Max position size - Swing trading stocks

J

Jack.c

Hi everyone, new to the forum here.

In context of a stock swing trader: roughly what is the maximum position size to put on a trade compared to the avg. volume of a stock (without getting slipped excessively when your stop is hit).


Things to consider:

1. Concern is mainly the exit, when my stop gets hit it dumps the entire position at once so I don't want to be slipped excessively (i.e. preferably no more than 10 cents).

2. My smallest stop is 30 cents from entry, and I risk about $300 per trade, meaning I need to put on ~1000 shares in some cases. With this position size is an exit feasible for stocks with 1 million shares daily avg. volume (without being slipped too much).

I have traded a while back with max. 600 shares per trade in lower vol stocks i.e. 500,000 avg daily. And I got slipped on exit. Worst was when it gapped overnight, my order dumped the position right on the open and there was a big slippage.

Preferably appreciate wisdom from people who has traded live with this position size and above :).

Thanks!
 
Adverse overnight gaps and intraday stop slippage are two very different animals. You should probably be fine intraday for 500k+ stocks within 10 cents of your stop. One exception might be 9:30-9:45 which is much more volatile. Gaps are different and should be treated as such...I wouldn't even call that "slippage" per se.
 
Thanks for the info Sam,

Yeah the time when it gapped on the open it was my trade that caused the stock to jump even further down and ended up being the low of the day. It sucks for sure when that happens.
 
Jack, I'd say 1,000 stocks shouldn't be a problem, unless you take some very low-volume stock. I remember somebody saying that you should be alright trading 10% of the current volume.
So, 10% of the M1 volume as a daytrader, 10% of the H1 or the daily volume as a swing trader,...

One more thing, try using limit orders. That helps a lot. Often there are more shares available in the market than you can see on L2 and you get better prices if you wait for a fill than with a market order.
For the stop, you can also use Stop Limit orders with a reasonable distance.
 
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