During two video review sessions today price was undervalued by our traders.  For active day traders price matters.  One of our talented new traders bought consistently at poor prices and was negative trading RIMM, while almost everyone else on our desk was in the green.  Let’s talk about price some more. 

Wharton Junior was trading GS and added to his position after GS broke above its upward channel.  The upward channel was 85c.  The exact price is not important, hence the reason it is not given.  Wharton Junior bought at 7c.  One of our experienced traders JToma gave him a hard time.  And I agree.  If the upward channel is 85c then the buy is not more than 92c.  As an active day trader there is a huge difference between your entry of 86c and 7c.  And when you review your trades you must ask if I buy GS when in breaks the upward channel 1000 times will I make money with a 7c entry.  And with Wharton Junior’s trade he wouldn’t.  Hence the JToma scolding. 

Another trader Mozart Light was waiting to short CVX below 75c.  CVX got below 75c and Mozart Light hit the 59c bid to get short.  Again you must ask whether hitting 59c bid 1000 times will be a profitable technique with his given setup.  And watching the trade back 59c was not a good enough entry.  65c would have been fine in front of a huge 68c offer.   But 59c was not good enough.  And Mozart Light should have let the trade run without him if he could have gotten short at 65c.

Wharton Junior risked an extra 21c on his trade.  Mozart Light risked an extra 6c on his trade.  If you are going to write 2m shares a month then 27c on two thousand shares is a huge deal.  And for active day traders you can’t be in these trades at the prices above.   Price matters. If I get this stock at this price will I make money over 1000 like trades? 

Learning to get stocks at the right price is a skill that good day traders learn.  And it’s a very important skill.  Do the math. If you learn to save 1c on average for every trade, and you write 2m shares in a month, how much extra will you make? That’s an extra 20k in your pocket.

 Best of luck with your trading.