Looking for a mentor

[tech/a]

Ha ha
Didn't see his aim
That won't happen
My suggestion was 10-20% Pa

I await the OPs reply before
Wasting any more time

 

[Airflix]

I currently have $1500 in AQQ. I don't have the $2000 right now but when I do I'll put it all on one stock and trade it a few times. I might have another $3000 to play with to start. My other investments are, 1 apartment in Melbourne CBD, $10k in Gold and Silver so now it's time to work on shares. I'm home all day as I was laid off a year a half ago, started my own Drone business and I have downtime at home to trade.

 

[tech/a]

My goal is to make $100 per day profit starting out, minimum by the end of the day I'm up $100 gp. I'm using Commsec so the commission fees are $30 per trade.

Are you trying to get someone to mentor you to make $100 a day with a $2000 capital base?

 

[Airflix]

Are you trying to get someone to mentor you to make $100 a day with a $2000 capital base?

To get started with the basics, the in's and out's. A month's worth of hey buy this now, now sell it...why did we make that trade?

 

[tech/a]

Ok
Can't help you

 

[Airflix]

Ok
Can't help you

Can you post your picks and the OP and I can research them and post our findings and possibilities.

 

[Habakkuk]

There was a thread in the Beginner's Lounge a few months ago called "$100 a day".

The OP had a lot of spare time during the day and wanted to know what sort of capital would be required to daytrade for $100.

The answer was $730,000 or maybe $100,000 but then only if you are really good at it. Before I got around to make a comment, the thread had been tragically hi-jacked to discuss the ins and outs of Queensland real estate. But I did think about it for a while and wrote up a possible and quite detailed strategy using just $10,000. Since I didn't get another chance to respond and didn't have a use for $100 a day, I deleted it.

In a nutshell, you open a DMA CFD account and daytrade ASX stocks on margin.
You will need an edge - this won't work without it.
You will need to know what your edge is and you need to know the size of it.
Then you can use the margin to turn over several times your own capital every day, e.g. trading the banks on 5 or 10% margin, you could theoretically turn over $100,000 or more. That's a little risky, so it might be better to go for $40 - 50,000 and try to clear 0.25% on turnover. Considering that the blue chips have an average intra-day range of 1 - 1.5% that's not particularly ambitious.

I'm not saying that I could do it but Trembling Hand could - with one (trembling) hand tied behind his back. Then again, who would want to work maybe all day to average 500 bucks a week?

There were a lot of extra details about money management in that exercise and other ways to do it without having to be in front of a screen. All deleted now - perhaps just as well - I'm sure I would have copped a lot of flak over it as it was all theory.

What if you have only $2,000 though? There is a possibility as well. CMC have a contra account where you can daytrade without any margin, i.e. if you buy $30,000 of ANZ, you don't need to put up $3,000 or even $1,500. As long as you have at least $200 in your account apparently, you can place your order. Again, I haven't done that and I'm not going to either, but that's what they say. There are a few ifs and buts as you might expect.

Nevertheless, the basic idea is to use the margin. You don't pay any interest at all as you're daytrading. It's kind of 'quantity rather than quality', meaning that there will not be much T/A involved, just execution skill, very considerable execution skill. The broker will be very happy too paying 0.15 bps to 0.06 bps brokerage to the ASX or Chi-X and charging you 8 bps.

Finally, just to clarify, this is definitely NOT advice for Airflix. It's just an excuse for me to post this.

 

[tech/a]

Do not trade margin unless you know how to trade with it
Using it to multiply you merge starting capital is a fast track to disaster.

The stock market isn't a get rich quick opportunity.

Airfix
Post a trading plan using a single stock strategy and I may look at some possible prospects

 

[Habakkuk]

Do not trade margin unless you know how to trade with it
Using it to multiply you merge starting capital is a fast track to disaster.

The stock market isn't a get rich quick opportunity.

Airfix
Post a trading plan using a single stock strategy and I may look at some possible prospects

Are you giving me advice now, tech? Or was that an order?

FYI, I have started early last year trading DMA CFDs. Not quite as aggressively as in my post. I know exactly what I'm doing although I don't intend to tell anyone. You will no doubt demand to see my brokerage statements as you usually do.


As for your last line to Airflix, tech, surely you jest!

 

[OmegaTrader]

I can teach you how to lose $100 a week if you want


Far out $100 on $2000. That would require a lot of trading time or a really fast computer trading system.
Or a lot of volatility..


60% without compounding!!
Compounding 5% per month 79.58%..

 

[tech/a]

As for your last line to Airflix, tech, surely you jest!

First place to start is a plan.
Best start at step 1
So no it wasn't in jest.

 

[tech/a]

Habakkuk

Perhaps you'd like to post up a trade from start to finish
demonstrating your use/undertanding of Margin.

 

[skc]

In a nutshell, you open a DMA CFD account and daytrade ASX stocks on margin.
You will need an edge - this won't work without it.
You will need to know what your edge is and you need to know the size of it.
Then you can use the margin to turn over several times your own capital every day, e.g. trading the banks on 5 or 10% margin, you could theoretically turn over $100,000 or more. That's a little risky, so it might be better to go for $40 - 50,000 and try to clear 0.25% on turnover. Considering that the blue chips have an average intra-day range of 1 - 1.5% that's not particularly ambitious.

To trade CFDs on ASX stocks on margin focusing on volume and small gains sounds feasible in theory, but in practice it would be extremely difficult.

- To clear 0.25% on turnover = catch a clean 0.5% move. Then you got to pay 8bps each way so really you need to catch a clean 0.66% move on average for each trade.
- How much can you risk each trade on a $10k capital? Let's say you are super aggressive risking $300 a trade (3% of capital which is massive for day trading). If you are trading $50k a hand, brokerage @ 8bps is $40 each way. So you can only afford $220 adverse movement, which is 0.44%.
- With such tight targets and stops, what win ratio can you realistically achieve? Let's say you are super skillful and you win 3/4 of the time.
- To achieve average trade result of 0.66%, you'd need every win to be 1.03% using a 75% win ratio.
- If you are looking at blue chips, then the target is starting to look a lot more ambitious.
- The outcome will be very much based on chance even with exceptional skill. 4 bad trades to start or an unlucky trading halt that gaps 2.5% (which is nothing in terms of movement except it is 5R because of the leverage) or something like that would quickly make it impossible.

To make $100 a day is only $25k a year, which is definitely achievable with $10k and lots of skill. However, I wouldn't do it in the way you suggested.

 

[Habakkuk]

skc, it looks like I'm going to have to say more than I intended. My original post was prompted by the similarity between the two OPs several months apart who both wanted to make $100 a day, and neither of them had the slightest clue about it. Nor did they get any kind of 'advice' from anyone (except to invest in Queensland real estate).

Like I said, I thought about it some months ago. Overall it's unrealistic to have a daily or even a weekly target. There will be losing days and very likely losing weeks. What I'm suggesting is to daytrade with 'notional capital'. That's what I'm doing. I haven't gone over your numbers because I made a little chart myself several months ago calculating the required percentages for different win rates and some of it did look a tad ambitious. As I see it, to clear 0.25% I need to get a clean 0.41% swing with 8 bps brokerage, not 0.66%. A trading halt would be very inconvenient indeed - I've had one of those.

I'm daytrading ASX stocks (DMA CFDs on IRESS) but not blue chips. It's a mechanical system for entries and I often override it for the exit before the close. The system enters on open and exits at close. It has been working fine for 10 months. My discretionary exits tend to make the returns worse but with much lower drawdowns.
The most important thing for me is to never keep a position open over night. Never. I did that when I started trading shares with Westpac almost 2 years ago, March 2015. I found it very hard to exit losing trades as you would expect from a beginner.

That problem has gone away pretty much now that I must exit at the close or before. That's why I can use margin with reasonable confidence.

Today's exchange has prompted me to re-visit the idea of daytrading the banks. I know that it's boring as batsh!t but now I want to know if it's really that difficult. Nobody will hear about the result, that's for sure - I have learnt my lesson this time.

 

[skc]

As I see it, to clear 0.25% I need to get a clean 0.41% swing with 8 bps brokerage, not 0.66%. A trading halt would be very inconvenient indeed - I've had one of those.

You said clear 0.25% on turnover. Turnover is usually measured on the sum of entries and exits (that's how your commission is charged). So if you buy $50k and sell $50k, you turnover is $100k. So if you clear 0.25% on $100k that's $250. $250 on a $50k position is 0.5% movement. Add 8bps each way for commission and you get 0.66%.

I'm daytrading ASX stocks (DMA CFDs on IRESS) but not blue chips. It's a mechanical system for entries and I often override it for the exit before the close. The system enters on open and exits at close. It has been working fine for 10 months. My discretionary exits tend to make the returns worse but with much lower drawdowns.
The most important thing for me is to never keep a position open over night. Never. I did that when I started trading shares with Westpac almost 2 years ago, March 2015. I found it very hard to exit losing trades as you would expect from a beginner.

That problem has gone away pretty much now that I must exit at the close or before. That's why I can use margin with reasonable confidence.

Good to see you finding something that works.

Today's exchange has prompted me to re-visit the idea of daytrading the banks. I know that it's boring as batsh!t but now I want to know if it's really that difficult. Nobody will hear about the result, that's for sure - I have learnt my lesson this time.

I see lots of traders generally ignore banks during the trading day, but there are good days when banks are awesome to trade (like in the past few days). Personally I don't find them boring at all. But if you want a better chance of success I'd say commission has to come down a lot lower than 8bps.

 

[Habakkuk]

You said clear 0.25% on turnover. Turnover is usually measured on the sum of entries and exits (that's how your commission is charged). So if you buy $50k and sell $50k, you turnover is $100k. So if you clear 0.25% on $100k that's $250. $250 on a $50k position is 0.5% movement. Add 8bps each way for commission and you get 0.66%.

I understand what you're saying. You're talking about brokerage turnover. I don't know the term to use for my turnover. Maybe there isn't one. To make $100 with an edge of 0.25% net I would need to turn over $40k of my money. That's the turnover I'm interested in. The broker gets 8 bps on $80k. He will be happy too.
It's just a difference in terminology. However, I don't know why I need to make $250 all of a sudden or why I have to risk $300 to make $100.

But don't worry about it, skc, no need to answer this.

Here is my example: ANZ opened today at $29.36 , easy enough to get 1000 shares (but I didn't), brokerage $23.49
28 minutes later it traded at $29.61 , exiting with perfect hindsight, of course, brokerage 23.69, clearing $201.82 profit.

Now let's do the percentages:
the move was 0.85% minus 2 lots of brokerage = 16 bps, leaving us with 0.69% net
My turnover was $29,360 of my money. 0.69% of that is ... $202.58

I have a pretty good understanding of the numbers. This is the little chart I made months ago using 6 bps brokerage. That's what I'm paying now, 6 bps, not 8 any more.

It's not formatting as I would like

win-rate, win, loss, net profit

40% 1.5% 0.38% 0.25%
50% 1.0% 0.25% 0.25%
60% 0.8% 0.30% 0.24%
70% 0.7% 0.40% 0.25%
75% 0.6% 0.30% 0.25%

50% 1.50% 0.25% 0.50%
60% 1.25% 0.30% 0.51%
70% 1.00% 0.27% 0.50%

I said it was ambitious. They're very tight stops indeed. No idea if I could achieve that, probably not. But I want to find out.

Thanks for your response, skc. I completely agree with your main points, the riskyness, the difficulty and the sillyness of working a high-skill full-time job for 500 bucks a week while taking financial risks. There are better ways.

It was never my intention to 'prove' anything. I couldn't. That first post, #27, was all I was going to say and I foolishly expected it to be quietly ignored.

I'm hoping that we can leave it at that, but the last word can certainly be yours.

 

[skc]

I understand what you're saying. You're talking about brokerage turnover. I don't know the term to use for my turnover. Maybe there isn't one. To make $100 with an edge of 0.25% net I would need to turn over $40k of my money. That's the turnover I'm interested in. The broker gets 8 bps on $80k. He will be happy too.

Clearly we defined "turnover" differently and that led to the confusion...but I'd say your definition is incorrect. There's no such thing as "my turnover"... turnover is simply totally value trade, be they long, short, entry or exit. Your turnover = broker turnover.

So you are really trying to clear 0.25% on roughly half your value traded... or 12.5bps of total value traded. If your brokerage is 6bps then you are looking at ~25 bps gross profit on total turnover.

FWIW in my own trading, grossing 20bps would be a very solid month. Throw in some average months, 6-8bps commission each way would basically make this unprofitable. I don't doubt some traders can do better than that, but it wouldn't be the sort of scalping/high volume approach discussed here.

I said it was ambitious. They're very tight stops indeed. No idea if I could achieve that, probably not. But I want to find out.

Thanks for your response, skc. I completely agree with your main points, the riskyness, the difficulty and the sillyness of working a high-skill full-time job for 500 bucks a week while taking financial risks. There are better ways.

Indeed if you can achieve that then you can always go prop. Yes the shop takes a cut of your profit but you pretty much make it back on lower brokerage costs. If you are trading blue chips the approach should be scalable to some extent. Imagine grossing 20bps on $10m turnover a month... or $40m, or $100m.

I'm hoping that we can leave it at that, but the last word can certainly be yours.

Yes I am sure we've gone off topic enough.

 

[ThingyMajiggy]

Just a quick question skc, are you trading actual shares or CFDs in prop?

 

[skc]

Just a quick question skc, are you trading actual shares or CFDs in prop?

Shares. I don't know any prop shop trading CFDs - could be just me being ignorant though.

 

[skyQuake]

Shares. I don't know any prop shop trading CFDs - could be just me being ignorant though.

You'd get access to hard to borrow stocks that retail likes to buy (eg BAL, BKY) and hard to access commodities (eg iron ore, china futs)

On the flip side you'd get counterparty risk, platform risk, client money risk, **** fills risk etc...