Emphasize Bet Size

SabreMan

SabreMan

Bet size is not often mentioned here on ET. But it is very important. The aim of every trader should be to increase his bet size as his account grows. If you can get to a decent trading size then you can start really making large sums of money.

I am currently betting (or risking) £3000 GBP per trade (about $4000) using an automated day trading strategy.

This bet size represents the risk to my stop loss point.
e.g. If my system dictates a 50 tick stop on say CL (which has a $10 per lot tick), then I would trade 8 lots, to give me a $4000 bet size.

My first target is to get to a £10,000 bet size.

The automated software will increase my bet size as my account grows, and decrease after losses. Such that when I double my account from current levels it will be risking £6000 per trade. But if I lose half, it will be risking £1500.

I am going to keep track of the bet size changes in this journal. And hopefully this will help me focus more on this aspect of trading rather than being focused on short term PnL.
 
SabreMan said:
The aim of every trader should be to increase his bet size as his account grows.
More...

Hi SabreMan,

I'm going to disagree a little. I agree that an account with $1mm needs to play larger than one with $100K. I'm not sure that an account with $10K should play bigger than one with $25K. You have to consider what you can afford to lose if that is all you have.

When we get beyond that, I think it is more important to focus on placing bigger bets when you have a higher confidence vs low confidence. Too many traders place the same size trade for good ideas vs great ones. You have to have a prcoess to rate your trades and go back later and update those evaluations.
 
SabreMan said:
Bet size is not often mentioned here on ET. But it is very important. The aim of every trader should be to increase his bet size as his account grows. If you can get to a decent trading size then you can start really making large sums of money.

I am currently betting (or risking) £3000 GBP per trade (about $4000) using an automated day trading strategy.

This bet size represents the risk to my stop loss point.
e.g. If my system dictates a 50 tick stop on say CL (which has a $10 per lot tick), then I would trade 8 lots, to give me a $4000 bet size.

My first target is to get to a £10,000 bet size.

The automated software will increase my bet size as my account grows, and decrease after losses. Such that when I double my account from current levels it will be risking £6000 per trade. But if I lose half, it will be risking £1500.

I am going to keep track of the bet size changes in this journal. And hopefully this will help me focus more on this aspect of trading rather than being focused on short term PnL.
More...

Can you share some of your system metrics? What is the holding period like?
 
I think I mentioned somewhere that portfolio formation and sizing are linked to your alpha signals so you should integrate them early on. There is a garden variety of discussions on bet sizing (jelly-style etc) and there are a few more advanced versions which integrates sizing and trade frequency reduction (you can do those separately, though).
 
SabreMan said:
Bet size is not often mentioned here on ET.
More...
I disagree with you on this. Bet size, position size, etc, are often mentioned.

In my case: position size depends on the value volatility of a futures contract versus my risk tolerance on my account plus on the level of conviction I have on the trade setup. This is integrated in an automated system.
 
I aim to increase the size of my winning positions by pyramiding them. Involves extending the period during which my initial capital risk is exposed, so its a real test of nerves. But the rewards are great when you can pyramid repeatedly. If I knew which trades would be the winners, obviously I'd bet the house on them, until that day its just 2% of capital risked maximum.
 
Just keep your stops adjusted...

tomorton said:
I aim to increase the size of my winning positions by pyramiding them. Involves extending the period during which my initial capital risk is exposed, so its a real test of nerves. But the rewards are great when you can pyramid repeatedly. If I knew which trades would be the winners, obviously I'd bet the house on them, until that day its just 2% of capital risked maximum.
More...
 
tomorton said:
I aim to increase the size of my winning positions by pyramiding them. Involves extending the period during which my initial capital risk is exposed, so its a real test of nerves. But the rewards are great when you can pyramid repeatedly. If I knew which trades would be the winners, obviously I'd bet the house on them, until that day its just 2% of capital risked maximum.
More...
%%
Really depends on the market; i'm thinking of one market for commercials they let you exchange for free, but limited number of times.[Same time another dealer required a extra fee if you did that] Sorta like the metal dealer that paid over spot price for silver, super strong uptrend, but now its much worse + .........................................:cool::cool:.
 
SabreMan said:
I am currently betting (or risking) £3000 GBP per trade (about $4000) using an automated day trading strategy.
More...

Good week in the market. Upping my bet size to 3550 GBP [about $4500].

Aim is to get to 10,000 GBP eventually, but will drop down bet size after losses, increase after winners.
 
You must log in or register to reply here.
Back
Top