Position sizing for long term investing

[Petermarkwood]

No denying in that. A single or tiny movement in the market against you would result in high losses and could also end up wiping out your entire account. Not just this, the financing costs keep rising because you don’t stop borrowing money from the broker. I for instance make sure to stick up with low leverage and small position size when trading with fxview and avatrade. Keeps me happy.

I sternly believe to risk a small percentage of trading account on a single trade. This eventually makes you take up small position size and your margin will also stay below the account’s equity.

 

[murray t turtle]

Don’t you think that high position size when accompanied with high leverage would magnify not just your profits but also your losses. This is probably one of the most common reasons why the noobs blow up their account within record time.

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That;
+ trading too much.........................................................................................

 

[murray t turtle]

No denying in that. A single or tiny movement in the market against you would result in high losses and could also end up wiping out your entire account. Not just this, the financing costs keep rising because you don’t stop borrowing money from the broker. I for instance make sure to stick up with low leverage and small position size when trading with fxview and avatrade. Keeps me happy.

%%
Sounds like bad data; but actually its a common pattern with plenty of liquidity, in all 3 of these.
Open price JAN 4 to todays open price;
QQQ=positive YTD;
QLD= negative % year to date
TQQQ= most negative%, year to date of the 3 [open price to open price]
NO way would i put on a position that in any way/ could ''result in wiping out you entire account'' NOT that you would. Thats how some get in trouble with time shares also\perpetual fees\fees\feees/LOL,

 

[Nicolemaz]

I sternly believe to risk a small percentage of trading account on a single trade. This eventually makes you take up small position size and your margin will also stay below the account’s equity.

This works perfectly well for new traders trading with low leverage ratio. Lower position size means little fluctuation in the account, which in turn keeps the emotions at bay and thus a decent trade.

 

[murray t turtle]

Hi all,

I would like to invest in the SPY for the long term (retirement). Is position sizing important when it comes to investing?

The common position sizing guide I see being suggested in trading books is "risk 1% of capital." Does this apply to investing? or does it not matter as much?

Thanks

%%
Since you are interested in SPY;
may want to print some charts of SPLV. It tends to go up + down a bit les than spy+2 million -14 million per day volume.......................................................NOT a prediction

 

[longandshort]

Hi all,

I would like to invest in the SPY for the long term (retirement). Is position sizing important when it comes to investing?

The common position sizing guide I see being suggested in trading books is "risk 1% of capital." Does this apply to investing? or does it not matter as much?

Thanks

No. Follow asset allocation rules when making long term investments. There are four primary asset classes:

• Equities
• Fixed income
• Currencies
• Commodities

There’s also volatility and derivatives on those assets. For a long term portfolio your goal is to maximize returns while minimizing drawdowns. You do that through investing in a combination that makes sense given your outlook and then blend that with the market portfolio (the actual allocation of capital across asset classes).

 

[murray t turtle]

No. Follow asset allocation rules when making long term investments. There are four primary asset classes:

• Equities
• Fixed income...............................................................

There’s also volatility and derivatives on those assets. For a long term portfolio your goal is to maximize returns while minimizing drawdowns. You do that through investing in a combination that makes sense given your outlook and then blend that with the market portfolio (the actual allocation of capital across asset classes).

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MOST investors make millions by buying [SPY for example or qqq] every month for 30 /40 years..................................................................................................Drawdowns are a traders term or turtle term+ most traders dont make money
And most of the big bucks in real estate are made by people that may not even know what a drawdown is/but i realize not every one wants to be a millionaire or billionaire. I dont want to be a biilionaire myself + prefer some stuff that drawdowns + some that does not. Thanks.

 

[longandshort]

Well, you minimize drawdowns by reducing the covariance in your portfolio. That allows you to eek out more return per every unit of portfolio risk.

 

[murray t turtle]

Well, you minimize drawdowns by reducing the covariance in your portfolio. That allows you to eek out more return per every unit of portfolio risk.

%%
So many want to minimize drawdowns/fine/ fine with me , to a degree.
I make sure to trade some ETfs with big % gains + drawdowns.
3rd friday week end of MAR tends to be down; unless they were front running that for 3 weeks in QQQ???
Of course drawdowns in QQQ + SPY tend to be much different than GM\ DAL/Bear Stearns/which bankrupt + never recovered for the buy + hold stock holders. NOT a prediction, not bank insured...................................................................................

 

[longandshort]

%%
So many want to minimize drawdowns/fine/ fine with me , to a degree.
I make sure to trade some ETfs with big % gains + drawdowns.
3rd friday week end of MAR tends to be down; unless they were front running that for 3 weeks in QQQ???
Of course drawdowns in QQQ + SPY tend to be much different than GM\ DAL/Bear Stearns/which bankrupt + never recovered for the buy + hold stock holders. NOT a prediction, not bank insured...................................................................................

Well you're trading, that's why. The op was asking about sizing for long-term...