How do you deal with big numbers?

When entering your trade you should not think how much you can make but how much could I lose. Never look for your target first, always look for your out first
 
Quote from Smart Money:

A hypothetical question. Suppose you use a method where you made 2% profit every day and you started with an account of $10,000. So on your first day, you made $200. Using the rule of 72's, after 36 days, you were making $400 a day. Another 36 days later, you're making $800 a day, and so on, and so on.

(note: no, this isn't my account size and this isn't how my numbers run...this is hypothetical)

Anyway...there would come a point where you'd be saying to yourself, "man...this is a lot of money on the line here". Maybe you built up to where you had a $1,000,000 account and you were making $20,000 a day.

How can you get to the point without getting a little bit cautious? How do you maintain your edge as the numbers get bigger and bigger?

Do you think of the numbers in terms of percentages? How do you stay detached frm it? How do you maintain the balance to keep yourself from jumping out of a good position too early because in your mind you've made "good profit"?

Also, I'm just curious about scalability here, but how big of a market cap do you need on a stock to where a purchase or sale of $1,000,000 worth of stock doesn't create wierdness in the charts? How do you get around it?

TIA,

SM
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If you position trade quality stocks, the consequences are different than you note. But nevertheless, position trading capital in a routine manner may serve as an example.

Three factors determine the rate of increasing capital in position trading. Any one can choose an appropriate universe of stocks from which to make money. The three factors are: the hold period, the number of days between cycles and the daily rate of profit expressed as a percent of price.

By using a weekly planning session, the universe may be updated, a week's trading planned and then execution takes about 15 to 20 minutes a day if employed or, if full time trading, monitoring a 30 minute chart is sufficient.

Here is the sequence over time to deal with your query:

1. Start with any initial capital and divide it into 4 streams.

2. Trade the four streams using the weekly batting order where the stock's money velocity serves as a tie breaker.

3. When you have doubled your captital, remove the original capital and begin again.

4. Always enter and exit using partial fills where the partial fill is equal to the larger blocks going through on the T &S.

5. Limit your trading turns to 10% of the cumulative total traded volume during any day by doing partial fills.

6. Limit any stream of capital holding to 100,000 shares.

7. Keep streams of capital in balance and go to 8 streams when you find that your holdings in any stream get to be 10 to 25 thousand shares.

General notes.

Any one choosing quality stocks to trade will find that they exceed 3 Beta of the indexes. Any stock in the quality category will also have a high RS and therefore be doing trading cycles on an upward MLR of price.

A common objective is to increase the number of cycles per year. The range ordinarily goes from 30 to 100 cycles where 50% of the price cycle swing is more than 10% of the nominal price.

As capital is increased, more attention to detail is affordable. Therefore the average hold period is reduced to the central part of price moves where the money velocity is the highest. Count on an average 2 1/2 day hold to extract the middle 50% of a price move.

To trade the "natural cycle" of a selected Universe, the leading indicator of price is volume. In terms of signal time, there is approximately 1 1/2 hours after the volume signal until price begins its move.

All of this can be done on Excel spread sheets and a simple platform where there is provision for listing the % of the 65 day average of volume in a sortable column.

The rate of doubling currently is about every 12 (4.00% money velocity) to 25 (3.33% money velocity) days. It is not possible to make as little as 20,000 dollars a day on a milliion dollars of capital when position trading with a quality based universe.

One of the by products of cross over trading (entering late and exiting early) is that there is no risk associated with rotating capital. The fact that price is a lagging indicator is also helpful.

This type of trading involves three rules: one for entry; one for holding and one for exiting. All are math expressions related to a single specific information flow variable, namely volume.
 
Quote from jack hershey:

If you position trade quality stocks, the consequences are different than you note. But nevertheless, position trading capital in a routine manner may serve as an example.

Three factors determine BLAH BLAH YADA YADA YADA. [/B]
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Jack's first disciple:

435_AmericanCrossEyedFaceJug.JPG
 
Here is a print of my log for the first BBT short of the day.

In another thread, I noted the reversals specifically if you are filling in the bar column as the day proceeds.

I have an original (violet) by Isabel Bloom, dated 1986, on my custom Norwegian oak finished console here. it is such a contrast to the OCD pics of TZ. I know I keep him so busy with my commentary.

Enjoy reading the log and its notes. You may be able to fathom how the YM leads the ES and how things happen inside of the five min bars. You also see on the Cash Cow columns how the MACD ray "calls" the turns well before any other signals.

Anyway it went short, long, short, and cover for M1 and M2 (I sit out the lateral play after the VE) and go long on the BBT first hold from B2B.
 

Attachments

here is a reminder of one of my comments on the "call" sheet.

Note that as the current BBT 2 long progresses, there is a relationship to the BBT 1 middle price move segment (the 2B). I note "cancel" BBT 1. This means that either segment 1 or segment 3 of the BBT 2 long could "exceed" the top value of pt3 of BBT 1 and the pt1 of BBT 1 (gap adjusted back to bar 77).

Market pace shifts out of the "opening pace" at bar 18 so the volume supplying momentum has died somwhat. we are also past the "oil" news as well.

So far bagging 6 points per contract on BBT 2 has worked out well.
 
Quote from TraderZones:

Jack's first disciple:

435_AmericanCrossEyedFaceJug.JPG
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And he posts a day ahead and makes all the calls for about 20 consecutive trades.

What would it have been like for you if your mind could function?

So long, you provide so many laughs for the world.

PVT, SCT and SSR and their foundation of the Pool Extraction Paradigm are the well rounded collection for making any amount of money a person desires to use to help others. Differentiating the mind has always been the holy grail for any method of successful trading.

There is only one pattern........ B2B 2R 2B

How sweet it is........
 
Quote from jack hershey:

And he posts a day ahead and makes all the calls for about 20 consecutive trades.

What would it have been like for you if your mind could function?

So long, you provide so many laughs for the world.

PVT, SCT and SSR and their foundation of the Pool Extraction Paradigm are the well rounded collection for making any amount of money a person desires to use to help others. Differentiating the mind has always been the holy grail for any method of successful trading.

There is only one pattern........ B2B 2R 2B

How sweet it is........
More...


Remember this, Jack? was it the 2nd or 3rd time you "left ET for good?"

09-25-07 08:05 PM
Quote from jack hershey:
I thought about the situation and I think I can make a payback to ET for the opportunity I have had here… I believe my presence here is outweighed by the trouble it causes Baron Robertson and his business pursuits… I'm shutting down my membership in ET now.
 
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