Post by Conrad Alvin Lim on Jul 28, 2006 2:08:17 GMT -4
Lately, I've been receiving queries as to why my daily scalps have dropped from the average $100 a day to only $10 or $20 a day.
When I was averaging $100 profits, I was scalping financial stocks like BSC, GS, LEH (before the split) and SHLD. It should be said that for every 5 successful $100 scalps, there was one $50 to $100 defeat, and about three exits on commission/slippage loss. (Slippage was never more than 10¢).
Not a bad return you might say. But in my opinion, too risky to lay on more contracts. I got excited just putting on 5 contracts on SHLD and this is not the way I want to trade.
Furthermore, these stocks have become difficult to scalp since the May tank and volumes have dropped off drastically. Before the tank, BSC used to get 180'000 at opening bell. Now they barely get 80'000 in the first half hour. Also, after the LEH split, I had one less trade to scalp.
So I've moved on and for the last three to four weeks, I've been studying the Indices and ETFs and found them quite viable for a minimum-risk intraday trade. At 80¢ for an OTM option, you can get up to 20¢ in a matter of 90 minutes. 25% return with minimal and controllable risks because the options don't move that fast as to tank you to death, unlike say, SHLD. This is my trading plan and I'm sticking to it even if I don't make more. Just as long as I don't lose.
Most importantly, I can do this consistently and regularly, regardless of market condition, without getting excited. It is very boring ... and that's how I like it.
So now that I have had an uncanny three week streak of accurately anticipating the market, I think another three weeks of day trading DIA, QQQQ, SPY, XLE and SMH at 10¢ to 20¢ profits will prepare me for more contracts by end August and with some luck, get back to posting $100 profits again.
I still do have an occasional scalp on the financials, but only when the conditions are right and volumes are somewhat better.
Feel free to reply here if you have opinions or questions about this.
Cheers!
When I was averaging $100 profits, I was scalping financial stocks like BSC, GS, LEH (before the split) and SHLD. It should be said that for every 5 successful $100 scalps, there was one $50 to $100 defeat, and about three exits on commission/slippage loss. (Slippage was never more than 10¢).
Not a bad return you might say. But in my opinion, too risky to lay on more contracts. I got excited just putting on 5 contracts on SHLD and this is not the way I want to trade.
Furthermore, these stocks have become difficult to scalp since the May tank and volumes have dropped off drastically. Before the tank, BSC used to get 180'000 at opening bell. Now they barely get 80'000 in the first half hour. Also, after the LEH split, I had one less trade to scalp.
So I've moved on and for the last three to four weeks, I've been studying the Indices and ETFs and found them quite viable for a minimum-risk intraday trade. At 80¢ for an OTM option, you can get up to 20¢ in a matter of 90 minutes. 25% return with minimal and controllable risks because the options don't move that fast as to tank you to death, unlike say, SHLD. This is my trading plan and I'm sticking to it even if I don't make more. Just as long as I don't lose.
Most importantly, I can do this consistently and regularly, regardless of market condition, without getting excited. It is very boring ... and that's how I like it.
So now that I have had an uncanny three week streak of accurately anticipating the market, I think another three weeks of day trading DIA, QQQQ, SPY, XLE and SMH at 10¢ to 20¢ profits will prepare me for more contracts by end August and with some luck, get back to posting $100 profits again.
I still do have an occasional scalp on the financials, but only when the conditions are right and volumes are somewhat better.
Feel free to reply here if you have opinions or questions about this.
Cheers!