Money Management - How do you size your positions?

[suhm]

but if you have such tight stop losses if u purchase some stocks which are more volatile i.e. vsl and gtp which can have intraday highs and lows about 5-10% apart on light volume and you would have missed out on a lot of upward movement

 

[Ageo]

Pliskin,

Now your making sense. But speak english as newbie's dont understand the Jargon!.

Cut your losses and let your profits run baby!! :dance:

As for position sizing, i have over 110k in capital but only allocate 40k towards short term position trading.

So i risk 2% of 40k

Then i leave my other capital for speculation (like BHP) or just plain old scalping to help fund the lifestyle.

But i will never have more than 30% of my "total" capital tighed up as this way i can be flexible in adjusting positions etc..

Enjoy your weekend

 

[MichaelD]

Further I would suggest having a smaller risk in times of uncertainty,this can be adjusted by taking smaller positions (My preference) or a closer stop, or both.

In volatile times, using wider stops and smaller position sizes is better - less drawdown/more profit. The tighter the stop, the more the positions whipsaw.

 

[It's Snake Pliskin]

Pliskin,

Now your making sense. But speak english as newbie's dont understand the Jargon!.

English is with a capital "E".

Nice figures. I'm sure that 40K is working well.

 

[It's Snake Pliskin]

but if you have such tight stop losses if u purchase some stocks which are more volatile i.e. vsl and gtp which can have intraday highs and lows about 5-10% apart on light volume and you would have missed out on a lot of upward movement

If you know your time frame its not an issue.

 

[stink]

HI Again,

Just wanted to say thanks all for the replies, i see a couple of you recommend smaller parcel sizes in the current environment. I had thought of that myself actually, working out how many shares i can buy based on a 2% risk and then cutting it by a third?

Anyway i am still papertrading at the moment so i will see how things go.

Regards Stink

 

[swingstar]

Risk is fixed 0.5-1% of total capital (depending on volatility)

Position sizes vary, sometimes up to 10%, but usually around 5%.

 

[stink]

Risk is fixed 0.5-1% of total capital (depending on volatility)

Position sizes vary, sometimes up to 10%, but usually around 5%.

Sorry to sound thick here mate but can you elaborate for my simple mind

is the above per trade or ?

Cheers

 

[Sir Burr]

Risk is fixed 0.5-1% of total capital (depending on volatility)

What do you base your "capital" on? Does it included realised or unrealised profits and losses?

Does it matter?

SB

 

[swingstar]

What do you base your "capital" on? Does it included realised or unrealised profits and losses?

Does it matter?

SB

I base it on realised. I never have much exposure to the market (I feel unsettled by having anymore than 40% on the market at one time), so it's not a huge difference between trades. For someone who trades their whole capital, then it's probably best they base it on unrealised.

 

[swingstar]

Sorry to sound thick here mate but can you elaborate for my simple mind

is the above per trade or ?

Cheers

For example, say I have $100k.

I only risk .5% on a single trade. So $500 on a single trade.

Say I feel good about a stock that I've traded in the past and 'know' well, I might use $10k on the position, with still only $500 risk. The risk for that trade then is 5%.

If I don't feel as confident of a trade, then I might use $4000. In that case the risk for that trade is still $500, but 12.5% -- as soon as the position value then drops 12.5%, I'm out. I may consider getting out earlier if it's consolidating or outside factors come in to play that could affect it.

Because I trade options, I have to be very cautious of gaps, so I factor that in as well. A gap could reduce my position to nothing. That's why I don't like much exposure