I've been paper trading since the beginning of the year, currently using a demo account with Options Express as it's one of the easier options for trading US stocks while living in Australia. It's going ok, winning about 70%, mostly going long on Nasdaq earnings winners and dip buying. The time zone makes it tricky as I usually have to set up trades before Wall st opens at 11.30pm my time. I'll usually get up at 5 or 6 am to review and continue trading.
A lot of my losses are when the stock price hits the stop loss, so I sell for a loss but then the stock goes on to bounce back in the next few days. So in effect my analysis is pretty good, but I may not be giving them enough wriggle room?
I'm tending to work on stop losses so as to only risk 1-5% of my entire account, but I notice a lot of experienced traders with big profits on here only have a roughly 50% win rates but their losses seem to be very small compared to their wins. So I'm debating whether to
1. Pursue my current strategy where my winning and losing percentages are similar but wins outnumber losses
or
2. Become a lot more strict and cut losses more quickly and increase the losing trades ratio?
Case in point is AQXP below, this had heaps of support just below 8 and a solid green candle on the 14th after earnings. I bought in at $8.45 on the 15th and set SL at $7.78, which I didn't think it would hit. It did and I lost about 8% on the trade. I re-bought that same day at 8.24, eventually sold at $10, so I came out in front, but wonder whether there would be a smarter way to play this? Remember I'm sleeping when most of this is going on, so can't have my finger on the button very much.
jeez keep getting cut off. From there you can place your trades based on those pre-drawn support and resistance. For SL, try to go under the support line, for TP do the same but with the Support. Support at 100, SL at 99.5 Resistance at 105, TP at 104.95 or whatever. People love their whole numbers.
If your sleeping, and cant have finger on trigger id suggest swing trading instead
Thanks all, I appreciate all the comments. @goodtimej, haven't used them yet, but intend to test out - especially in situations where I want to protect profits. @tompumpanddump thanks buddy, will be stopping the sissy paper trading soon :-)
@nightwolf92 thanks very much for the comments. That's kinda similar to what i do but the way you approach seems more robust. @Wolves_Of_WallStreet thanks! am always interested inyour watchlists
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