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Old 08-02-2018, 01:17 PM
CowboyGuy CowboyGuy is offline
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Default Day Trading

Trade high volume, high volatility stocks. Set stop loss at 1% below the price. For profit taking, set a target 2-3% above the price. Even if you're wrong 60% of the time, you will still be taking decent profits home if your risk to reward ratio is 1:2 or 1:3.

What's wrong with this strategy?

Heck, as long as you set stop losses at 1%, you can even trade leveraged ETFs, because the potential loss will still be the same.

Another tip, rather than taking the profits at 2-3%, let the profits run and see where it takes you. If seeing a downward trend, cash it out.

Only trade major stocks such as Apple, Google, Microsoft, Intel, Facebook, Micron etc., as they offer high liquidity and high volume. Stop loss is your friend. Whenever you have a loss, it should not be more than 1%. Except for the months when the market is down majority of the days, you will be taking decent profits home.

And its not a full time job. Set stop losses. Just watch the market for an hour or two to optimize target profits.

I know you may think majority of the day traders lose money bla bla bla. But after doing a lot of research, I've found that there are several reasons for that. They get emotional. They don't set stop losses. They lack discipline. They start making several angry trades during the day after having one or two losses, that also increases transaction costs etc.
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Old 08-02-2018, 01:24 PM
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Quote:
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Trade high volume, high volatility stocks.
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Only trade major stocks such as Apple, Google, Microsoft, Intel, Facebook, Micron etc.,
There seems to be some confusion on definitions?
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Old 08-02-2018, 01:53 PM
CowboyGuy CowboyGuy is offline
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There seems to be some confusion on definitions?
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Originally Posted by CowboyGuy View Post

Heck, as long as you set stop losses at 1%, you can even trade leveraged ETFs, because the potential loss will still be the same.
I would target high volatility stocks from the list such as FB. You’ll have to find a balance.

One issue with leveraged ETFs would be low volume and potential for slippage?
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Old 08-02-2018, 02:49 PM
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Ive had some success with larger stocks using the 'take what the defense gives you' strategy. I would try to get comfortable with a handful of pics and track them daily. tbf, that was during the long bull run, so the general uptrend made day trading a little easier.

like any type of gambling, there are cold streaks. Even if you limit with some hard stop loss rule, you can still take a long run of losses. So if you are patient and want to go for the long haul, you may be able to get a good overall win rate, but there may be some months of big losses along the way. Your comment about self discipline is spot on- the best gamblers I know can stay true to their strategy regardless a long run of losses, but that type of self control took them a long time to get command of; most people do not just jump into the scene with that control.

Biggest issue for me is the amount of time it takes to track everything. Its practically a day job.
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Old 08-02-2018, 03:03 PM
CowboyGuy CowboyGuy is offline
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Originally Posted by DataDan View Post
Ive had some success with larger stocks using the 'take what the defense gives you' strategy. I would try to get comfortable with a handful of pics and track them daily. tbf, that was during the long bull run, so the general uptrend made day trading a little easier.

like any type of gambling, there are cold streaks. Even if you limit with some hard stop loss rule, you can still take a long run of losses. So if you are patient and want to go for the long haul, you may be able to get a good overall win rate, but there may be some months of big losses along the way. Your comment about self discipline is spot on- the best gamblers I know can stay true to their strategy regardless a long run of losses, but that type of self control took them a long time to get command of; most people do not just jump into the scene with that control.

Biggest issue for me is the amount of time it takes to track everything. Its practically a day job.
Good post.

Also, I think having a bull or bear run in the market makes a big difference too. Minimizing the losses should be the greatest goal for a day trader.
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Old 08-02-2018, 05:06 PM
A Student A Student is offline
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Note, just because you have a stop loss orders on a position, doesn't mean you can't lose more than the stop loss. It's especially an issue if you hold positions overnight, and stocks seldom have 1% swings during the day making an overnight holding necessary if you want to see a 1-2% gain before selling.
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Old 08-02-2018, 05:13 PM
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Ok, so you have $100,000 and decide to follow this strategy and put 2% of your money in each of 50 major stocks .

Then the market has a bad day, and 40 of them ($80,000) stay at the same price, and 10 go down 1% so you sell them off. Now you're down to $99,800.

What do you invest the $19,800 in now? Certainly you don't invest the money back into the stop loss stocks, otherwise you're just incurring trading fees. What now?
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Old 08-02-2018, 05:39 PM
CowboyGuy CowboyGuy is offline
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Note, just because you have a stop loss orders on a position, doesn't mean you can't lose more than the stop loss. It's especially an issue if you hold positions overnight, and stocks seldom have 1% swings during the day making an overnight holding necessary if you want to see a 1-2% gain before selling.
You will never hold overnight. Always sell before the trading ends on the day.

There are many high volume stocks that have more than 1% swings. 2 to 3% are very common.
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Old 08-02-2018, 05:48 PM
CowboyGuy CowboyGuy is offline
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Originally Posted by Klaymen View Post
Ok, so you have $100,000 and decide to follow this strategy and put 2% of your money in each of 50 major stocks .

Then the market has a bad day, and 40 of them ($80,000) stay at the same price, and 10 go down 1% so you sell them off. Now you're down to $99,800.

What do you invest the $19,800 in now? Certainly you don't invest the money back into the stop loss stocks, otherwise you're just incurring trading fees. What now?
I'm not sure if this is a serious post. Are you familiar with the fundamentals of day trading?

First, you don't trade more than 3 or 4 stocks in a day. Anything more than that eats up your account in the form of transaction costs.

Secondly, even if we consider your example, you'll be doing nothing that day anymore. Take the $200 loss and don't trade anymore that day.

Next day, you'll be investing the full $99,800.

If you set your profit to loss ratio as 2:1 (for example your losers at 1% and winners are 2%), in order for you to be successful/have a net gain, you'll have to have a win rate at least more than 33% of the time. Having a win rate of 50% is common and is easily doable.

In addition to the win rate, the size of your profit to loss ratio counts a lot. The greater than profit to loss ratio is, the lesser win ratio you can afford.
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Old 08-02-2018, 06:40 PM
ActuateThis ActuateThis is offline
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Quote:
Originally Posted by CowboyGuy View Post
I'm not sure if this is a serious post. Are you familiar with the fundamentals of day trading?

First, you don't trade more than 3 or 4 stocks in a day. Anything more than that eats up your account in the form of transaction costs.

Secondly, even if we consider your example, you'll be doing nothing that day anymore. Take the $200 loss and don't trade anymore that day.

Next day, you'll be investing the full $99,800.

If you set your profit to loss ratio as 2:1 (for example your losers at 1% and winners are 2%), in order for you to be successful/have a net gain, you'll have to have a win rate at least more than 33% of the time. Having a win rate of 50% is common and is easily doable.

In addition to the win rate, the size of your profit to loss ratio counts a lot. The greater than profit to loss ratio is, the lesser win ratio you can afford.
Why stop at 2-3%?
If you set target at high enough, you only need a win rate of 1% and you'll be rich in no time.
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