I was talking to one of our trainees today about starting to trade a live account. He said “Steve, I don’t want to make a lot of trades each day.” I told him that he should be looking for the best setups in the stocks he is watching and execute on those trades. That is certainly my goal each day.

When I look over my work at the end of the day there are hundreds of orders that have been executed. But how many trades have I really made? If I think RIMM is a long at 63.50 and a sale at 65 but it takes me three attempts to establish my initial position how many trades have I made? If I notice some unusual selling at 64 prior to RIMM hitting my ultimate target and sell some stock is this a separate trade?

The reality is that all successful short term traders must make a bunch of smaller trades to effectively execute on the larger setups that they have identified. Of course there are those who simply make a living scalping for five or ten cents hundreds of times each day but the vast majority of top level traders are simply managing their risk by moving in and out of a position throughout the day.

You should never have a pre-determined cap on how many trades you make each day. If you have the cognitive bandwidth to process information in dozens of stocks and are able to identify 100 good trades each day then execute the trades. The PnL will take care of itself.