Position Sizing

[cdcaveman]

shouldn't there be a dollar size amount? like what if your trading a 10k or 20k account ... five percent is super small.. its almost impossible not to over concentrate!

 

[oldtime]

Quote from cdcaveman:

shouldn't there be a dollar size amount? like what if your trading a 10k or 20k account ... five percent is super small.. its almost impossible not to over concentrate!

what the hell do you want? Some kind of free lunch? Heck yes there is a limit. Why do you think we always tell people they are undercapitalized? Just because you can afford it doesn't mean you should do it.

That is why I like spot forex. If you do it right there is just absoluteley no excuse for being under capitalized.

Number one reason for failure is undercapitalization

number two reason is gullibility

I suppose number three is just being unlucky (that's the one that worries me)

 

[NoDoji]

Quote from sowterdad:

Do you alter your position size based on changing mkts? i CERTAINLY DO- I reduce my position size by 50% if I'm taking a "tenative" trade, and I take a stop at a much tighter level if the trade fails to perform as expected..

You nailed it. I trade far more instinctively now than I used to and I can't even explain a lot of it. I watch price react to a level, then I react to the setup without as much "overthinking" as I used to do. If there's no well-defined trend, I trade small and also exit very quickly if there's no wind at my back after I enter.

Quote from sowterdad:

How would you guide the novice trader in terms of position sizing their starting account? What would you tell them so they could survive the learning curve? What would you tell them when it is time to step aside? When is it a good time to go all in?
Position sizing is the answer for the learning curve IMO- How do you apply it as the mkt conditions change? How would you guide the initiate trader so they could survive?
I think your answers , and your experience, would be most beneficial.

I guide a novice trader just as I was guided. Bighog told me to learn to trade 1 lot ES; Sal told me learn to trade 1 lot CL. If you learn to trade 1 lot of something, you can't "cheat" by averaging down. Averaging down has its place...in the hands of a professional only. A novice needs to learn to trade straight up, no gimmicks. The advanced stuff can come later.

If you're consistently profitable trading 1 lot, if your actual results are pretty close to your backtested results, then add a lot, and keep adding as long as the results increase commensurately. If you reach a point where the size begins negatively influencing your trade management, then in the words of Marty Schwartz's wife, “Get smaller, get smaller.”

 

[cdcaveman]

Quote from oldtime:

what the hell do you want? Some kind of free lunch? Heck yes there is a limit. Why do you think we always tell people they are undercapitalized? Just because you can afford it doesn't mean you should do it.

That is why I like spot forex. If you do it right there is just absoluteley no excuse for being under capitalized.

Number one reason for failure is undercapitalization

number two reason is gullibility

I suppose number three is just being unlucky (that's the one that worries me)

options.. and more options.. must be in options

 

[oldtime]

Quote from cdcaveman:

options.. and more options.. must be in options

no kidding man, that's exactly how I started out. Back then they called them OEX options, I don't know if they even still trade them now. They were options on the S&P 100 index.

It's a rough way to go. The worst feeling I ever had was when I was trading some OPM and got caught legging in to a calendar spread and in a few minutes had lost more than the account was worth.

And that was after I explained to them that it was a very conservative strategy.

 

[IeatGoldmanSnax]

One of the biggest things in this game

 

[cdcaveman]

Quote from oldtime:

no kidding man, that's exactly how I started out. Back then they called them OEX options, I don't know if they even still trade them now. They were options on the S&P 100 index.

It's a rough way to go. The worst feeling I ever had was when I was trading some OPM and got caught legging in to a calendar spread and in a few minutes had lost more than the account was worth.

And that was after I explained to them that it was a very conservative strategy.

haha... i started out just outright buying premium... caught me for like 5 grand in one of my first trades.. i learned about theta quick like... i trade alot of flys and ratios...

 

[oldtime]

Quote from cdcaveman:

haha... i started out just outright buying premium... caught me for like 5 grand in one of my first trades.. i learned about theta quick like... i trade alot of flys and ratios...

yeah it doesn't take you long to figure out that they really don't offer you anything on a regular basis that is worth buying. And selling isn't that much better.

 

[cdcaveman]

Quote from oldtime:

yeah it doesn't take you long to figure out that they really don't offer you anything on a regular basis that is worth buying. And selling isn't that much better.

Ya chose your weapon of self destruction long vol or short.

Bleed slow or blow up all of a sudden

 

[plsnobull]

Quote from NoDoji:

Audited statements won't help anyone trade. Rather than continue to post here off-topic, visit CL Redux for another example of precision price action scalping concepts:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=178741&perpage=10&pagenumber=3112

You realize that anyone can write down a sequence of gains and claim he is achieving that in real trading. If you cannot produce any records to back your statements, better refrain from such practice imo. That is all I have to say. Bye.