For me, success in trading, whether by day or for the rest of my trading life, rests upon
one criteria only: can I do this as a day job? As a figure, it can be explained this way: what would I have earned, from the period of the start of my trading career to today, expressed as a net simple (not compounded) daily % gain/loss? Here are my stats for the last 5 trading days:
View attachment 99908
As you can see, I had been hovering about 2% up until yesterday. If I was satisfied with $300/day, I would need 15K capital for it to be a day job.
2 days ago, I had been overly optimistic with my exit price. Which did not result in a net gain in return. yesterday, I was overly optimistic with my entry price. In hindsight, I can see that my risk appetite was getting bigger.
I will learn from this experience - I will use this chart to gauge whether an increase in risk for my daily entries resulted a net gain:
* If no material gain was made, then revert to a previous risk-adverse trading strategy
* If it did, then continue and monitor for the next few days.
I like your strategy regarding microcaps, makes sense. I'll take note of it.
As for scalping - I agree with your comments regarding volume possibly being misleading because my order size may be bigger than supply for a price level. Hence why I have hesitated in entering into stocks that offer 1 tick as the range for the day.
Take for example ESI: in the last 5 days,
each day has offered +5%. The trouble is that this stock only moves 1 tick per day. I find this stock risky if I was to put capital into it because I can get stuck in this share and it can reverse on me. Hence, I have place a 1-tick down entry for this stock to mitigate risk (this risk strategy is based on odds - you might be familiar with it in the context of gambling, but its purely a good statistical figure for uncertain future outcomes).
With all things considered, for ESI-like stocks, I would either scalp and 1) exit with a 5% profit 2) exit with net brokerage loss or 3) not be able to enter at all (good old game theory from Economics). I've expressed my current performance in each area as a fraction in brackets for each cell.
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
| 1 |
Stock tanks
, has +5% before tanks
|
Stock tanks, does not reach +5% |
Stock rises |
|
| 2 |
Target entry reached |
+ve, -ve (2/8) |
-ve, -ve (10/18) |
+ve, +ve (6/8) |
| 3 |
Target entry not reached |
0,-ve (0/3) |
0,-ve (0/3) |
0, +ve (3/3) |
Got to head to work , will post later.
