Day Trading

[michaelusher 10]

Why is it harder to make gains with larger trading capital than smaller capital? Since if you use the same allocation,should the yearly gains be the same?

[jpennybags 11]

Are you asking this question out of personal experience... or something you have imagined?

 

If you have a large amount of product that must be moved... let's just say crystal meth. You may have to take a different approach than someone selling dime bags. It's a problem of distribution and finding willing buyers.

 

If you are large enough, you will have to trade differently than someone who is smaller. As you have chosen to have posed this question, I would assume that you are not "that" large.

 

Possibly, you can elaborate...

[josephhawkins 10]

No stock has infinite liquidity. The more money you have to invest, the fewer opportunities will be large enough to absorb your capital, broadly speaking. In other words, in the stock market, volume matters. The larger your investable capital grows, the more you focus on large companies, which have already realized much of their growth potential. The biggest upside is to invest early with companies while they are still small, their growth is still ahead of them, and most investors haven't realized it yet.

[Emily291 10]

Why is it harder to make gains with larger trading capital than smaller capital? Since if you use the same allocation,should the yearly gains be the same?

 

What you're saying is correct in theory, I think, but in practice trying to trade the huge numbers of contracts needed to maintain the same allocation would cause you to move the markets against you.

 

Be careful though . . . A lot of educators seem to use this explanation when you ask them a question like "if the best hedge fund managers in the world only return an average of 30% per year, how come you're claiming to double your account every month?". Although a small retail trader might be able to outperform a hedge fund because they're not dealing with huge amounts of capital, this isn't going to account for a huge difference of thousands of percent per year.

[Senior 10]

I don't really care about dividends, buybacks, strong dollar, headwinds, tailwinds, calls & puts, current issues or crushing suppliers. I've been buying & selling APPLE stock for 3 years and now I'm playing with 1000 shares all on company money. Sold my shares for $118.10 hoping to buy back at $114.00 or lower in next few days. I guess I'm just a foolish old man ...