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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: wallstreeter who wrote (2757)	8/13/1999 8:17:00 PM
From: JB2	Respond to of 18137

Hi Wallstreeter, It sounds like you are trading from home and not out of a direct access shop---good luck with teaching yourself how to use the software, and coordinating all your computer peripherals. Here is a story I heard about a daytrading firm that might be of interest. An outfit was interested in soliciting new business, and keeping their current customers happy. So they hosted a buffet dinner every so often, and gave pep talks after dinner. In a discussion of technique, traders were encouraged to scalp a point wherever they could, and someone asked "isn't it better to get one point from a $15 stock, than a $115 stock, since it's a much better rate of return?" No, not really, he was told, you just want to keep your money moving, take a point wherever you can and move on. "So you don't think rate of return is something a trader needs to be concerned about before placing a trade?" No, just grab a point and go, you're not using all your capital on every trade, so rates of return don't really have to be considered. Months later, the daytrading outfit is still in business, but no longer hosting the dinners. Why? Because they'd calculated that it wasn't generating a good return for the amount they had to layout to throw the dinners. Do you think it is a good idea to think about the rate of return on YOUR capital? You bet the guy who runs the brokerage is looking out for his company's capital. But only you care about the risk/return of your own funds. The point is, a point isn't just a point. It's a fractional return on an initial outlay, and when you're spending $ to try and make that point, it's worth something to consider the risk and costs.