Is there a general guideline as too how small a move you try to trade or is it a function of how nimble you can trade in general?
The size of you average profit would, among other things, depend on how high your profitable percentage is, and how many shares you are trading. If you are only trading 100 shares, for example, a 1/4 point gain (+$25.00) will not even cover commission costs.
On a 1000 share, a 1/16 point gain will result in +$62.50 minus two commission -$40(@$20 each) = $22.50 profit.
However, a 1/16 point loss will result in -$62.50 - $40 = $102.50 loss.
Therefore, if you are going to trade for 1/16 point profits, you will need to make 5 profits for every 1 loss just to break even. ==> Not an achievable goal, in my opinion.
I would suggest a minimum profit target for a trade of 1/4 point on 1000 shares, and it is probably easier to be successful if you are trading for 3/4 point to 2 points per trade.
Just my opinion,
-Eric |
