I only want to focus on instruments whose daily average traded value is high enough for my capital base and, at the same time, the other criteria for this particular daily average trader values that it must be a certain value that cannot be easily manipulated. Alright? Generally, I would just say that at least, one million dollars of daily average trader value on what would be an instrument as I do.

And frankly if you ask me, I don’t really care what name is the instrument. What counts though is that as long as they commit all these particular requirements. Alright, so ideally one million dollars daily average value onwards, alright. So that is the minimum average trader value I’m looking at. And of course beyond that, it also depends on how much capital base you have.

So, let’s say you only have 10 thousand dollars of capital base, then you just have to focus on anything that’s one million dollars onwards that will meet your criteria in terms of liquidity-wise. But, however, if you are very rich, you are a multimillionaire and your trading capital base could be in the tune of five million or 10 million dollars onwards.

Generally, what I would suggest is that you have to even be more selective in terms of the stocks or the instruments that you look at. And generally I will suggest that the average traded value at least one million onwards, and it must be about five to 10 times more than your entire trading capital base, just to make sure that if you need to execute any trades along the way, of course, depending on your strategy, you’ll be able to get in and get out very easily.

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Philip Teo

Founder & CEO at Traderwave Pte Ltd
Philip Teo is an entrepreneur, speaker and trading coach who specialises in the field of Technical Analysis of the financial markets. He is currently the Founder and CEO of Traderwave Pte Ltd, a financial technology company that offers a web charting application to global traders. He has conducted many trading seminars and appeared on national television before. He is also currently an official speaker and trainer with SGX Academy. Learn more about him at his Google+ Profile, LinkedIn Profile and Facebook Profile

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