Response:
I never buy less than 300 shares of anything, regardless of price. My largest single holding was 10,000 shares of CPQ, but the largest single buy was only 5k shares (not counting the 50 or 100k shares of penny stocks that Copia forces me...lol). I have bought stocks that ranged in price from $0.25 to $100.00, but the averag is about $12-15 I would guess.
The 300 share minimum is for two reasons, one, the stock only has to move 1/8th to cover trading costs, and secondly, if it drops and I want to average down, I can do so for 500 or 700 shares, which for arcane mathematical reasons works out very well. My average buy is usually about 1000 shares, and I rarely buy stocks costing more that $40.
The reason for that is the % gain. There are lots and lots of stocks worth $75-$100 bucks that can move $1-5 a day, but if you are buying the equity, it is much more profitable to buy less expensive stocks that make the same $ gain. For Jenna and the others doing Options, the opposite is true. A $1 contract option price gain is much more profitable than buying the stock.
I only made 147 trades last year, and I am runing 1/3rd less than that this year so far, although that is mostly because of the Position Trading Account which by its nature trades less frequently, and is using the funds I normally reserve for small caps.
The criteria for Risk Adversity is specific to the individual, not the trading process. Decide on your own level of risk tolerance, and then gear your trading frequency and method around that.
lastshadow |
