This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
I traded Akamai Technologies, Inc. (NASDAQ: AKAM) today. I should have traded my NR7 scan, as I’d be up a bunch shorting DNDN, but anyway…
I tried to trade off of a 1 minute chart. I was late to the party as price broke $43.50, but the volume was picking up, so I went for it. I also wanted to use a very tight stop, to try to give me a chance for a big R gain, but it was not to be:
My read of the price action was right, which is shown by the rest of the day’s action, but I didn’t want to re-enter to save on my allowed daytrades. It even went on to hit my original target:
I would have re-entered if I had no other restrictions. Pattern Daytrader Rules are killing me. I feel like I could do much better if I was over the $25k hump. :(
Trade Summary:
AKAM Short 98 Shares
Entry: $43.34, Stop: $43.50, Target: $42.44
R: $15.68, Exit: $43.52
P/L: -1.13R, or ($17.64)
Trade Grade:
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| AKAM |  |  |  |
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
May 15th, 2007 at 3:29 pm
If those are the charts you are looking at I suggest removing all indicators except volume. 1 min time frame is good for for scalping. 12 - 1 even 2 pm is lunch time chop zone. AKAM will take your .16 stop most of the time. Just my thoughts Prospectus, good luck!!
May 15th, 2007 at 3:38 pm
Prosp.
if you have $2k US you can leave zecco and go with a broker that will give you x4 intraday margin and no pdt rules.
May 15th, 2007 at 7:33 pm
Babak, how can you do that?
May 15th, 2007 at 8:14 pm
I wrote about it last week. Check it out.
May 16th, 2007 at 5:44 am
Babak: I read that post last week. Unless I could get $2 commissions, then it wouldn’t work for a $2k account–the commissions would eat me alive.
May 16th, 2007 at 5:48 pm
ok lets use an example: a $40 per share stock and using the per share structure (1.5 cents+$5flat)
You’ve got $2k (min) which means you can buy up to $8000 of stock or 200 shares intraday
That comes to 200x$0.015 + $5 or $8 per side
$16 roundtrip is 0.2% of $8000
How is that ‘eating you alive’?
And keep in mind that once you have an active acct you can negotiate a lower fee.
Just to be clear I’m not trying to push Alliance - I have no connection with them. I’m just trying to work through an example.
May 16th, 2007 at 7:34 pm
I appreciate your discussion, because maybe I have it all wrong, or maybe there’s a way to make it work out.
$16 is 0.2% of $8000, but that’s not your equity. If you want to risk 1% of your equity per trade, and you have $2k, then your total allowable risk is $20. $16 commission leaves only $4 for stock movement. Even if you jump up to 2%, than a breakeven trade (in and out at the same price) is still almost -0.5R; that’s what I mean by eating me alive. Is that how you see it?
May 16th, 2007 at 11:10 pm
Prostpectus,
Yes, you’re absolutely right. On another point, I think 1% is a quite low. I would suggest between 3-5% of your equity risked per trade. That would bring the $ amt to $60-100
Theoretical “risk of ruin” if one risks 3%-5% per trade is 33-20 losing trades in a row.
The other way would be to trade high priced stocks, say $50 and above. That would reduce your commissions considerably. For example, lets say you trade AAPL exclusively. That would mean you would pay $0.015 per share + $5 flat fee.
Since AAPL is around $110/per share you would buy 75 shares and pay $6 and $12 RT or 0.6% of equity
Of course, that would imply a change in strategy which is another whole ball of wax.
Anyway, just some ideas thrown into the po :-)