How much did you lose to begin with?

[The_Dude]

Im just starting out in the game of day trading. I've done my homework and will be mostly skimming low votility utility stocks looking for large bid ask gaps.... what's the chance that i blow my 5k learning before i start making some money back...

it would be nice to know other peoples experiences

 

[ChowClown]

With sound money management and discipline you should be OK - I began trading in a very undisciplined, adhoc manner, thinking trading was an easy route to wealth - within 12 months I'd blown 60% of capital, only then did I realise the importance of assessing trade risk, before profit.

Good luck to you.

 

[neil]

Im just starting out in the game of day trading. I've done my homework and will be mostly skimming low votility utility stocks looking for large bid ask gaps.... what's the chance that i blow my 5k learning before i start making some money back...

it would be nice to know other peoples experiences

How much did you loose to begin with? :?:

Loose = opposite of tight

Lose = opposite of win.

:cheesy:

 

[TheBramble]

will be mostly skimming low votility utility stocks looking for large bid ask gaps....

TD - what do you mean 'skimming'? And how will you use those 'large bid ask gaps'?

To answer your question - statistically, you'll be on eof the 97% who fail within 6 months of starting out. But that's only a statistic.

As ChowClown says, with correct money and risk management, you could do OK.

The system you're using will have some bearing on your potential for success as well (hence my questions).

 

[The_Dude]

TD - what do you mean 'skimming'? And how will you use those 'large bid ask gaps'?

To answer your question - statistically, you'll be on eof the 97% who fail within 6 months of starting out. But that's only a statistic.

As ChowClown says, with correct money and risk management, you could do OK.

The system you're using will have some bearing on your potential for success as well (hence my questions).

I will be putting limit orders above the ask price, waiting for somebody to sell at market price (which will then be me)... and straight away selling for below the bid price... so when somebody buys at market price they will be buying my shares again.

I make a 1/16th and on a few thousand shares thats a couple of hundred pounds
i dont have to risk much.... and can do that a few times a day

 

[oatman]

If you've done your homework, then your method presumably makes money.
Why, then, are you considering losses?

 

[TWI]

Hey Dude,
Your method sounds as incredible as it is impossible.
Until you figure out the difference between bids and offers, limit and stop, buy and sell, suggest you may just lose your arris.
Very best of luck.

 

[frugi]

Dude,

"I will be putting limit orders above the ask price, waiting for somebody to sell at market price (which will then be me)... and straight away selling for below the bid price... so when somebody buys at market price they will be buying my shares again."

As twalker says, your plan as stated makes no sense. However I get the idea you may be trying to do this:

You intend to play market maker, to bid for stock with a wide spread a little above the best bid then if filled immediately offer it out a little below the best offer, i.e capturing some of the spread. This could work, although there is a large danger that once you own your stock not only can you not sell it on the offer but also then the bid, or indeed bids, that were just below your initial filled bid, disappear leaving you in a quandary. Your Level 2 skills and trading platform will need to be sharp to do this I think.Best of luck anyway.

PS I didn't pee on your rug I swear

 

[Salty Gibbon]

Been trading for 10 months.

I trade mainly Nasdaq stocks using my own methods which I have gradually developed through reading, tuition and a lot of advice from members who frequent this website.

Started with US$ 50k capital and now I have more than that - not much more but at least I did not lose.

I looked deeply at the psychological aspects of trading, I employ pretty good money management methods and I try to be as disciplined as possible ( not always easy ).

I never went more than US$ 1,000 below my starting capital although I did keep my position size pretty low during the past year. No need to start out trading 1,000 shares at a time. That way you will probably suffer some big drawdowns.

But overall, if you are sensible and a little bit clued up, you should be okay.

 

[adrianallen99]

I expect that The_Dude has read the same book I did a while back regarding day trading.

You pick a stock that moves very little most days and has a volume of over 20,000. You place a limit to buy the stock at the bid, as a rule the specialist has to give priority to your order over there so when someone sells at market you get to buy the stock. You then sell at the ask and wait until someone puts a buy order at market. Again your order takes priority over the specialist.

This techinque can work and Ive seen it done. Usually losses are small and it is possible to make quite a few trades a day.

A US broker that charges less than $10 a trade and allows limit orders is best. You can't use this technique with a lot of brokers because they only offer a fill or kill limit order.

Firstly, if you get it right, great, it isnt as easy as it looks.

secondly, £5000 is not a hugh amount to trade this technique with.

 

[adrianallen99]

I never went more than US$ 1,000 below my starting capital although I did keep my position size pretty low during the past year. No need to start out trading 1,000 shares at a time. That way you will probably suffer some big drawdowns.

With the technique he is describing you have to trade in lots of 1000 or 2000 shares, otherwise it wont work.

 

[adrianallen99]

This is the book, that explains it -

Day Trade Online: Start Trading for a Living
Christopher Farrell

 

[donaldduke]

"I make a 1/16th and on a few thousand shares thats a couple of hundred pounds"

The market doesnt trade in 1/16ths any more.
Will this strategy, (that you must of read in a book written before decimalization), still work today?

 

[adrianallen99]

The problem you encounter trading for 1/16 is that if you trade 2000 shares at $5 a share, that is $10,000. You then sell for your 1/16 profit and make $125. The broker fee really affects this, say for example you have a UK broker that charges £12.50 a trade. Thats over $40 for the trade (buy+sell).

You have traded your entire capital for £50. Trade less and you will hardly make anything - trade more and you may not get filled. If you win every trade, fine, but lose a couple or get a bad start and you no longer have the capital to carry on trading this strategy.

 

[BBB]

Excellent point DD.

 

[pimpey]

Im cancelling my bloomberg subscription as we speak, this method sounds like a much easier way of making money......not,

it'd be lovely to think it was that simple but as AA99 said it's not going to take many loses before you are screwed. leave that way of profit taking to the marketmakers, after all they're playing with other peoples money.

 

[carl131]

I, too have read Farrell's book, and it may have worked a few years ago, but a concept like that only works if it is original. What I mean is that it's a bestselling book, so if you step in front of the specialist to soak up the market orders, expect half of the planet also to have the same idea, and getting out of a 1000 share trade in an illiquid stock that's gone wrong isn't pretty!

 

[LittleWhiteBull]

The best thing about Chris Farrell's book is that he wrote it first and made alot of money, for Chris Farrell, on a good idea that went sour as soon as it became a bestseller.

I like Toni Turner's books as they deal with some very straightforward common sense approaches.