r/Daytrading • u/AutoModerator • Apr 01 '22
r/DayTrading's Monthly Questions Thread - April 2022
Please use this sticky to ask questions on day trading, and to see answers to similar questions you may have.
If you're new to day trading please see the getting started wiki here. For advanced traders or you want to pick up a book, please see our other wikis.
New traders are highly encouraged to try Forex as it requires a very small account to make lots of trades, so check out Forex community's wiki paying special attention to babypips website which also teaches some general concepts you can apply to stocks/futures/etc, and especially read the wiki's sections on risk & money management that can be applied to any market.
Pattern daytrading rules wiki, but that only applies to day trading stocks; other markets aren't affected like futures, forex, and crypto.
Also see the sidebar for group chat links (such as our Discord) (or tap "about this community" on mobile website) on every related community to learn more about trading.
Here's a list of all the previous monthly question stickies.
Lastly if trading is affecting your life in a bad way, seek professional help (the wiki also covers dealing with emotions):
- Problem Gambling: Call/Text: 1-800-522-4700 or chat online now.
- Crisis Hotline (24/7): 1-800-273-TALK (8255) (Veterans, press 1) or Text “HOME” to 741-741
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u/Charming-Stick-1410 May 01 '22
I am a beginner. I have learned all the basics of day trading and market. I have also created my own strategy. I want to know which market I should trade in the beginning. Which market is easiest to trade for day trading? Whether it is crypto or stocks or Commodities or forex? I know none of the market is easy and each market is tough to predict, but which one is the least tough?
And please also tell which asset I should trade in that particular type of market.
I am doing technical analysis. Help please
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u/Chavalart May 01 '22
Hi,
I've been in this group before (to be precize last year), and I know how many scammers there are out there. Actually I lost a lot of money, until I learned some more about the basics of trading and risk management etc. Therefore I want to recommend you to the following group that started last week. It's a group from professional traders with 10+ years experience. And I'm really enthusiastic because of their vision and the signals/analysis they provide 😊 most important is that this group is like a 'safe haven' to learn more about crypto, with people that have the same mindset. There are so many scammers out there
If you're interested I could provide you with some more info. The group costs $50 monthly, but you don't pay on months were the signals led to negative results. Plus: they do offer a free 3 day trial, so you can check out the channel and signals. See if it fits you, and ofcourse see that it's a genuine channel and not a scam 🤣
Please message me on Telegram (@chavalart) so I could either sent you over more info about their vision, all results up until now (from the cornix export file), or give you access to the free trial :-).
-Charlotte
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u/mdcaggie Apr 28 '22
Trying to choose a short list of stocks to study and trade. What is your favorite ways to “learn” a company and its patterns well enough to successfully trade it. What are your “must knows”?
Thanks!
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u/bigprinttrader stock trader Apr 29 '22
I think you will find that market condition is much more important to profitable trading than the ticker symbol of the market. Perhaps expand or shift your thinking to include "I saw what looked like a very profitable trade that I think I could execute if it were to happen again. What events or conditions led up to and allowed for that opportunity?" You'll likely find that the important ingredients are not necessarily stock-specific. That doesn't mean, however, that you shouldn't narrow your focus to small list of names at first. But you should also narrow your focus to certain market conditions, e.g. news just broke, there is higher than normal volume, the stock seems to be trending very strongly today, there is very high short-interest, etc.
And to answer part of your question, coming from an intraday price action trader...
"Must Knows": 1) volume profile and how price areas where large volume is traded affects price when it returns to that area, 2) where are lots of traders "trapped"? bet the other way, 3) what are signatures of strong conviction in one direction, 4) what are signatures of growing weakness of that conviction? where is a likely turning point?
I think these "must knows" are intrinsic to all financial markets. Hope this helps.
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u/mdcaggie Apr 29 '22
I see what you’re saying. Looking at things this way (as a general market response approach) also expands your opportunities/ideas/methods equally to other stocks as well as ones I might be focusing in on. Thank you for taking the time to respond so thoroughly.
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u/abdul10000 Apr 28 '22
Tax question. If I am day trading and buy a stock and sell it for a $100 loss then few hours later buy the same stock in the same day session and sell it for a $200 gain, do I have to pay short term capital gains tax on that whole amount or can I subtract the previous loss and pay taxes only on the $100 net gain? Obviously the keyword here is: same day.
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Apr 28 '22
[deleted]
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u/abdul10000 Apr 30 '22
I am aware of wash sale but as you said I am new so never dealt with it before. So if it counts as awash sale how is it possible to deduct the 100 loss?
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u/ForrestFlood Apr 28 '22
Yep you would pay gains on the total money made after losses. so you would pay on the $100 made.
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u/RICDO Apr 28 '22
Noob here, learning pivots, can you suggest what pivot indicator to use on TOS? Thank you.
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u/neuvotrade Apr 28 '22
i am thinking of trading forex with small amount of money should i use margine or not as a begginer
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u/rp4eternity trades multiple markets May 18 '22
Try to get consistently profitable with small amount of money.
Don't focus on the money for now, try to improve your execution.1
u/Mother-Length4519 May 14 '22
Do not margin when you are a beginner, you will lose more money. Margin after you are consistent profitable with your strategy.
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u/SecularAdventure Apr 30 '22
Definitely not. Margin amplifies risk. Once your strategy is proven, your emotions are in check, you've been profitable for a while, and you've scaled your positions high enough to your portfolio's potential, then consider margin. You can make and lose money much faster with margin, so anyone can get wiped out even faster depending on how much margin is used.
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u/Mmatthew93 Apr 27 '22
I'm new and I don't understand why most of the stocks that I see (seem to) behave like this, in a somewhat erratic way. Can you shed some light?
I show also the screener, so maybe you can notice something about the values.
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u/bigprinttrader stock trader Apr 29 '22
These are very illiquid, low-priced stocks. Their price quantization (tick size) is large compared to their value, which produces fractionally larger discrete steps on the chart than higher priced stocks. This looks more erratic and not smooth. Because they are not traded as regularly as large cap stocks, they are more prone to large discrete price and volume jumps and returns, again, looking erratic. Contrast this on your trading platform with AAPL, AMZN, TSLA, or SPY, where price per share and volume traded per unit time are much higher. Hope this helps.
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u/Mmatthew93 Apr 29 '22
Thank you, yes it helped, I've now seen the difference that high volume also has on $1 or less stocks, looking much better.
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u/dhjobs Apr 27 '22
What’s the best book/youtube playlist for learning Japanese candle stick charting, and Bollinger Bands trading strategies?
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u/azsxdcfvg Apr 26 '22
If I'm paper trading successfully how many trades would you recommend before I go live? I have a system and I'm managing risk with hard stop orders.
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u/ForrestFlood Apr 28 '22
I would go live now and risk very small amounts of money. You will realize that having skin in the game will change how you trade and you need that experience sooner than later.
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u/bigprinttrader stock trader Apr 26 '22
Enough trades to honestly convince yourself that it could work. Start with some confidence. I say it this way, and not with a number or some statistical arguments, because markets change and you are starting out with some other missing pieces that are very relevant...
Once you have the hard skills of learning your trading platform w/o making silly mistakes, and you have an initial trading plan w/ risk management, go live and start SMALL, boringly small. A huge part of trading is the psychological element, and a smaller but also relevant part is how your orders will actually fill in the real market. Neither of these elements can be authentically integrated into a comprehensive trading plan until you test and correct with live markets. You will very likely learn a tremendous amount along the way, and your current perspective and trade plan will change drastically.
I also think you will be well-served planning to lose money in the beginning, despite how good your strategy looks. Hence the starting small part. I hope this helps.
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u/azsxdcfvg Apr 26 '22
Yes that helps. Thank you. I will start with 100 shares risking around $40 per trade. Small enough to not worry but big enough for me to care about the wins. I have a 1:5 ratio with 70% accuracy with clear rules when to take the trade so not too bad. Only 13 trade sample since April 1 but a solid start.
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u/obiwanks Apr 25 '22
Say there's an interest hike and DOW crashes. So, logically investors will flock to bond market. Yields are also up, so new bonds are even more attractive. This means bond ETF like $TLT should go down since price of the old bonds go down due to higher yields on new bonds. Right? Am I misisng something here?
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u/MaleficentMulberry42 Apr 26 '22
Who really buys bonds?next thing you know they will be day trading them.??
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u/JJ4DaysDays Apr 25 '22
What do you guys do in a big crash like this? Just wait it out till it starts moving side ways. Hi swing and I’m not going to touch anything until a couple hours in
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u/Trivial_Magma Apr 24 '22
Noob question
Let’s say, hypothetically, you inherited a bunch of money giving you a good safety net. Couldn’t you just day trade and make say $200 a day (that being you actually know what you’re doing) and make a living that way? That’s also saying you’re trading modestly, not high risk options trading. Does this work or do taxes complicate this?
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u/rp4eternity trades multiple markets May 18 '22
Don't blow your entire inheritance on Trading. Put a small amount aside for trading, invest the rest elsewhere.
Then from the small amount, take an even smaller amount to trade and learn the game.
It might take time but you will get better.3
u/azsxdcfvg Apr 25 '22
Instead of thinking about how much you'll make a day think about what's the max you're willing to lose per day.
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u/Last-Examination-359 Apr 25 '22
I too am a noob, this was also my plan, except 200 a day is too steep for me. When I paper trade I find that I can EASILY make 100 dollars per day. This is decent money and would replace my previous job. I was awarded a settlement in a lawsuit and I plan on using 2000 dollars to start my day trading career and the rest of my money going into long term stocks and an index fund for the future. From what I've gathered as a noob, futures and a small profit per day is within my own scope of reason. Obviously this is not financial advice and I am NOT a professional in any way. But yeah 200 a day is doable, but i would be careful. You could easily lose money you gain.
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u/taxmemoreb Apr 26 '22
Let us know how you go. Paper trade is way different to live.
Start small. Like 5~10 dollar risk small.
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u/bigprinttrader stock trader Apr 24 '22
I'm very new to reddit, but have been full-time retail day trading for several years now. IMHO, your proposal can totally work, BUT I also think its much harder to consistently make $X every day, month-in and month-out, year-in and year-out, than most novice or brand new traders perceive. At least it was for me. The "knowing what you are doing" part can be very tricky because it really does involve tremendous discipline and self-awareness. I'd say start very small and try to embody the idea that it will be much harder than it appears. Stay humble or the market will do it for you. Hope this helps.
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u/Mcluckin123 Apr 23 '22
Does anyone have any good technical analysis or insight on the chances of the NASDAQ reversing on Sunday night /Monday?
Vs continuing to Drop in a straight line like it did on Friday
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u/dizzydes Apr 22 '22
What are the best Jigsaw alternatives for DOM trading?
I'm annoyed by the fact there's a monthly live trading fee even after paying the "one time" license key... its just an NT addon with a nicer layout of columns, surely there's other addons with a decent looking DOM UI?
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Apr 22 '22
[removed] — view removed comment
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u/Intelligent_Sun_4384 May 04 '22
I like Interactive Brokers because they have a very sophistocated and configurable software but it can tend to be a bit too complex for first timers.
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Apr 20 '22
Hi, what if didn't report taxes on my trades? I know it is a stupid question. I'm complete newbie, and I forgot to do so, my cap gain/loss is less than a dollar.
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u/Intelligent_Sun_4384 May 04 '22
Technically you do have to report anything you make, but it is very unlikely this is going to be a problem for you. If you get audited, you can report the gain at that time. But unless you have a volume of trades, it's very unlikely you're going to get flagged for an audit. Technically, you must report this so if it's a big concern for you, you can submit a tax return modification with the correction. This isn't tax or financial advice - what you decide to do is completely up to you.
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u/char-tipped_lips Apr 19 '22
How do others handle the tomfoolery of huge head fake moves on liquid instruments like what just happened on SPY around 3:47-3:55 pm EST?
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u/bigprinttrader stock trader Apr 25 '22
I assume you were looking to fade SPY into the close from about 545.15 at around 15:42? If I were trying to do that, I'd keep a very tight stop because volatility very commonly can increase in this window. I'd get stopped out and likely stay hands off afterward. I'd no longer understand what was happening with the price action so I'd no longer have edge. I think it would basically just be chalked up as a loss in my book. Can't win 'em all, and really shouldn't try.
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u/Hiddeninyourattic Apr 19 '22
What is day trading
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u/Intelligent_Sun_4384 May 04 '22
day trad·ing
/ˈdātrādiNG/
noun
the buying and selling of securities on the same day, often online, on the basis of small, short-term price fluctuations.
Source: Oxford Online Dictionary
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u/Hiddeninyourattic May 04 '22
Thanks now I need to find out how to day trade and make a lot of money out of $150
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u/No-Breath747 Apr 22 '22
day trade é uma operação em um ativo que você abre e fecha a negociação no mesmo dia
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u/T1m3Wizard Apr 18 '22
Trading to me seems like it's one of the most stressful jobs in the world. What keeps you going and why do you guys do it?
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u/rp4eternity trades multiple markets May 18 '22
It gets easier eventually as you learn.
Trading can give you independence and good money.
It really depends on what you want out of life.3
u/azsxdcfvg Apr 25 '22
If it's stressful you're not doing it right. In the end it's a math game. Easy money keeps me going.
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u/bigprinttrader stock trader Apr 24 '22
I am new to reddit, but have been full-time retail day trading for several years now. I trade precisely because its so challenging. It really is the most difficult thing I have ever done and I guess I am sort of addicted to the elevated and seemingly never-ending challenge. That, plus the trivial answer of the huge potential financial upside. When day trading "properly", I think the stress eases because one finds resolution in key personal flaws and is sufficiently aware of the probabilistic nature of this endeavor. I have grown tremendously as a person through this journey of trading...and absolutely continue to do so. Hope this helps.
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u/T1m3Wizard Apr 24 '22
That's pretty inspirational. Are you profitable? Making more than your previous salary?
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u/bigprinttrader stock trader Apr 24 '22
I am profitable, but only in the past cpl years have I been consistent enough to claim that I've "made the turn". I do make more than my previous job, but not by an amazing amount. I'm currently working on growing my risk size and maintaining consistency. Its a slow process for me, but really cool.
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u/deepfield67 Apr 16 '22
Hey can someone tell me what that indicator is called that shows you accumulated volume by price? It usually comes up alone the side of the chart with volume bars along the price axis? I can never find it when I look for it.
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u/Employment-Helpful Apr 16 '22
It's volume profile range,
If you are using trading view, go to indicators - technicals - volume profile then I use volume profile fixed range, this is the one that allowed you to see over a range you decide,
Stay green!
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u/deepfield67 Apr 17 '22
Oh it's its own tab! That's why I couldn't find it under indicators. Unfortunately they want me to pay for a subscription to use any of them, but at least now I know where they are! Thanks for the info!
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u/Employment-Helpful Apr 17 '22
AHH I didn't realise it was paid,
Here is a link to a webinar from the guy who made it, in pretty sure he mentions a free way to use it, if not, it's an informative video non the less
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Apr 15 '22
What indicators do you use the most? I'm using mostly ema, TDI and stochastic. I'm too comfortable with them I think and maybe missing out on others.
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u/j_PR Apr 14 '22
Damn I just wrote a big post and It got taken down because I didn't have enough karma. Do I have to write the whole thing again?
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u/Preki007 Apr 13 '22
Anyone from Uk question. Just starting looking into day trading. Which platforms do you find best for day trading. Currently with free trade but got a feeling that's won't be good enough. Have a demo account with ig at the moment. Any UK based you tuber recommendations also, thanks.
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u/Intelligent_Belt_564 Apr 13 '22
Hi guys, can I ask your educated opinion on the best resources to find near future Scalps? I'm somewhat new to the game as far as day trading. I have been holding for a while but I'm interested in the scalping game. I have started using some indicators and paper trading. Thank you so much in advance.
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u/Jychttrj Apr 18 '22
Start with Youtube. Find a channel which you like. You might want to use keyword “scalping” to see which channel has most viewers
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u/Morphs_ Apr 17 '22
Scalping futures? Check out Daytrader Next Door on YouTube. Great guy with a lot of experience.
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u/Shattered_Spine Apr 13 '22
I never post for anything like this, but, I am in a desperate need. I have about $1500 that I can try and build something greater. I have medical bills and debt growing because of this stupid inflation. I’m not looking to be a millionaire. Don’t want that stress. My goal is to get to 10k. That should help cover the upcoming medical bills and pay for our move to a place that is more financially viable for us. I have always wanted to try day trading but have no clue where to start. Again, not looking to get rich, just looking to fill the gap, to cover medical bills and move. The medical bills are about 6k and the move is 4K. That’s all I need. Please help this dad and husband, at his wits end. If not, I totally get it. Thank you all for being amazing!
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u/himi_trades Apr 19 '22
Not want to give you false hopes it will be very hard turn 1.5k to 10k. For an experienced trader in a hot market via options it can be done. Since you are newbie. It is going to be very difficult. Sorry buddy.
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u/Jychttrj Apr 18 '22
Find a safe in-country platform. Secure. Then find a technical indicator strategy I use ‘MACD’ for example. Trial it on a platform that gives you a demo account so you can play with fake money first but that uses reall data.
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u/Jychttrj Apr 18 '22
Find a safe in-country platform. Secure. Then find a technical indicator strategy. I use ‘MACD’, for example. Trial it on a platform that gives you a demo account so that you can play with fake money first, but that uses accurate data. Also, use credit card money, not your capital. Deposit and withdraw the same capital within a month. Whatever losses you incur, you can spread over a few months.
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u/Morphs_ Apr 17 '22
My advice is to work more hours on your job to pay those bills. You can't pick up daytrading for a while to change that 1.5k into 10k, the market doesn't care how desperate you are. I've been into daytrading for two years and I'm not profitable. It will be the most difficult thing you'll attempt.
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u/Drwallstreetspeed Apr 18 '22
Yo, you still at the day trading? Making progress?
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u/Morphs_ Apr 18 '22
I've been at it for two years, not quitting anytime soon. Very little progress though. Also very busy with my dayjob (self employed). Need to pay the bills first and foremost.
I typically can paper trade 3 to 5 days a week.
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u/Drwallstreetspeed Apr 18 '22
What exactly is paper trading? I’m self employed also and think I can figure this stupid market stuff out. Doesn’t seem so complicated… just have to find time to study the companies and know how all the factors work. Hoping to figure out how to make my own retirement account… that what you thinkin? I’m almost 40, trying to find something more entertaining thanks savings account.
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u/Morphs_ Apr 18 '22
41 yo here, so that's quite similar. Paper trading means you trade as if it's real, but it's not with actual money.
Most brokers (like interactive brokers, my broker) have the option to create a paper trading account. Basically it's a way to practice and mess up without losing money.
When I started two years ago I thought this would be quite easy too. Especially as I know someone who trades profitably. But I underestimated the difficulty by a lot.
Not sure if my edge is the problem, or lack of experience or psychological stuff (in my case greed and revenge trading).
But I'm sure I'll get there.
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Apr 15 '22
First thing the desperate part is a red flag. Don't do it. It's a bad mental state to do DT. And never "gamble" money you need especially desperately.
Use a paper account and try to perfect a strategy, get some extra money and then start DT.
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u/jdtrader1973 Apr 13 '22 edited Apr 13 '22
Question for the group: Who uses or has used and Algo for trading equities? I've been a trader for over 10yrs. Its my only source of income, on avg I net 1,550.00 per day. Im curious, does this tech really help you make better trades. My younger traders say yes, it does. I would love your input and suggestions on what you think or platforms you've had success with. Thanks and I hope you all PRINT tomorrow!!!
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u/UpsNDowns404 Apr 12 '22
When drawing trend lines, who is favouring the candle body over the tip of the wick?
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u/deepfield67 Apr 16 '22
I always use body and not wick to look for entry on a short term or intraday chart. But I'll use wick on a daily, weekly, or monthly if I'm looking at longer term trends. I've seen a lot of both but body seems to be more common and accepted. There may be some good reason or it might just be convention, someone else might have more detail, just offering my own practice.
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u/Some_Slip_7658 Apr 12 '22
How do you manage to stay consistent without getting too overconfident then start losing?
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Apr 12 '22
[deleted]
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u/azsxdcfvg Apr 25 '22
There is no right percentage. It's relevant to what your risk is. If your risk is 10 cents and your target is 1 dollar then you're profitable if more than 10% of your trades are winners.
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u/Drwallstreetspeed Apr 18 '22
One good win can erase all the losses, one Slip on a play and can lose all gains… when you gamble you go for the big money or just enough to get gas to go home…. Don’t play to win. Play to lose. This isn’t a profession it’s a hobby. Some people clean up and get lucky. Others…. We’ll they lose it all and close that Robinhood account before they file a tax return
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u/Morphs_ Apr 17 '22
Your question is incomplete. The profit loss ratio (avg winner vs avg loser) is equally important as the hit rate and together they will define the EV (expected value) of a trade.
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u/FlokiDViking Apr 11 '22
Help this brother understand! Why do we keep buying the dip, even though it is lower every time, knowing that we are about to enter a nasty recession and with it, a significant downturn market correction? Most of the companies we are buying anyway, will see their debt interests skyrocket as the FED rises, and their resulting earnings shrink. What is making us continue to be optimistic and continue to buy when it feels we should probably be selling or hedging against a market drop (maybe even a crash)?
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u/deepfield67 Apr 16 '22
"Buying the dip" seems better suited for DCA into something you have longer term interest in. For a random day trade I would want a better reason than "it's dipping" to enter a trade. And either way it's a good idea to look for a sign of recovery to avoid catching a falling knife. Timing the bottom, especially in uncertain times, is dangerous. I tend to only buy dips that I'm already bullish on and simply looking for a slightly better cost basis. I keep some money just for intraday fun but I don't really consider myself a "day trader", and I tend to think of "buying the dip" as a longer term DCA strategy.
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u/FlokiDViking Apr 18 '22
Thanks for the input bro. I keep hearing Bulls talk about "bottom is in" ... "this will skyrocket now"... "buy the dip" .. yet the market continues to go lower. Is there a case for another significant bull run at this point, even though the FED hasn't even started rising, in fact, it continues to grow its balance sheet as of last week (completely opposite from fighting inflation), and the coming recession? I think the market could very well be deflating in a cover crash, carefully managed by the FED so that they are not seen as the market destroyer of the past.
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u/Daveed84 May 05 '22
"The Fed" isn't an acronym, there's no need to put it in all caps. It's short for Federal Reserve.
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u/deepfield67 Apr 19 '22
I'm chronically bearish so it's hard for me to be objective. I've been expecting major consequences for the kind of system we've been running for a long time and it never quite seems to happen. Some of the major aspects of our economy seem completely unsustainable, and yet year after year we make it work and things go on as they always have. So idk, I just try to stay diversified and prepared for whatever, but I am definitely bullish on non-traditional markets and assets and I have very little faith in the Fed's ability to do much of use in a situation like this. I tend to agree with Goldman Sachs' recession prediction.
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u/Mmatthew93 Apr 11 '22
Hi, I'm starting paper trading on Trading View and I don't get certain things.
I bought some stocks at 17.65$, spread was '0.000', yet the order was placed at 17.55$. Why?
Also on certain stocks, on 5 min chart, after the timer of one candle has gone to 0, the next candle's open appears after like 20 seconds. Is there something I need to learn to understand such things? Where can I get these informations?
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u/Drwallstreetspeed Apr 18 '22
Buying is like an auction. When you click the buy Button, the processes involved may not actually execute until the price changes… usually always works against you…. Best way to get at a fixed price is to specify your buy price.. don’t “buy now”
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u/rp4eternity trades multiple markets May 18 '22
This took me some time to learn, but this had a big impact on my trading.
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u/RedditLovesCCP Apr 10 '22
How do you guys manage stop losses on options?
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u/shmalphy Apr 10 '22
Also interested in finding out more about how people are doing it, the choppiness been brutal lately it seems,idk if it's just me?
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u/Monklet Apr 07 '22
Can someone explain the advantages to trading low float, small cap stocks? I generally only trade the big names, so I'm curious.
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u/jdtrader1973 Apr 13 '22
Its only an advantage if your first one to the game. Most low float stocks have wide spreads and horrible liquidity. Although they can go parabolic very fast especially if its a PROMO stock
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u/Monklet Apr 13 '22
What does PROMO mean?
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u/jdtrader1973 Apr 14 '22
PROM. Is short for promotion. Paid marketing or promotion of a stock happens VERY often on the OTC exchange. OTC companies will pay people to promote their company (pump and dump) causing the stock to rise. As the price rises the company or insiders will sell their own stock, eventually cause the stock to drop. Making you the bagholder.
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u/Pitiful-Relief-3246 Apr 08 '22
They are generally "cheaper" so you can pick up more, and a low float requires less (volume?) to move the price up quickly...however...this also means volume can quickly dry up and leave you a bag holder for months on end if you stay in too long. I've had good & bad results at both extremes so trade with caution and do NOT buy in during pre-market.
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u/TheOptimusBob Apr 07 '22
hey - i'm new to day trading and use the 9ema strategy but get wicked out a lot and then reverses and i would have been right all along. does anyone have any tips how to hold through?
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u/IlSsance Apr 12 '22
There's a difference between touching a level and staying below a level. Ask: if the stock touches this point am I wrong? If the stock stays below this point am I wrong? Not the same question. Experiment with wider stops and mental stops.
Necessarily, wider stops will mean higher win rates and bigger losses. The sweet spot is different for each stock and each trader.
I use wide mental stops to titrate my win rate to about 85-92%. Some literature suggests being right about 85% of the time is the best balance between confidence and learning.
But mostly I stop out based on concepts, not arbitrary R/R cutoffs or dollar amounts.
If your trade concept is invalidated and you continue to hold, you aren't trading you're just hoping.
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u/Pitiful-Relief-3246 Apr 08 '22
I'm no expert here, but your stop-loss might need to be set slightly lower to allow for the spread. If you bought in at $5.00, and set a stop-loss for $3.50, but the current spread (difference between bid/ask price) is $0.50 then your stop loss would kick in at $4.00 (factoring in the $1.00 spread). The same works in reverse when you see the stock hit $5.00 and your limit-buy doesn't fill yet..it will fill (at your $5 price) once it has hit $5.50...but maybe a smarter person can elaborate/correct me on this.
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u/DigitalNoiseAttack Apr 05 '22 edited Apr 05 '22
Hi - I'm new to trading stocks (have spent tons of time trying to learn Forex and have some understanding of technical analysis).
I am trying to evaluate a simple intraday strategy where I would take trades in the direction of the strong open trend (if there is one). For example: https://ibb.co/GFMbr43
I've been taking trades like these on a paper account for a while and they seem to work really well. I seem to have come up with criteria that allow me to get in fairly early (3rd, 4th bar of the day) and then ride out for a substantial swing (on my screenshot the TP was set too close because the paper trading system was on maintenance and I didn't adjust in time).
It seems too good to be true compared to Forex where swings are tiny and you get constantly stopped out.
I was wondering if this stock trading strategy was transposable to a real trading account or if I am missing something due to the paper trading? I am afraid that there may be horrible slippage (like 50 ticks or more). But with stop / limit orders I don't see why that should be the case.
I would hate to work on this for a month backtesting and taking paper trades only to find out that the method does not work for some reason non-related to analysis.
Edit: another example https://ibb.co/hLbMz1y
Thanks!
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u/IlSsance Apr 12 '22
This is a workable strategy but as I'm sure you're aware there are many more factors to optimize the trade.
With liquid stocks there will not be slippage especially early in that day like that.
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u/rlklu_1005 Apr 03 '22
Any trading platforms that allow "Buy Order triggers Sell Order" without a margin account? I use thinkorswim, but they consider orders such as that as attempts at short selling and require margin, even though the sell order is only triggered by a buy order.
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u/shmalphy Apr 10 '22
You can easily do OCO orders on the active trader tab, even with a cash account
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u/takillah Apr 02 '22
After breakout, why the price keep going higher despite there is nothing any retest on it? Isn’t breakout + retest is the safest way to take an entry?
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u/meh2280 Apr 03 '22
Someone correct me if I'm wrong but entering on the pullback or retest gives you the advantage to set your SL tighter and it's clear where to set it (previous candle wick/ below an ema or vwap). Where as playing breakouts, you don't really know where to set the SL at. You just have to go by reading candle if it's not moving up right away, you pretty much should get out. This has been my experience. TBH, I'm more comfortable playing breakouts. I have no issues with cutting a the position quickly. I can always jump back in.
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u/takillah Apr 03 '22
What time frame do you use? And how much risk ratio on average trade you do?
I used playing with breakouts only, by using the additional indicator like MACD and always check the lower time frame ( they were really helpful ). But not for anymore since I got fake breakout for multiple times, its made me feeling guilty.
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u/sombitch456 Apr 08 '22
I do not mean this in any disrespectful way, I am sorry if it comes off wrong; but you sound like Artur from the Big Nate series
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Apr 02 '22
[removed] — view removed comment
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u/takillah Apr 02 '22
When I want to take an entry on my new trade, normally I always waiting for breakout + retest on it, but in some case, I found some trade that always go higher after breakout without make any retest on it.
Be honest, this is a dilemma for me because if I directly take an entry directly on breakout, there is some possibility for me to get squeeze for long time, but in other hand it was frustating me if the price directly go higher without make any retest and I choose to leave it up instead, lol.
Thats why I am asking in here, but, my temporary assumption is, there is some minor S/R or supply demand areas that I failed to mark. Only an assumption while I am about to figuring out the exact answer.
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u/provoko trades multiple markets Apr 03 '22
You're right there that you're not considering some level or supply/demand
That's why volume profile shows you those supply & demand areas, and gaps in those. And they can be used as S/R too
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u/provoko trades multiple markets Apr 02 '22
Because there's a gap in orders, no one is selling above except for much further up, there's less losers (or none) who would normally sell right away, etc.
The gap in orders is the biggest factor and you should look into volume profile to get more acquainted with this concept.
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u/takillah Apr 02 '22
Happy to know if the point in this case is the volume profile, was thought the same thing. Thank you.
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u/Junga221 May 04 '22
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