Alternative Million-Dollar Strategy

[jeff46902]

I just thought of a new alternative strategy which could also theoretically work.  Please let me know what you all think of this:

There are about 250 trading days each year, so I did a little bit of math, calculating the gain if a person were to make a certain percent profit every day.  If you start with $1000, and every day you day-trade a stock for a 1% profit (using all of your money each time), you will have $12,032.16 at the end of the year.  That may not seem like much, but look what it would be if you gained 2% every time.  You would have $141,267.72.  Now, if you gained 3% every trading day, you would end up with $1,619,221.78 after one year.

Therefore, if one can aim for a 3% gain on every trade, every day of the year, you would succeed.  I don't know how this would compare (as difficulty/risk) with trying to find 10 penny stocks that double non-concurrently.  It's not every day that any stock doubles, but many stocks close at least 3% higher than they open.

Jeff

[stocky]

I have learned a hard way that trying to make a million quickly is a sure ticket to lose your shirt.

Dont want to discourage you but part-timers or ppl who cant watch the tape whole day will be better off with something like the 3SF strategy.

Compounding is much more ruthless on the downside then its fun on the upside.

Goodluck.

[AussieTrader]

Mathmatical compounding is aweome and always works.....theoretically anyways. Real world is a lot different. Most trades are losses, the trick is to ensure your winners (fewer in number) outweigh the losers from a $ return basis.
You would never be able to win 3% on EVERY trade, it's just impossible (unfortunately) 

[shawFund]

Have you ever thought of losing your trrade?

By chance, no matter how good you are, once you placed a trade, the percentage of winning is about 50/50. It could either go up or down.

How do you deal with losses? Exit at 3% loss, 2% or 1%?

[vivdcosta]

I thought of trying that strategy, now I am 70 % down.  Of course I did not go only for 3% wins o try to restrict my losses. One big problem for me is that ameritrade wants a pattern daytrader to have 25,000 in equity. How do you guyz day trade ? I have to limit my daytrades to 4 in 5 days to avoid the designation.

[stocky]

One way to daytrade [I practiced it for a while when I hated that unsettled cash restrictions using CASH account] is to use only 33.33% of your cash per day. Here I am not suggesting to put the whole capital on one stock but you can try as you like. The point is that if you do it every day then on fourth day you will be using your 33.33% plus or minus your losses.

I never traded on margin and the above technique gives you lot of peace. Again one must divide the risk by putting max of 10% on any one trade and its better not to day trade if one can't find proper opportunities.

Aussie may shed more light as he is a pro in this area.

One more point: There is nothing more that races blood in ones viens then shoemacher [hope spelling right] and a small float day trade [heck even any day trade]. So take caution as you would if driving a 350 mph ferrari.

[AussieTrader]

I love using OPM? Other Peoples Money. It's another form of leverage you can use in your favour, but you must manage it corrctly.For day trading I am generally using margin (assuming I am 100% or so vested in my port). The risk is only in the loss tolerance you set yourself whether you are using your own cash or margin. I tend to only run 1 or maximim 2 daytrades at any one time and I attempt to by momo stocks whose intraday chart I perceive to show support to allow an entry and exit giving at least 5% return, mostly loking for pivot pullbacks to support or what I cal staircasing stocks (using intraday 5 min chart a stock that just keeps putting white candle after white candle supported by a moving average). By using margin I don't have to worry about the funds settlement thingy, my account is flagged as a pattern day trader which also gives me 4X margin on my total portfolio balance (strange SEC ruling, but what the hey).
Many people have a problem with margin, primarily because they do not understand it or use it incorrectly.