The $500 Experiment

we're abt to begin. scm even started a blog somewhere abt this. and i re-named this thread the same name (hope ya don't mind, scm

). i want to quote you from your blog too- seems to sum it up for me:
"this is not a competition between the two of us — we are both pulling for one another and will on occasion seek advice from one another. The whole point of this experiment is to show other investors that you don’t need large returns on large investments, but rather that money can be made with small returns on small investments — as one of our good friends always says, “There’s no such thing as a bad profit.”

we start this coming week. so for members who are new to trading i want to use some hard numbers to point out a couple things abt "There’s no such thing as a bad profit" (catfish quote). we're planning to do this for 52 weeks. so would your strategy be to maximize gain per each trade, or to settle for less and maximize the number of trades? you may want to comment or disagree but here's what i see...

there's a 3-day settlement rule, so you have 1.66 max trades per week. in pennies, if you hold out for, more than 10% on each trade, your likelihood of getting stuck or delayed or of hitting your (mental) stop loss are all increased in direct proportion to how much above 10% you target. let's say you target 25%-- your likely average gain will be closer to 15%, if that. your three-day settlement cycle will also be disrupted and you'll only make abt 1 trade per week (52 per year). but, if you FIRMLY target only 10%, assuming you have good t/a skills, you'll usually get it, along with 1.66 trades per week (86.32 per year). i messed up in the chart below and show only 85 trades but you get the idea...

so do you disagree with the FIRM 10% gain strategy? i also ran a 1 trade per week 20% gain and it does outperform this. i'll probably float somewhere between 10-20%.

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