Apparently I am some prodigy, though I'm inclined to believe I am just getting an extreme case of beginner's luck.

I've been trading stocks exclusively, and a couple indexes(if I'm not wrong).
Just yesterday I did something different and made some swing trades to see how it'd work out, before I'd been closing everything by market close (or if something came up @ work, since I do this all @ work).

I've been trading using the Real-Time Quotes on Yahoo, and if a price is in doubt (such as after I've decided to sell yet am still typing out my sell order and the price moves a couple cents, I take the disadvantageous price), I've included $10 commission on both BUYs+SELLs.

I'm aware this is fake money, and I'm aware slippage has not been accounted for, but something has to be up.

Here is the spreadsheet of my trades:
http://spreadsheets.google.com/ccc?k...Al7ID9Aw&hl=en


8+% return in 8 days? only like 4-5 days of actual trading?
Is this good?
Am I taking too much risk ~5 total equity per trade?
Are my stops too close? ~.5-2% stop losses?
How can I improve?
How can I make this more realistic(minus using real money)?

Here is the spreadsheet of trades in an image file for those not registered w/ google docs

[David Waring]

Hi Sawyer,

Glad to hear from you and thank you for sharing your experience it sounds like you are off to a good start.

The first thing that I think it is important to point out here is that while being able to place profitable trades when paper trading is a step in the right direction towards profitable live trading, the emotions involved with trading live money bring a whole new level to the game that it is really hard to imagine before actually trading live money.

So with this in mind, while it is good that you are trading profitably on a paper account, I would encourage you to tread lightly and start small when you do decide to go live, so you can get a feel for the emotions of trading live money on small amounts and then work your way up.

As for the stops in my opinion anything over 2% of account equity risked per trade, especially for an active strategy, is too much, however I do know that there are lots of people who risk more than that.

A question for you here would also be that if your stops are .5 to 2% which I think most would agree are prudent levels, then how can you be risking 5% per trade?

As far as recommendations for improving I would recommend going through the two free basics of trading video courses which we have here on the site if you have not done so already. You can find the links below:

InformedTrades : Learn Trading. Trading Education. | - Basics of Trading Course

InformedTrades : Learn Trading. Trading Education. | - Airelon's Beginner Trading Course

Best Regards,
Dave

[Shaun Overton]

Sawyer,

I noticed that you seem to actively daytrade. On July 30 the account balance went down to $50,000 before recovering again above $100,000. I would ask myself "can I seriously afford to lose $50,000 in a single day without blowing my brains out?"

Thanks guys, and yeah I've been watching your videos David, they are the best resource on the web I have found. I just finished your Candlestick + Tech Analysis video sections and I learned so much, and anytime I forget things I know right where to go. You have saved me at least 200 dollars in book costs etc let alone how much you've earned me haha. I have so much to learn, and I just started watching your Risk Management series and I think I'm good w/ my losses, but I think I should give some of my stocks which gain less than 1% more time to run. Often if they are at 1% return, and it's ticking down enough I will sell even if the technicals disagree, the part about how a 90k return vs 10k return 95% of the time w/ no gain 5% of the time averages 9.5 was very eye opening.

As for the subject at hand, when I say I risk 5k per trade, I mean all my position are sized @ 5% of my total equity, if I am very sure of a particular trade and expect it to make a big move (I did this with Fannie Mae recently) i'll risk 7.5k but I guess risk is a misnomer
since the largest stop I will place is @ 2%, but I look at volatility for this #.

What are some good rules for stop placement?

How should I size my positions, I know people recommend 2% of your total equity, but I find it hard to find 50 stocks worth trading a day(maybe I should start swing trading more =] ) I just think I'm doing something wrong by making all my trades 5%. (should they ever be different sizes?)

How much of a loss does slippage cause in stock trading, j/w?


As for Shaun, I'm not sure if we are on the same page. When I make trades, I subtract the amount of the trade + commissions from acct. balance, simply so I know how much I have out on the market (and because it helps simplify excel calculations). As I've pointed out 50,000 is never at risk, in fact only yesterday did I actually put almost all $110k on the market (22 trades, I made a 2.14% return) and even then my biggest single stop was 1.5% which means the largest loss i could incur was about 2.5k dollars(that is if ALL my positions TANKED). And for the returns I have consistently got(i say this lightly since I've papertrade barely 2 weeks now) I think I would take that gamble (i'm a poker player and the #'s look good) but I am a very new trader and have no experience so please tell me if I'm wrong.

Sorry for the massive post, and thanks again David,

sawyer

nvm David! Just got to your 2nd Money Management section about settings stops etc. answered most of my questions above.

The only question I have is what should determine my position size? Right now they are all the same (5%totalcapital).

[Shaun Overton]

sawyer,

It appears that I misinterpreted the statement. Yes, I would say that that is very good performance for two weeks.

Some people have reservations about making poker analogies to trading, but I believe that the experience is highly relevant. Poker made me a better trader and trading made me a better poker player. Both skills rely on managing emotions, allocating risk and calculating odds for success.

If you can maintain positive performance for a few more months (not even good performance, just "not losing"), then you may want to follow David's advice. Start with a small account to make sure you can replicate the success, then get bigger as your confidence increases.

Originally Posted by Shaun Overton

sawyer,

It appears that I misinterpreted the statement. Yes, I would say that that is very good performance for two weeks.

Some people have reservations about making poker analogies to trading, but I believe that the experience is highly relevant. Poker made me a better trader and trading made me a better poker player. Both skills rely on managing emotions, allocating risk and calculating odds for success.

If you can maintain positive performance for a few more months (not even good performance, just "not losing"), then you may want to follow David's advice. Start with a small account to make sure you can replicate the success, then get bigger as your confidence increases.

Thanks, yeah I think I've had a few lucky runs, but my trading strategy (I'll refrain from calling it a system since it is a very very basic idea) seems to rarely return losses. Even on really bad days, not only am I positive but I outpreform what people tell me a good portfolio returns (annual 10-20%, I return .33% x ~200 market days = 60%)

One of my bigdays was when I swing traded just as an experiment, and I did quite well.

My problem is that I have this preconceived notion that swing-trading is out of my control simply because I deal with some pretty volatile stocks and who knows what a stock could open at the next day completely passing my stop point(Am I right here? Your stop order is executed at MO price?) I just see it as an un-necessary risk that is completely avoidable.

So while people always told me Day Trading is riskier, I'd disagree, at least for the stocks that I trade. Am I wrong here?'

p.s. thanks Shaun, and thanks again David W.

[Shaun Overton]

Yes, you're right. If the market opens below your stop, you get executed at the first available price.

As for swing trading, I recommend not placing trades if you are not comfortable. It leads to second guessing and mistakes.

There are traders who make outrageous returns. The difference is that it is not realistic to expect that type of performance oconsistently over time. There are some reputable commodity funds up over 60% this year thanks to a hot market. I doubt they can replicate that level of performance year in and year out.

Daytrading is considered riskier because the excessive commissions generate enormous costs and slippage plays a larger role. Commissions hurt your risk-reward ratio, percent accuracy, etc. They are bad for trading in every sense. Slippage on a high-probability, low return trade can double or triple your anticipated trading cost. That means more stress, more work in terms of watching the market, etc.

Daytrading does not match my personality, but maybe it complements you well. Everyone has their own style, so there is no right answer as to which is better.

In a case like mine where I am up 10% in 9 days, how much of a drawdown would I really have experienced from slippage, keep in mind I'm using $10 buy/sell comissions, some brokers offer 5, I think, but not sure if that includes a stop order.

I have ~2.8k in commission fees already...

Everything I've seen/read and everybody I've talked to always tells me, if it's too good to be true, be skeptical. In theory I'm not risking that much and my returns are pretty ridiculous...so I have to assume something is up, especially since I haven't really had a losing day since I started trading my strategy.

I just feel like I'm being way too successful for such a beginner...this is like the subprime market where they had Walmart employees working as mortgage bankers... something has to be up =\