Position sizing

What is your position on investment entry?

  • My initial investment on every trade is the same amount.

    Votes: 16 28.6%

  • My initial investment to enter a trade is always different.

    Votes: 23 41.1%

  • My initial investment is the same and so is the $ position size increase.

    Votes: 7 12.5%

  • My initial investment is the same but the $ position size increaseis different.

    Votes: 10 17.9%
  • Total voters
    56
Quote from mschey:

We all have to learn to question our beleifs about trading. One common misconception, is that you never add to a loser. This is a fallacy. Adding to a loser and trading out, can and does work very well. A good general rule of thumb is that when you can't take the pain, and you have finally reached your puking point on a trade, double your position and PLACE A STOP ON THE ENTIRE POSITION TO PROTECT YOURSELF.

Good traders to this all the time. Not recommended for those with a weak constitution, fragile health, weak heart, or small trading account.
More...

I do hope you are talking about intraday trading and not position trading.

I would strongly suggest one look at the correaltion of the returns generated across the portfolio before doubling up at maximum pain thresholds.

Or do you unequivically state doubling up is a prudent approach to trading,including overnight positions??
 
overnite position tradin' can be approached with an accumulation mentality; meanin' u will keep buyin' as the instrument drops in price...i dont think there's really nothin' wrong with it. there's a substantial difference between addin' to a loser and accumulate a different [lower] price levels. addin' to losers intraday also is not an absolute no-no even tho it aint exaclty me cup of tea; it can be done sometimes if the reasons for bein' in the stocks in the first place still exist. u can also add to an underwater pos if it's likely the sob will move enough to make u recover part of your losses, b/e or eventually come slightly ahead.
 
HolyGrail,

Leverage can be a two-edged sword agreed. I think that when mschey calculates geometric progressions he is referring to those black swan events and dealing with them too. He does not reveal his trading strategy for us to see, so he is limited with his replies. Please excuse me, as I am not speaking for him, and I do not mean to offend anybody.

Last month I discovered what your point is HolyGrail, and cut my risk by 1/2, then 1/2 again...this would put my yield much lower (lowering risk or "entry, tiered exposure", often lowers yield too)

I think the use of leverage when you have an edge is a good use of time, but the trick is to discover early when your edge is failing. YOU DO NOT INCREASE LEVERAGE TO DIAL IN THE YIELD YOU ARE ACCUSTOMED TO.


Michael B.

Quote from HolyGrail:

Yes he did, but 5 years is not a career.

We grew our business from 0 to 22 million in sales during the first 6 years. It was done with an initial risk of 50,000 in capital and bank loans which eventually reached 1.5 million. We did not change our lifestyle and we continued to plow all of our profits back into the business.

The economy turned sour (sept 11th 2001) for 3 solid years which would be equivalent to a loss of trading edge. Our 4 million dollars of inventory was now worth 2 million due to market forces. The bank turned sour on us as well (margin call), and we were forced to take out the bank with our own personal funds. My partner and I decided to continue the business for one more quarter. If we couldn't turn it around after three years we would close it down.

We managed to turn it around and we are right back where we were before the 3 year disaster, but this time we have NO DEBT. With no debt (no margin) we can now go through more tough times with much less effect on our business.

So the bottom line is you can optimize all you want,but if you are using borrowed money to achieve your wealth you better not be living on ALL of your profits or one day you won't be making a living doing what you are doing. That goes for any type of business, trading included.
More...
 
Often there are cautious scaling approaches that can be used....test the waters "so-to-speak".

When you enter in tier # 1 with your "geometrically, calculated ATR" scale, you can see by the amount of time that passes and the reaction to your entry that price is "telling".

After a while this discretionary observation is quite indictive of how long the trade will last. After a while you know when to just "get out". After a few trades go sour on you, you would have to be an idiot not to recognize these events. But you gotta do the time to be a discretionary pro, but not neccesarily a genius.

Michael B.
 
Another trick is to get in on the geometric progression on paper and then to get in on real $'s in the middle of the thing...

Many protraders trade more on paper and spend more time in research than actual logged "trade-time".

Michael B.
 
Quote from ElectricSavant:

HolyGrail,

I think the use of leverage when you have an edge is a good use of time, but the trick is to discover early when your edge is failing. YOU DO NOT INCREASE LEVERAGE TO DIAL IN THE YIELD YOU ARE ACCUSTOMED TO.


Michael B.
More...

I cannot disagree with this statement. After all, I used a great deal of leverage to increase my business. I think the key is to protect a good portion of your profits and not live off of them. If you are making 100,000 a year trading and spending 100,000 per year living you will eventually fail. If you can put away 25-40% of what you are making then your career will be longer lived.

I also feel discovering "early when your edge is failing" is important, but I believe that most people cannot do it. The more successful they were in the past with their edge the least likely they will be to recognize the failure early. I think that is just human nature.
 
I will tell you that in currency trading that mscheys methods are dangerous. I mean dangerous to the dealers/marketmakers who are bucketshops.

Even the most talked about marketmaker in Retail Spot Forex on ET has had to widen spreads during anticipated high volatility times A few traders from another site has banded together with a geometrical progression method capitalizing on the anticipated spike during a news event.

I believe that mschey is trading equities, but he should take a look at the secondary market of Retail Spot Forex.

Michael B.
 
Quote from ElectricSavant:

Didn't he claim that he has been profitable for 5 years? That is more than many of us can claim.
More...

That is impressive indeed but why would this guy offer his system for $200 at in and out burger. 6 months worth of trades is presumably worth more than 200 bucks. The guy comes off sounding super arrogant saying he is an "elite" trader. If so he is a 7 to 8 figure trader and why in the world would you make that offer.
 
ok perhaps you are correct and it was rather a bold statement.

Let me rephrase. I spend more time in research than actually trading. I mechanically trade my system without thought 24 hours a day with two traders and spend a lot of time looking for new edges. Looking for new edges is the life blood of being able to take money out of the market continously.

Trading in the simulator to help "time the trade" is a current project I am on. The synchronizing of timing the executions with the simulator over to live trading is very valid for me. It reduces the amount of time that the trade is exposed to risk. The complexity of geometric progression and multiple scaling in or out strategies and "timing" the first entry/exit require simulator trading to find the "sweet spot"

Michael B.


Quote from Bitstream:

ror, no.
More...
 
You must log in or register to reply here.
Back
Top