An Experiment In Not Losing Too Much Money

[AppleCrumble]

Subtitled: Loose Trading Loses Money. (4 jonu )

So this is concerned with buying stocks with the intent of selling them at a higher price later in order to make a profit.
In a word: Trading Long. (OK, in two words).

Buys are limited to stocks in the ASX300 at the time of purchase.
The initial 'cash' for this experiment is $25,000, which creates the first set of problems - it is not a lot of money.

Among the rules of trading are that you:
- never risk more than 2% of your capital on any one stock;
- have diversity in your trades;
- cut your loses;
- let your profits run.

Best Wishes
Paper Tiger

Why is the first problem - it is not a lot of money. ?

Is this because 25K is not that much and the fees would eat into any gains comapred with a bigger investment of 100K or more?

[Snow Leopard]

Why is the first problem - it is not a lot of money. ?

Is this because 25K is not that much and the fees would eat into any gains comapred with a bigger investment of 100K or more?

Yes.

The $15.37 brokerage I used on my buy & sells is the actual amount I get charged by my Australian Super Fund for trades up to $10,000 (then it is a constant %). So if we traded larger amounts then the % lost in fees would be less, and every cent counts towards the profit.

However we had a rule not to risk more than 2% ($500) of our capital on any one trade and given that you have to allow some room for the SP to decrease after buying it then I ended up with an initial trade size of $3,300 ($500 being 15% of that).

I choose the $25,000 fairly arbitrarily.
If you have less you have to work with that;
If you have more, lucky you .

Best Wishes
Paper Tiger