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View Full Version : Just started Paper Trading, This Seems Waaaayyy Too Easy



gvjwnfvy84
07-17-2015,
Hey everyone, I have recently started a paper account and have been trading penny stocks. I suppose I have adopted a strategy of scalping. My concern is whether or not my virtual trading strategy would work realistically with order demand, etc.. at least within the penny stock market. I am deliberatley choosing stocks with relatively high volume assuming that realistically this would allow me to get out of a trade once I'm in. Let me give an example of a couple of the trades I have been making and hopefully someone could give me some feedback as to what might be wrong with them in a real world scenario.

Buy 2,300 shares of MDW at .8628
Sell 2300 shares of MDW at .8900

And another one...

Buy 10,000 shares of APDN at .1020
Sell 10,000 shares of APDN at .1040

I know about pattern day trading rules and I know I'm not making a whole lot of money on these types of trades and have considered commission costs as well. I worry if these trades will actually go through though. Anybody have experience trading like this?

gwjqqbrp11
07-18-2015,
Some platforms are more realistic than others. Some will just simulate the buy/sell at whatever the price is no mater the volume.....some require available volume. But I would guess nothing will be as reliable as the real thing.

Also flipping a coin and getting heads a few times in a row does not mean flipping heads is easy.

Net/Net more money is probably made from selling trading ideas than the trades themselves make.

"Those who have knowledge, don't predict. Those who predict, don't have knowledge."
Lao Tzu

gztgtbyp77
07-19-2015,
Thierry, yeah that’s pretty much what I'm worried about. Hopefully an experienced penny stock trader can chime in as well.

The limit orders I know would be a big part of trading this way. I heard Choice Trade is $5 a trade market, or limit, so if this strategy is something that is actually feasible, I would probably use them or something similar.

As of right now I’m spending the next few months saving up some capital to start trading with and in the meantime want to practice whatever strategies I’m actually going to be using. I like the idea of this strategy because it seems that only with a few thousand dollars I could profit off of the natural daily price fluctuations of cheap stocks without needing them to really rise in value all that much. But, if it isn’t even possible to get orders to go through in this way, at the prices I need them to be, I don’t want to spend the next few months practicing a strategy that is essentially a horse with no legs.

It seems like it’s almost impossible to buy a stock priced above $5 if you only actually have a few thousand in your account to trade with, and to hold it long enough to make a profit that is even remotely worth the risk. More often than not it seems like a lot of trades can pretty easily boil down to essentially “holding and hoping” with little to go on that the stock will actually rise in value enough to have made the trade worthwhile.

So, I guess while I would also hopefully like to hear from a penny stock trader about order processing and such, I’m also curious about any other strategies that traders with little starting capital used to start to become successful.

Acstudio, thanks for chiming in. Of a lot of the people who I have seen post on these forums you really seem to be an intelligent person who has their head wrapped pretty well around the markets as well as business and entrepreneurship in general.

If you don’t mind me asking, how do you trade? And, in another forum post that asked traders how much they earned you replied essentially that your current day trading business was pretty much just a “Lemonade Stand” at the moment.

What type of lemonade stand are we talking about here? Are we talking Neighborhood kid standing on the corner with a pitcher of Minute Maid selling for 5cents a glass, or something more along the lines of a Lemonade stand that sets up at state fairs, has a booth that looks like a giant lemon, and charges an arm and a leg for a hand squeezed glass of lemonade partially cause its good, but mostly cause you’re at a state fair, it’s hot out, and there’s only so many places to get something decent to drink? Like I said, from the posts of yours I’ve read you seem to have your ducks pretty well in a row and I’d love to know how you operate.

Thank you everyone for replying, I really do appreciate the info.

gwkfndil05
07-20-2015,
Pretty much the neighborhood kid on the corner...haha. I'm coming up on my one year anniversary of my first trade. Since then I've made 800-1000 trades, mostly all this year. I've gotten to where I trade almost exclusively options. I have one covered call position on with a stock simply because I'm down heavy on it but it has pretty heavy premium so I'll hang with it until I can get some where near breakeven by selling calls on it or until I need the buying power for something else.

Below is my current position list...there are a few dogs in there but most are solid underlyings....but all the positions were created using around 2k in capital. I try to leave some cash on the sidelines so I can maneuver or take advantage of any new opportunities pretty quick.
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hagprwsl57
07-21-2015,
HungryWallet said: ↑
My concern is whether or not my virtual trading strategy would work realistically with order demand, etc.. at least within the penny stock market.

...

Buy 2,300 shares of MDW at .8628
Sell 2300 shares of MDW at .8900
And another one...
Buy 10,000 shares of APDN at .1020
Sell 10,000 shares of APDN at .1040
Click to expand...
The short answer is... "With your two examples, no, it's not realistic that you'll make any money".

The long answer... You only get three day trades in a five-day rolling period, and you've wasted two day trades for a measly $82 in gross profits. Minus the $20 round trip that TDA charges me, I'd have a net profit of $42 off of these two trades, which (literally) isn't enough incentive for me to even get out of bed. If I don't believe I can get at least $100 net profit from a trade, I won't tie up my money and waste my time.

And in reality, at least in my experience with TDA placing Limit Orders for penny stocks, trades of 2000+ shares can sometimes take almost an hour to fill.