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No. of Recommendations: 2
Quill,

I love you dearly and you're a hellva good trader. But your posts are a jumble of misdirection.

First, no one who might benefit from reading our posts --yours, mine, or anyone else's who posts in this forum-- is going to be betting in the sizes you do. Even at its present low price of $12-$13 bucks and change, to buy 1,000 shares of BITO means making (at least) a $12k-$13k bet, right? If a prudent rule of thumb is to bet no more than 10% of one's trading fund per trade --as Wm O'Neil advocates-- that would imply AUM of $120k-$130k. That's a lot of money. More than most beginners have to work with. If bet size is dropped down to something smaller, say, 5% of AUM, then AUM would have to be around a quarter million. YeeowZaah!

Yeah, I'm trading with a million plus, and you're doing multiples of that. But neither of us got there by making $12k or $13k bets right out the gate. We just didn't have that kind of money. So let's drop AUM down to a more realistic level for beginners, which is a total account just $200 to $500 dollars, and let's work with that limitation.

What's the rule of thumb for traders for sizing positions? Never risk more than 2% (of AUM) per trade. That's 'risk', not 'exposure', which are only the same if the whole position is lost. How does one try to ensure that no more than 2% is lost per trade? Stop losses, right? So, if a bet were to be made on BITO --on the basis of what seems be a favorable chart--, and if account size is $500 dollars, and if max trade size is 10% of AUM, then a reasonable bet on BITO would be 4 shares, trailed by a 2% stop.

Now comes another complication you constantly overlook. You're retired --as am I-- and we can sit all day in front of a trading screen if we choose. (Or two screens or four screens, or whatever we use for our trading station.) That is NOT the case with most beginner investors. They've got a day job, plus family obligations, plus they want a bit of a life apart from the craziness of markets, such as maybe some fishing time. That means they have to do their analysis fast, submit their orders outside of regular market hours, and then hope for the best. This means they have be ruthless with submitting limit orders in an effort to get fills at prices that will give them a margin of safety. It also means they need to be using a broker that implements OCO orders, and TD is the broker that most easily facilitates that.

So, right now, as test run on that idea, I wrote an OCO on BITO. I bid to buy 1 share of BITO at 12.57 (yesterday's low), trailed with a 2% stop loss and bracketed with a 5% profit target. Click. Click. Click. Easy, peasy. The order won't execute, because I'm too far away from the market, nor am I much interested in trading BITO today. But I think the process is viable if for no other reason than my daughter ran a trading program doing just. She'd bid low, sold high, and went three months without a losing trade. She executed through Schwab. But I really prefer TD (now owned by Schwab, but really a separate entity that Schwab isn't going to mess with.)

She chose to stop trading when work became overwhelming and when the weather warmed and she'd rather spend her time gardening or training for an upcoming half Ironman. But that's a real person example of the viability of being an after-market/pre-market intraday trader, though some of her trades took several days to complete. But often enough, she did get kicked out same day and banked her 2% to 5% profit.

So, this is my challenge to you. Let's set up a fictional account, with minimal funds --say, $500 bucks-- and call out our intended trades each day BEFORE market open.

Arindam
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