Position Size?

[murray t turtle]

Yes, many seem to forget ( if they know that is ), that the markets have to go up, otherwise the big wheels of finance will stop, and where would we all be then

This is exactly why one should never risk all of their money on one thing, and keep a good bit in reserve for when it happens again, as it will happen, as sure as day turns to night.

Some would be better off not trading at all, so when the big down spike arrives, you can sit back and laugh at all the highly educated fools twiddling their thumbs and watching the millions of $$ disappearing in front of their eyes.

How does one know when the time is right.

Well, you can never know for sure, which is why you must position size correctly when required

%%
Plenty of truth in your post,MrScalper. Long term trend of SPY/S& P 500 is up; but that is not a prediction.Good thing about trading ,,many made it after huge drawDowns/blowing up an account...................................................................................LOL

 

[ironchef]

Fine now of course, as US market has enjoyed a freak wave, but the problem with these accounts is that when the SHTF, they will just sit there twiddling their thumbs and say.. don't worry, it will go back up again

They are right. For the US market, so far, it always went up after a big drop.

 

[ironchef]

Absolutely nothing wrong with investing or position trading, but unless you lock in profits, and even better remove them from the markets entirely, then one should really just put oneself in the merry go round group.

The clever few will always remove profits from the markets and bank them, as they know that a profit is not a real profit until you can feel the bulge in the arse pocket of your trousers

Very good advice. By doing so overall profit maybe lower but on a risk adjusted basis probably superior.

 

[murray t turtle]

It is: the purpose of trading with $500 isn't to make money - it's to gain experience and see whether you can trade reasonably consistently without losing money.

Half of what Kelly's formula predicates isn't a bad principle at all. The problem, though, is that calculating it requires knowing your expectancy accurately, and that's asking a lot without considerable experience.

I think your 1% risk is a good principle, at least to start you off. That doesn't depend on your leverage.

If you want to read up on position-sizing in a user-friendly way, look no further than Van Tharp's book Trade Your Way to Financial Freedom (and without letting the title put you off it!): most of the second half of the book is directly or indirectly about "how to work out position-sizing", and you might just find a PDF copy of it online.

If you're trading spot forex, Oanda allows infinite granularity of position-sizing: you can easily do $5 trades there, if you want to. Anything from $1 up, in fact.

%%
That's strange;
+ i mean that in a good sense. Thats the updated edition name ;
original name =Daytrading Your Way To Financial Freedom. IBD founder noted it take about 3 years to learn to trade/Invest.NOT a prediction

Good thing he did not name it= DayTrading My Way To Financial Freedom.LOL

 

[murray t turtle]

Yes, many seem to forget ( if they know that is ), that the markets have to go up, otherwise the big wheels of finance will stop, and where would we all be then

This is exactly why one should never risk all of their money on one thing, and keep a good bit in reserve for when it happens again, as it will happen, as sure as day turns to night.

Some would be better off not trading at all, so when the big down spike arrives, you can sit back and laugh at all the highly educated fools twiddling their thumbs and watching the millions of $$ disappearing in front of their eyes.

How does one know when the time is right.

Well, you can never know for sure, which is why you must position size correctly when required

%%
Good points MrScalper; but US stock market has been upTrending for more than 200 years; of course one has to factor in 3 year bear market$...... [S&P 500/SPY /benchmark /bear markets like 2001, 2002, 2003.] SPY goes from $150 to $75, more than 50%+/ drawDown]. 50%+/ means 50% plus or minus.

If one like roller coaster$ like QQQ, went from $120 to less than$20 = finally back over $120.Better than 80% draWdown . SQQQ dose well in a bear market. LOL. Frankly as good as the capital markets/US stock market has been over time, has paid to invest long term, but NOT a prediction. IBD neWspaper+ CanSlim System explains why US market has upTrended so well; not a prediction.......................................................................

 

[Robby Luca]

When they say risk 1% of your account, it means for every trade you should not lose more than 1% of you account.

Example:
Account = $500
Risk = 1%
$500 x 1% = $5

So for every trade you should not lose more than $5. When things go bad and your trade is down by 5$ then you should sell.

 

[MrScalper]

%%
Good points MrScalper; but US stock market has been upTrending for more than 200 years; of course one has to factor in 3 year bear market$...... [S&P 500/SPY /benchmark /bear markets like 2001, 2002, 2003.] SPY goes from $150 to $75, more than 50%+/ drawDown]. 50%+/ means 50% plus or minus.

If one like roller coaster$ like QQQ, went from $120 to less than$20 = finally back over $120.Better than 80% draWdown . SQQQ dose well in a bear market. LOL. Frankly as good as the capital markets/US stock market has been over time, has paid to invest long term, but NOT a prediction. IBD neWspaper+ CanSlim System explains why US market has upTrended so well; not a prediction.......................................................................

Good things come to those who wait!

A fool and his money are easily parted!

When the public shout buy, it is time to sell!

When the public scream sell, it is time to buy!

Some things never change

 

[murray t turtle]

When they say risk 1% of your account, it means for every trade you should not lose more than 1% of you account.

Example:
Account = $500
Risk = 1%
$500 x 1% = $5

So for every trade you should not lose more than $5. When things go bad and your trade is down by 5$ then you should sell.

%%
That is a worse case [-1%]scenerio, Robby ; most using that are using hi leverage/have to sell by 3rd friday.The math is right.
CAN SLIM/IBD[cash markets] risks $ 7 or 8[ or less] to make $24, which i found much more profitable.But that is in the context of a 250 -450 page system.He even sells sometime if it goes outside the channel; but the big trend$ i like spend so much time downtrending or uptrending outside the channel i dont do that out side the channel close exit = almost NEVER........

He did start with $500; maybe $1000 in todays US dollars....................................