Day Trading for beginners

[Mr J]

My advice would be to consider the commission and spread of different stocks and markets, to calculate what is needed to break-even. If you're willing to risk say 10 points and there is 2 points of expenses, you'll need to make 20% per trade just to break even. On 5 points of risk, you'd need 40%. On 20 points of risk, you'd need 10%. Which of those would be easiest for a new trader to overcome?

This doesn't mean short-term trading is impossible (far from it), but I think it's far safer to start with slower trading. Brokerage and spread can be significant, as trading the euro/usd for example is far, far cheaper than trading bhp.

Unlike you I don't aim for a certain % winners only a positive R.
I can do that with far less than 50%!

By aiming for a certain R:R, you are also aiming for a certain win%.

 

[tech/a]

Now you know thats not right tech , probability is defined before entry and not after , but hey whatever makes you feel better .

Proabibility doesnt preclude the possible from happening , just manage the possibilities

Today the wheel has turned the high probability high risk trade of yesterday today looks highly profitable low risk.
Yesterdays Day trade failed but perhaps the anticipation remains in tact in spite of the "Probability" due to the factors of analysis as seen by ginar.

I'm glad to see that the Probability was (Clearly!!!) known before the trade!! I'm sure this shows the futility of fixed analysis!

By aiming for a certain R:R, you are also aiming for a certain win%

Im aiming for a positive R not a definative %R
Even so I'm interested in how if I was aiming for a particular R% return how that equates to a % win. It could but its not necessary.

as trading the euro/usd for example is far, far cheaper than trading bhp.

If you mean leverage and possibly brokerage then yes but otherwise?

 

[tech/a]

Todays trade with WBC
5 min chart

Click to expand

 

[tech/a]

Out $24.65

34c in the trade.

 

[Kryzz]

Out $24.65

34c in the trade.

Nice job tech,

does your risk level change when trading equities intraday, eg, from 1% per trade to a daily risk limit, ie, no more than 1% of capital risked for the day?

cheers

 

[tech/a]

Very rarely trade intraday.
But will risk (In this case) .5%-2% of equity and move to B/E as quick as I can.
If I'm on a flyer I will add as quick as I can and just get out when volume and range flattens.
Prefer longer but nothing much on offer.

 

[satanoperca]

Tech/A,

Would you say that day trading is like most forms of trading just on a different time scale. Day trading you must be quick and react fast as positions can move quickly for or against you.

Cheers

 

[new2stock]

hi i had a question,

i am new to the stock market i have bought some shares in some companies already just small amounts for a first go and theyhave actually gone up to my surprise haha.

Anyway my question is I was looking at this one particular stock, it's selling for .001 cents. I have noticed people buying about 5k worth for example then the next few days I see them selling it again for .002 potentially doubling money - tax / brokerage fees is this normal cause it seems as though its an easy way of double or nothing. i'm not 100% on the difference between day trading and short selling but what does that fit under and whats the risks of this?

 

[Wysiwyg]

hi i had a question,
Anyway my question is I was looking at this one particular stock, it's selling for .001 cents. I have noticed people buying about 5k worth for example then the next few days I see them selling it again for .002 potentially doubling money -

If you provide the company symbol I can show you that the entity buying is not the entity selling the next few days. There is a priority to order execution and the ask side you see at .002 has a list of orders awaiting execution. You cannot jump to the front of this queue to execute a sell at .002.

 

[nunthewiser]

There is a priority to order execution and the ask side you see at .002 has a list of orders awaiting execution. You cannot jump to the front of this queue to execute a sell at .002.

With the exception of the " auction shuffle " ............ good game that one..handy sneaky tool of the trade is the "auction game" .....but be careful can turn on you in the blink of a bid

 

[Wysiwyg]

With the exception of the " auction shuffle " ............ good game that one.

Pending bid quantity is greater than ask quantity at the match-up.

 

[tech/a]

Tech/A,

Would you say that day trading is like most forms of trading just on a different time scale. Day trading you must be quick and react fast as positions can move quickly for or against you.

Cheers

Yes.
Like any trading your looking for a trend to ride.
The tighter you ride a trend the shorter you'll be on it.
If you look at the daily bar for today I managed to get a fair piece of that above the Gap.
Had I held yesterdays position O/N I would have profited handsomley.
BUT the whole idea of day/session trading is to take out the risk of O/N holds.

I have noticed people buying about 5k worth for example then the next few days I see them selling it again for .002 potentially doubling money - tax / brokerage fees is this normal cause it seems as though its an easy way of double or nothing. i'm not 100% on the difference between day trading and short selling but what does that fit under and whats the risks of this?

You can enter a buy order for .001 then a sell at .002 or whatever you like.
But as others have said you could be a while getting filled.
Range trading is common BRM is one which has been very predictable in this consolidation.

 

[Mr J]

Im aiming for a positive R not a definative %R
Even so I'm interested in how if I was aiming for a particular R% return how that equates to a % win. It could but its not necessary.

It doesn't have to be a specific figure, I could have said the same using ballpark figures or ranges. There are three values that make up the expectancy equation, so having an aim for any two of those values means also having an aim for the third.

If you mean leverage and possibly brokerage then yes but otherwise?

I was thinking of brokerage and the spread. If I make a 10k stock trade at IB, that's $16 round trip, plus some spread. For the same cost, in forex I'd be able to trade 160k. Obviously forex requires trading larger amounts since the moves are smaller, but I remember it still being a very large difference. I think futures were even better. It doesn't matter as much for medium and longterm timeframes, but it's significant for a day trader, and not the best place for a beginner to start.

 

[Trembling Hand]

An important thing to consider is Ticks to Costs ratio.

For FX its around 2-3 ticks to cover cost (brokerage and/or spread)

With Futs it 0.3 to 1.5 ticks (depends on entry/exit method) that includes FX futs & ECN.

With stocks its woeful. If you are looking at the $20 - $50 range you need 7 to 10 ticks just to cover brokerage then you have to add spread which is mostly nowhere near as tight as futs or major fx. I would like to see the effect of that cost over a year of day trading ASX stocks.

 

[tech/a]

I think this is worth repeating for those who didnt understand it as the last 2 days have drilled into us on WBC.

We can look at 100s of various analytical tools and feel really comfortable that ALL those tools align before we take a trade but the hard truth is that we cannot be certain at the time of the trade whether in fact THIS trade has a higher probability of a winning trade than the LAST trade which also ticked all the boxes.

 

[Sir Osisofliver]

@ Tech/A

Not sure if this will be considered :topic or not. I just wanted to get into your head a little. If you think it is and want to continue I'd be happy to take this to a new thread.

Yes I appreciate that we are talking about the very specific area of day or session trading, but I'm curious as to your reasoning behind a few things.

From your comments in this thread it appears that your exit strategy is entirely dependent on the placement of your stop loss. From what you've said you do not appear to use indicators or price action as a guide for your exit levels.

I'm wondering if this is simply a result of the style of trading that you are employing with fast trading requiring a simple and quick method of managing the outcomes of multiple positions, or if there is another reason.

Your comments that...

"Everyone aims for a winning trade.
but before each trade is taken we have no idea whether it will be a winner more so how much it will win---we can determine loss.
We can look at 100s of various analytical tools and feel really comfortable that ALL those tools align before we take a trade but the hard truth is that we cannot be certain at the time of the trade whether in fact THIS trade has a higher probability of a winning trade than the LAST trade which also ticked all the boxes."

are intriguing to me because I obviously follow a very different style to yourself, where I have some expectation as to price movement. From this expectation of price action I determine my positional sizing, trade risk weighting and set a stop loss.

Without some expectation of price how do you determine such things?

Cheers

Sir O

 

[tech/a]

Sir O
Happy to continue discussion elsewhere,which is more appropriate I think.
Leave it to you.

 

[dantheman3000]

My suggestions for what they are worth;
Rule One: Dont lose money (stick to your stops)
Don’t do it unless you can do it full time.
Get good news sources, AFR, Eureka, business spectator, Bloomberg, barrons, Financial times, business spectator, Trade the news (live squawk), Hightower report (futures)
Find a cheap broker.
Stay the hell off stock forums for your trades
Get a good charting package (metastock, signal)
Get a good mentor
Paper trade, paper trade, paper trade! Trial your entry methods and profit targets and learn to reject trades that don’t conform to your criteria. They really are a dime a dozen!
Define your risk to 1% of your trading account on every trade.
Read as many books as you can, turtle traders, etc
Most importantly give yourself every opportunity of being successful. Don’t go at it half hearted. Do not die wondering.

Good luck!

 

[Frank D]

I think this is worth repeating for those who didnt understand it as the last 2 days have drilled into us on WBC.

Don’t’ confuse probability with being a pork chop.

You were trading a breakout pattern that was known before the open
and validating the pattern with intra-day price action.

The pattern was known before the open and validated thereafter using
intra-day noise.

Don’t confuse probability with curve fitting price action.

Leave that for the gullible pork chops

 

[Sir Osisofliver]

Sir O
Happy to continue discussion elsewhere,which is more appropriate I think.
Leave it to you.

https://www.aussiestockforums.com/forums/showthread.php?t=18814

ok thread up

Cheers

Sir O