Eat the elephant in smaller bites (the case for making multiple trades)
Being a semi-retired owner of a few businesses means that the habit of being time productive and focused carries over to my trading activity. I used to be a long term investor but taking a hard look at the ROI from such an approach, they weren't much better than the returns from my businesses.
So I changed my trading outlook to a much shorter time horizon and making more trades as a consequence. If you have to eat an elephant, taking a single big bite may be very rewarding but it is not without its risks. Try eating the elephant in smaller bites. So yesterday I did 70 trades, a typical number for me. Here are the reasons why I do multiple trades:
1) I watch a basket of stocks covering different sectors and often multiple companies within the sector. That allows me to employ differing trading strategies for each sector and for each company. Trading small and wide lessens exposure risks.
2) I am cautious in that I almost never buy a single large quantity of shares per order but to split them into smaller quantities to obtain an optimum price. So in my example of $Alibaba(BABA.US$ yesterday,
you will see a flurry of last minute buying to get at a target price. This sets me up for a particular position for the following day's trade activities.
3) I try to make a modest amount everyday for my trades where possible. That doesn't mean I don't keep a long position or a short position on a stock or sector for a long term. Taking small bites on the elephant everyday will mean I will eventually eat the whole elephant, lol. Trading extensively in volume will also mean an incremental increase in your portfolio and profit. Eat everyday and avoid the feast vs famine approach.
4) There is a function of TIME when buying and selling stocks, something many of us forget or ignore. If a particular stock is a laggard, I will review and typically close out my position and switch to something different. Multiple small trades allow you to be nimble and flexible especially if the market changes bullish or bearish.
My objective is to minimise risk and doing multiple trades is a useful tool to that end.
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NANA123 :
whqqq : Indeed, long-term holding does have risks. However, I think there are risks in the stock market whether in the short term and long term. You must be good at identifying them, so you can avoid them as much as possible in many short-term transactions.
Ixy The CatOP whqqq: agree with your assessment.
GuruGuruGulu : Jesus... 70 trades...
meruson : the logic is there but the way you are implementing it is highly inefficient mathematically speaking. take your earnings divided by your turnover and plot it on a graph to know your efficiency.
MooMamaLlama : 70?!?! in one day? holy cow I thought my 25+ trades a week was on the high side (for a small retail investors lol)
however I agree with a lot of what you say..... Love the DCA'ing on Moomoo when prices dip. I use another platform to day trade (smaller fees) where I can do none in a day or 30 in a day depending in the market. on there I like opening multiple positions at different entry points, usually escalating or de-escalating in price. Then I can be more nimble in cutting loose the stragglers or taking profit on some shares whilst leaving the rest.
I dont see how that principle can be applied efficiently on here with dca involved?..... I've tried both ways and sure you can make a buck off 30 different stocks but that can flip and you're losing a buck off 30 stocks. Also missing out on fleeting opportunities because I was bogged down managing over 150 trades at once over said 30 stocks... gets overwhelming. But I'm just a struggler, I can't afford to play with strategies to see what loses, of you have thousands to play with different strategies, the best of luck to you!!
KingNY-Life : You don't know how much service charge you paid.
Tomerr MooMamaLlama: May I know which platform do you use for day trading? Thanks.
MooMamaLlama Tomerr: of course you can
I use etoro for day trading. there are not any fees per say (except the usual overnight fees,cfds etc. very small, like 1c overnight fee or weekend fee)
They get their dues from the spread between buy and sell price. Still, usually small, 0.2% - 0.5%, unless its particularly volatile then they'll put the spread closer to 1%.
But you can have multiple positions in one stock with the choice to close individual positions at a time VS dollar cost averaging. Both have benefits, i use etoro to 'practice' my strategies (or test my nerve haha) with many very small investments.
Moomoo I have the stocks I plan to keep long term, they're my fave as I believe in the actual companies not just daily price movement.
Tomerr MooMamaLlama: Thanks for the detailed reply:) So you use etoro instead of moomoo because of the DCA. Is the spread cost similar with moomoo? I’m quite new for moomoo and stock. Thanks.
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