 days, but my average winning day was about 1500 and my average losing day was about 1700.

    This is an issue I thought about a lot and I'm still not certain what is best.

    <abbr>traderx’s last blog post..Week ending 5-29</abbr>
  • Very solid analysis and useful experience which a lot of other readers/traders can benefit from.

    I like average winning days to be larger than average losing days.
  • rxalex10
    Whats going on with FAZ? do you think it may go back up to double digits?
  • If you are talking about teens, there is possibility. If it reachs your break even point, get out. However, today's close is 4.66, you need to put in a 10% max for your stop loss in case it moves to 3,2,1. I wrote this post when it was around 10 http://www.momdaytrader.com/blog/2009/04/16/fal...
  • rxalex10
    Yes I saw that post, I have no choice but to hold. my avrg price is now 11.06 :( I have to hold it ... what do you suggest?
  • Why do you have to hold? That makes no sense.

    Plus, it's next to impossible to hold something like FAZ for any length of time and make money even if the financials go in your favor. There's a lot of info out there explaining why the time decay reduces the odds of a buy and hold on 3x ETF to nil. If I can find it quick I'll post it for you.

    <abbr>traderx’s last blog post..Week ending 5-29</abbr>
  • Here: http://www.darwinsfinance.com/riskiest-etfs-ear...

    <abbr>traderx’s last blog post..Week ending 5-29</abbr>
blog comments powered by Disqus

Trading Ideas

Receive Updates via Email Delivered by Google FeedBurner

Enter your email address:

Popular

USER LOGIN


Twitter: Follow Trader Mom
RSS Feed: Subscribe in a reader
MDT Portf
Investing Systems