Tips on How To Trade Large Size - Getting Used to 5k share scalps?

[AAAintheBeltway]

Do what you're comfortable with. When you get too far out of your comfort zone, bad things tend to happen.

The logical way to look at this is to think in terms of the percentage risk per trade. You must be very low, ie<1%, now, if you have the BP to contemplate dramatically upping your size. Personally, I think risking more than 1 or maybe 2% account equity per trade is asking for trouble eventually.

 

[NoDoji]

Quote from Cutten:

You need to stop thinking about it in terms of $ amounts and numbers of shares. Instead, think in terms of cents, and multiples of base trade-units.

Compare:

A. "Ok I've just bought 5000 shares at $30, wow that's $500 every 10 cents, ok it's just gone 3 cents against me, I'm down $150 already, shit"

B. "Ok I"ve just bought 1 unit at $30, it's gone 3 cents against me but it's not near my stop yet and there's good support here, let's see what the S&P futures are doing..."

The more you associate price movements with actually money won and lost, the less effective you will be with your trading. The ideal point is where you don't care at all (in an emotional sense - obviously in a purely rational sense you have to care) what happens to the market price or your positions.

Nicely put, Cutten. I too have been wondering how to move to the next level from 200-500 share lots I currently trade. If you have an edge, it's a probability game of taking all your setups, and whatever price action invalidates a trade determines where the stop should be placed. If your account can survive that stop at particular position size you should go for it. I used to think it made more sense to have wider stops and smaller positions, but wider stops are a way of saying "I'm not really sure this is the best setup, so I'm going to give it more room to become a better setup if necessary." Now my take on it is, of the trade moves against me and passes a critical price point (such as previous S/R), get out and re-evaluate to see of a better entry arises, or reverse the position if indicated. As a result of this shift in my strategy, I'm forcing myself to avoid lukewarm setups, I can put on larger size with tighter stops, and have more room to take quick partial profits and let the remainder run further.

 

[Lights]

trade according to the risk reward of the specific trade. create a spectrum for that. if the ratio is in your favor, you should "bet" bigger and vice versa.

Quote from KCalhoun:

Hi -

My #1 challenge as a trader isn't making winning trades; it's that I do so usually on small share 50-200 share size trades, dozens a day, which adds up but not as much as I know I am capable of...

Does anyone who trades large size on higher priced stocks, eg $15-$60/share, over 2k shares/trade, routinely, have any insights as to how to get mentally comfortable pulling the trigger on that much size, knowing every .05 is worth hundreds?

That's the one remaining barrier to success in my trading, and for all the years I've traded, I still haven't overcome it... I don't mind trading 5k shares of some cheap fifty cent stock since the downside isn't much... but taking stops of $100 in pursuit of wins of $500+ isn't something I'm comfortable with yet.

(and when I play blackjack at casinos I play the $5-$10/hand tables too - same issue, fwiw)... I've made hundreds of trades a day, and am good at it, using IB/esignal, but I don't feel comfortable trading large size on higher priced stocks. It's driving me nuts, because that's the last page I need to turn, to make this all work for big $. Any ideas?


thx,

ken

p.s. I should probably talk to a market maker, or at least one of those 26-year old world poker champs who bets 50k hands, for some insights too.

 

[TrueProp]

I've had this problem in the past and in some ways I still have it. The difference is that I'm pushing myself to take 5 digit (10k+ shares) positions when the liquidity is there and the risk-to-reward is favorable. My advice is that there is no secret on how to do it. You just have to do it.

As you raise your share size, make sure you pay attention to the cents in the trade and not the dollar amount -- that goes for the losers AND the winners. When you first take a few thousand shares and it goes against you, don't think "crap, I'm down X amount of dollars," instead, gather yourself and focus on the amount of cents that you're down and trade your plan.

Advice from others is good, but no one on here can make you press the button. Press the button and deal with your fear.

Also, DO NOT jump from 50-200 share positions to 5000 share positions -- that's not a good idea.

 

[The General]

Quote from KCalhoun:

Hi -

My #1 challenge as a trader isn't making winning trades; it's that I do so usually on small share 50-200 share size trades, dozens a day, which adds up but not as much as I know I am capable of...

Does anyone who trades large size on higher priced stocks, eg $15-$60/share, over 2k shares/trade, routinely, have any insights as to how to get mentally comfortable pulling the trigger on that much size, knowing every .05 is worth hundreds?

That's the one remaining barrier to success in my trading, and for all the years I've traded, I still haven't overcome it... I don't mind trading 5k shares of some cheap fifty cent stock since the downside isn't much... but taking stops of $100 in pursuit of wins of $500+ isn't something I'm comfortable with yet.

(and when I play blackjack at casinos I play the $5-$10/hand tables too - same issue, fwiw)... I've made hundreds of trades a day, and am good at it, using IB/esignal, but I don't feel comfortable trading large size on higher priced stocks. It's driving me nuts, because that's the last page I need to turn, to make this all work for big $. Any ideas?


thx,

ken

p.s. I should probably talk to a market maker, or at least one of those 26-year old world poker champs who bets 50k hands, for some insights too.

Ken-

It is your lucky day.

First-burn all those videos and cd's on 2day high/low breakouts.

Second-get rid of Steve as he is not Japanese in case you have not noticed?

Third-5K shares is small size when you trade in The General's league.

Fourth-mentally comfortable has absolutely nothing to do with it. When you know what you are doing it becomes very easy.

Fifth-casino's are for gamblers and large size trades are for The Generals.

Watch that pattern.

The General