max position - risk control

S

SethArb

hello ... I would welcome comments

from discretionary traders who have limits ( buying power )

on how or when they should reduce their trading size

( positions size )

to prevent any bad days or weeks from hurting their P+L

( profits ) for the week - month - year

I am seriously considering reducing my BP

by making as much as a 50 - 75 % withdrawal from my

main trading acct.

it seems from time to time I use up too much of my

BP and realize my exposure is starting to get too large

at those times ... let alone my P+L can have swings that are

too big for me to handle ... even though by the end of the week
and month I am positive ... it is no longer a smooth ride
or grind it out ... for me with my acct growing larger most weeks
( except when I take out some funds for living expenses )
 
If your confident with your strategies increase size -- if your not reduce. Simple as that.

Personally I try to diversify as much as possible. I have a plethora of strategies but not enough money to trade them all !!!
 
if ur up by the end of the week most of the time, i dont quite see what the problem is. Increase size or keep it constant. Consider increasing positionsize by a fixed amount whenever you have a positive week, and decreasing positionsize whenever you have a losing week. Alternatively, consider increasing by a fixed amount whenever you make $x in profits, and decreasing by fixed amount if you lose $x
 
I guess experience is the best teacher

I can experiment and reduce my acct size

dramatically ( i.e. move funds to another less active trading acct

or to a bank CD )

while I see how much my P+L is affected by the smaller

acct size ... if I can still make a high enough percentage
of profits but within the BP limits of an account 1/2 the size
and am happy with this smaller positive P+L knowing my
neg P+L or swings will be alot smaller ... then perhaps this is best for me ...

thanks for the replies guys
 
a good rule of thumb is that you never want to risk more than 1-3% of your nut on a trade. 1-3% depending on your risk tolerance so lets say you choose 2% for arguments sake

so 100,000 account

you are willing to risk 2k on your initial trade

a stock is trading at 12.00. your stop is at 10.00 - you are permitted to buy 1000 shares.

if you get stopped and lose the 2k - your account is now 98,000 and you can risk 2% of that on your next trade or if you win then its 2% of the amount in your account...

this should keep you out of trouble...

if you track your trades - which you should - your results can become very predictable and confidence in yourself will increase. plus you learn that one trade really isnt that important because you know you have a positive expectancy...
 
Quote from ozzy:

If your confident with your strategies increase size -- if your not reduce. Simple as that.

Personally I try to diversify as much as possible. I have a plethora of strategies but not enough money to trade them all !!!
More...

Quote from ozzy:

Blowing out is one of the worst exp.

I'm on the verge of my second blowout.

1) First blowout was 2001, started trading at peak the peak of the bubble. Lost 25K.

2) Blowout number two 2004 and still ongoing. Went from 800K to under 70K.

All I have to say is its devasting and very hard to recover from mentally. I quit my job started trading fulltime a few months ago, stopped trading stocks/options and now I'm trading futures/currency. I thought I could conquer the market If I was dedicating all my energy to it. Well all I can say is, things have not gone so good so far (Good in ES, but devastation in currencies). There's a chance I might wash out. But I'm almost positive I'll be back in a year or two, since I know this is what I want to do as a career.

ozzy "from rags to riches to rags"
More...


QUOTE]Quote from ozzy:

It has been gradual, but I did have some big hits along the way.

I've learned a many things along the way. Hard to say which is the most important.

1) Playing far to big for my knowledge Exp.
2) Being an optimist, overconfidence, etc etc. (not having the right traders mindset)
3) Risk Management was out of control (Being too aggresive)
4) Money Management was terrible


There's a quite a few more. I think I can write an essay on this subject.

Anyways. I'm taking this as a learning exp. I'm dedicating night and day to this business and even if I washout in the next few months I know it will not be the end of my trading career. I'm not going to quit until i'm successfull.

ozzy [/QUOTE]
 
Thanks for bringing that stuff up. You live and you learn. Things are going well now -- or at least much better lol.

I went from knowing nothing to having a good grasp on things. Let's see what happens over the next few years.

Cheers
 
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