Question

why do you think so many people work in apple trade

Answer 1

How much of a paper loss are you willing to tolerate if the market moves in the opposite direction from your initial bet? Let's say you shorted at $108, hoping to cover at $107.75.  But the market is going higher. Do you cover at $108.25 and realize a small loss or do you wait? How about at $109?  $113? Note that if Apple shares moved up to $113 and you covered then you just lost $2,376.5.  This means that you would have to be right the next 25 times to recover from this loss. 

Let's assume that you can employ a super disciplined risk management. But even then, if you were to have tight risk limits the odds are still stacked up against you. Such small moves in a stock of Apple are a 50 / 50 bet - up or down.  But since you are a price taker, you by definition will be sacrificing bid / offer spread - likely 1 cent or 1/25th of your expected profit, and that is in addition to a trading fee from Scottrade.  All in all, given your assumptions above, and a strict .25 cent upper and lower risk limits, your expected payoff will be (46% times .25 cents times 450 shares) + (54% times negative 0.25 cents times 450 shares) minus 14 dollars in fees.Result - expected loss of $23 from each round trip transaction.  Awful!

How could you make money from this strategy?  You would have to, somehow, design an algorithm that will tell you with at least 57% accuracy that the next short-term move in the price of Apple stock is in the direction you need it to go.  Having a 57%+ batting ratio (vs 50 /50) ratio is what separates stars from the rest of us.

therefor trading apple is risky


❤❤hope it help you ❤❤

Answer 2

How much of a paper loss are you willing to tolerate if the market moves in the opposite direction from your initial bet? Let's say you shorted at $108, hoping to cover at $107.75.  But the market is going higher. Do you cover at $108.25 and realize a small loss or do you wait? How about at $109?  $113? Note that if Apple shares moved up to $113 and you covered then you just lost $2,376.5.  This means that you would have to be right the next 25 times to recover from this loss. 

Let's assume that you can employ a super disciplined risk management. But even then, if you were to have tight risk limits the odds are still stacked up against you. Such small moves in a stock of Apple are a 50 / 50 bet - up or down.  But since you are a price taker, you by definition will be sacrificing bid / offer spread - likely 1 cent or 1/25th of your expected profit, and that is in addition to a trading fee from Scottrade.  All in all, given your assumptions above, and a strict .25 cent upper and lower risk limits, your expected payoff will be (46% times .25 cents times 450 shares) + (54% times negative 0.25 cents times 450 shares) minus 14 dollars in fees.Result - expected loss of $23 from each round trip transaction.  Awful!

How could you make money from this strategy?  You would have to, somehow, design an algorithm that will tell you with at least 57% accuracy that the next short-term move in the price of Apple stock is in the direction you need it to go.  Having a 57%+ batting ratio (vs 50 /50) ratio is what separates stars from the rest of us.