Is trading a zero sum game?

[danielion]

That is, as a worst case scenario. So if you're losing money like I have you're doing poorer than you would blindfolded. I made money last year then I lost twice as much this year. But largely because I believed in a principle (gold will go to 2000), and tried to hold stocks long term, only to relinquish some of them on their lows. But most of my Day trading has been positive, other than a few occasions of emotional upheaval that lead to a bit of a drawdown. But nothing has taken more money than "faith" in a stock, or "faith" that the economy will recover. I suppose maybe it will, but in the meanwhile we are at its mercy as to timing.

This is what I like about Day Trading. I should be able to trade blindfolded and never lose more than commissions. At a buck a trade and a few trades a day at least this won't break me. I tried tossing a coin a hundred times just to remind myself that the market is NOT against me. Greed and fear are the enemy. Odds are neutral.

 

[Vaco]

odds are not neutral, the spread tilts the odds against you. Its up to you to find an edge that tilts the odds back in your favour.

Merry Xmas

 

[Splitlink]

That is, as a worst case scenario. So if you're losing money like I have you're doing poorer than you would blindfolded. I made money last year then I lost twice as much this year. But largely because I believed in a principle (gold will go to 2000), and tried to hold stocks long term, only to relinquish some of them on their lows. But most of my Day trading has been positive, other than a few occasions of emotional upheaval that lead to a bit of a drawdown. But nothing has taken more money than "faith" in a stock, or "faith" that the economy will recover. I suppose maybe it will, but in the meanwhile we are at its mercy as to timing.

This is what I like about Day Trading. I should be able to trade blindfolded and never lose more than commissions. At a buck a trade and a few trades a day at least this won't break me. I tried tossing a coin a hundred times just to remind myself that the market is NOT against me. Greed and fear are the enemy. Odds are neutral.

I congratulate you. The spread is against me so, when I open a trade I go negative, normally, at once for that much,at least. You must take a slightly greater loss, surely. Otherwise, you are assuming that your trade is going to go in the desired direction from the start. Are you telling me that you refuse to take even a slightly greater loss, but that you close as soon the spread loss is exceeded?

If I was to do that I would have to enter my trade several times and, then, when I gained, I would have to win back the losses on several trades.

I wish my trades would all move in my favour from the start, then I would never worry about money again.

 

[danielion]

I'm only thinking about adding liquidity to the market. Then setting a buy/sell stop equidistance from your profit taking point. Maybe for goldcorp it would work something like entry 26 dollars, exit either 25.50 or 26.50. Then I don't see how the bid/ask spread will affect you here. But I see there could be some loss with slippage.
Incidentally, how bad could a person get hurt with slippage in intraday trading? is it possible to have an instant sell off through 50 cents worth of bid depth and then get stopped out 50 cents lower than you wanted. The most I've seen is a few pennies in the trades I have done, but I am alway's concerned a big seller/buyer may drastically alter my risk expectations. Are their guidelines as to how quickly one is able to sell shares in order to honor the stops of all the smaller players? I suspect not.

 

[neildub]

Who gives you a buck a trade?

 

[danielion]

Interacive Brokers, hundred shares of any stock. I think if you do it unbundled it could even be less than that, espectially on the NYSE. For Canadian stocks you don't need the minimum in order to daytrade.

 

[Vaco]

that strategy will be a long term loser, there is no edge and your chances are not 50/50.

to use your example. you have a long entry order sitting at 26 with your oco exits at 25.5 and 26.5

If the spread on gold corp is 10c then your order gets filled when the offer is at 26

At this point the bid would be at 25.9 40c away from your stop loss but 60c away from your target.

As your stop is closer then your target you will be stopped out more often then you hit your target over the long run.

On top of this your R:R is 1:1 meaning that even if the win rate was 50% you would still be a net loser.

 

[danielion]

Even if I don't get in at the market offer but place a bid instead? What about slippage? Do you think it is better to place stop limit order's rather than stops?

 

[Vaco]

My knowledge of direct access trading is limited so i cant advise you on order types. but it is unlikely that you will get in at the bid very often.

The point remains that placing random orders with a fixed stop and target does not give you an edge.

 

[danielion]

Elefteros, yeah, I see with 1/1 a person could get hurt in the long run without an edge. My intent was just to point out that perhaps an edge giving you 52% or 53% profitable trades would be all it takes to break even. This in order to gain some perspective. If you could give me some examples of your own experiences with slippage that would be greatly appreciated.

 

[Vaco]

Dan,

I trade via CFDs so my only experience of slippage is re-quotes, but then i cant buy at the bid either.
The winning % of trades is insignificant without knowing the R:R.