Thanks for your response "icantbebothered"I too agree with maybe...

Thanks for your response "icantbebothered"

I too agree with maybe using indices rather than individual stocks as you would reduce the non-systematic risk you take. That being said it is completely opposite to what a day trader does as one of the biggest risk they take on is non-systematic risk (ie firm specific).

When looking at the risk reward profile of many shares that are discussed here, they tend to be quite high and rely more so on momentum.

Like all investment this can be scaled. If u want less return you just invest less in the stock and thus movement will effect you less. If you want more then leverage and borrow to invest.

However what i found that cant be scaled is the movement volatility which i think can be confused with risk. For blue chips or index there will be more ticks than lets say a typical day traders stock. More tick means more price movement against or in your favour.

Now the more tics that happen the faster and better chance you have of entering and exiting at your desired price. This concept is correlated with stock volume and liquidity. Take the reverse for example a penny stock with low volatility. you are going to find it hard to enter and exit with a profit.

But the main draw back with blue chips or indices is they dont move enough to satisfy our return requirements but thats when leverageing and buying CFD's comes into play we can inflate our returns while keeping the same risk reward profile which as discussed tends to be lower due to many factors including liquidity and volume.
Throw in the advantage of shorting and also not using as much cash until needed (thus you can chuck it in a bank and gain interest)

Another advantage is that these stocks tend to be more resilient and dont tend to go bankrupt or stay low for a years giziloin (exaggeration).

I guess discipline needs to be used not to over do it and to use stops.

But i guess we can discuss this afterward cos i might be pollution the DT thread. (srry tweet pie)

VIPHAR