Millionaire Traders

JWBK169-Lien July 3, 2007 13:56

Millionaire Traders

Q: You have seven Level 2 screens that you are watching, but

you are actually trading only one stock at a time, correct?

A: I may be in two or three. I won’t be in more than that. But I

want to be watching everything. I was in a stock today. It sat in a

range of 15 cents for four hours. But I just traded it back and forth,

back and forth.

Q: Now that you are trading for such small spreads, how is your

cost structure?

A: Prices have come down a lot. When I first started trading it

was 3 cents a share. So$30 for a thousand shares. Then it came

down to a penny a share or$10 a thousand. Now it’s 0.4 or 0.5

cents a share. So, basically, when I trade in and out on a stock I

can scratch the trade on just 1 cent gain, which is nice because I

can trade bigger size.

Q: A nickel is about as much as you are willing to sacrifice on

each trade. But on average, and of course each trade is different,

how much do you try to profit from each trade?

A: I don’t set hard targets. If I am in a stock and the buyer comes

up, I will stay in it and I can make a dollar sometimes. I can make

75 cents. Whatever the market gives me depends on where I got

in. If I got in at the bottom and the market turned and there is no

reason to get out, no one is offering, and the bids are holding up,

I will stay in it.

Q: That brings up an interesting question. No financial instru-

ment goes up vertically. There are always retraces along the way.

So even if you have a 50 cents move up, there is at least a 10

cent retracement somewhere along the way. What gives you the

confidence to hold through those retracements?