I have been running some strategies on my kelly criterion calculator(spreadsheet) which adjusts for fees and considers the possibility of multiple bets at a lower correlation.
Concentrate your portfolio: It seems counter intuitive, but diversification can get you in trouble and is only acceptable using a very profitable option strategy. Diversification means smaller position size which means a bigger cost of commission as a percentage of your gains and losses which hurt performance. Even with 50,000 trading stocks you still should be limited to less than 10 names. I was shocked by these conclusions but even small fees can cost you enough to where it's not worth the benefit of additional lower correlated bets.
The low funded can profit, but the options are more limited, and they should concentrate into 3 names or fewer if trading stock.
If you have less than $5000, stay away from swing trading entirely. The cost makes it more difficult using stocks even running a position trade and swing trading or day trading options even becomes challenging. Maybe 10 day swings if the trades were perfect could generate a very small profit and over a year that could add up, but the possibility of something going wrong, execution being bad, or the results being less than an average of say 5% gain could make the strategy disastrous.
Trend/Position trading using stocks offers some growth per trade if you are very good, but not very much.
Investing for long term appreciation and dividend reinvestment is probably the safest bet as there is the least chance of a problem. The reason is, if you can hold a stock indefinately and reinvest the dividends, the upward drift plus dividends that occurs will generate potentially hundreds or even thousands of percentage points return while risking only 100% and that being pretty rare. This allows for you to risk less capital and the fees to not matter and enter more trades if you wish, but also allows you the ability to concentrate it more aggressively into one trade if you choose.
Allocating money to ETFs using commission free trading strategies would be another great alternative and could be run like a permanent portfolio with a bias (or could be done with no bias). Other commission free ETF strategies may also work such as identifying sector rotations.
Forex trading has the potential to work because fees aren't based upon contract size and position size can be customized.
Option trading of course as you might expect is a two edged sword. If you are very good and you can make it work you certainly have the potential for growth. There are a few strategies using options that can work. Be careful of the Bid-Ask Spread with any option strategy as it can create additional "hidden" fees since you probably won't be able to exit at a great price.
It is also VITAL that you keep your position size very small with option trading. Fees are very expensive if you properly adjust your position size downwards, but things can still work if you really monitor what you are doing and are careful. I can't really put this into a paragraph brief enough to really explain without distracting from this article so do lots of homework before option trading
One of them involves using just a few contracts that are very cheap and swinging for the fence aiming for a monster return. You only get that monster return a few times, but in theory it pays for it's losses many many times over making it incredibly profitable. I call this strategy "the nickler" as it turns nickles to Dollars.
Another options strategy that can work is "stock replacement" In which you basically are taking a position trade in a stock but subbing out stock and instead using near money options with lots of time on it. If the trade goes against you, the time value is what preserves your capital, but it is still leveraged enough on your biggest gains to produce tremendous potential and thus it can be profitable even with the high cost of fees.
Then you can try swing trading option strategies for 5 to 10 day holds with at the money options.
Finally, there is the "weekly lotto" which basically is trying to hit a homerun by using very very cheap options. You must be excellent at timing and you probably will lose your entire premium. Much like "the nickler" it aims for a monster "homerun" that can receive hundreds or even a thousand percent gain (I've witnessed a guy called "optionaddict" at trading addicts take a weekly Apple Call and make 1700% one time. He currently runs a blog at ibankcoin.com).
I suppose there is one final option strategy and it involves either selling put with intention to buy if it closes below the price you want it, or selling calls aainst an existing investment. This can be coupledwith your investment strategy. The criteria I look for when selling puts is when the market tanks and volatility skyrockets and I have an investment that I want to buy under a certain pric. For selling covered calls it's the same thing exceptI also may do it when I think short term the price will decline, but can't afford the fees of selling. When I see the VIX skyrocket I alo am much more willing to sell a put if I think the market will bounce as if I am right I make my entire premium, and I sell covered calls when I am less certain and think a decline could continue but long term think my stock represents great value. As a general rule of thumb I like to sell options out of the money only
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