five40
23 posts
msg #56739
- Ignore five40 |
11/14/2007 12:05:49 PM
For those of you swing trading, what is your position sizing system? How many different positions are you looking have open at any one time? How do you determine the size of each position?
For me, just starting out, I'm looking to have about 10 smaller positions open. When I find a setup I like, I first determine where my initial stop needs to be. I use the delta between the buy price and stop price to determine how many shares to buy.
Example- stock XYZ looks like a good setup.
buy price = $10.00
stop price = $9.25
buy/stop delta = $0.75
With a potential $0.75 loss per share, I would probably buy 200 shares thereby limiting my total loss to $150 (except for slippage).
Is anyone using a different system? Any advice that might be helpful?
Also- is there any advantage to buying only multiples of 100 shares?
Thanks.
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TheRumpledOne
6,411 posts
msg #56745
- Ignore TheRumpledOne
modified |
11/14/2007 1:04:34 PM
Search for my /* Dynamic Support/Resistance with TRADE PLANNER DISPLAY */ thread
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five40
23 posts
msg #56747
- Ignore five40 |
11/14/2007 3:21:54 PM
Thanks TRO!
Gonna take me a while to figure all that out. You got a tutorial to go with it? :-) lol
If I am looking this correct, it is setup to have only one position open at a time? Is this your methodology?
I'd love to hear what other swing traders are doing with position sizing...
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traderblues
195 posts
msg #56750
- Ignore traderblues
modified |
11/14/2007 5:42:42 PM
Five40,
That's a good way to do position sizing. How do you determine what your stop price is? There's a system of position sizing using Average True Range to set your stop price. Van K Tharp talks about it in his book, "Trade Your Way to Financial Freedom."
Do you have a system that says you want to risk $150 per trade? What I do is determine how much of my total equity I want to risk on each trade. I typically use 2%. The 2% of total equity risk is how much I would lose if I were stopped out (which agrees with how you are looking at it). 2% is fairly agressive. Some other traders use 1 to 1.5% risk per trade.
I usually have between 10 and 20 trades open at any one time.
And as far as trading in lots of 100 shares, that doesn't make much difference any more. I often trade odd lots, and have no problems.
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guru_trader
485 posts
msg #56752
- Ignore guru_trader
modified |
11/14/2007 7:27:04 PM
I use Market System Analyzer (MSA) to evaluate various position sizing scenarios.
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guru_trader
485 posts
msg #56753
- Ignore guru_trader
modified |
11/14/2007 7:29:09 PM
TRO's Dynamic Support/Resistance with Trade Planner Display ...
http://forums.stockfetcher.com/sfforums/?q=view&fid=1002&tid=40832&qrid=.
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guru_trader
485 posts
msg #56754
- Ignore guru_trader |
11/14/2007 7:32:03 PM
MTPredictor will show you real-time position sizing on the live trading charts ... can be a useful visual tool, like so many of TRO's filters in Tradestation.
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nikoschopen
2,824 posts
msg #56759
- Ignore nikoschopen |
11/14/2007 10:49:06 PM
Thanks, Guru. Although it sounds somewhat far-fetched, MSA sounds interesting.
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guru_trader
485 posts
msg #56760
- Ignore guru_trader
modified |
11/14/2007 11:21:00 PM
You're welcome, I love using MSA ... it's motivational to look at the equity curve. It was someone on this forum who mentioned MSA who got me interested in it originally. Also, I'm constantly writing to the author to add new features in future versions.
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nikoschopen
2,824 posts
msg #56769
- Ignore nikoschopen |
11/15/2007 1:11:41 PM
Thanks for the pointer. I should like to quote for the original poster that A WINNING TRADER IS ONE WHO KNOWS HOW TO LOSE PROPERLY, so sez one of my favorite authors (Marcel Link). I devoted an entire thread on the importance of such, including how best to determine stop loss values. The thread can be found here:
http://forums.stockfetcher.com/sfforums/?q=view&tid=40321&start=0
You might also want to check out this link for his explanation on placing stops:
http://beta.stockfetcher.com/sfforums/?q=view&fid=1001&tid=46075&qrid=
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