How many positions should I purchase in this case?

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oem7110
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How many positions should I purchase in this case?

Post by oem7110 » Sun Mar 31, 2013 11:23 am

Referring to followibg linked image, I would like to know how many positions I should purchase if price breaks the previous.

Does anyone have any suggestions?

Thanks in advance for any suggestions

Image

sluggo
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Post by sluggo » Sun Mar 31, 2013 3:42 pm

You could call this your "increase size after a price retracement" rule.

One possibility is to think of five or ten different "increase size after a price retracement" rules. Write them down, and test each one of these rules against historical price data using software like Trading Blox. Then you would get simulated trading results for each of the candidate rules.

After studying these simulated trading results, you may find that one "increase size after a price retracement" rule, gives trading results that are tremendously more appealing to you than all the other candidate rules. Naturally you would choose this rule and discard all the other candidates. Problem solved.

On the other hand, the simulated trading results might not yield a clear favorite. You might have two or three rules that are more-or-less equally appealing to you. Then you could choose a rule by flipping coins or throwing darts (since they are equally appealing it doesn't matter which one you select). Or you could split your money into two portions. Trade money portion #1 using "rule 1 for increasing size after a price retracement", and trade money portion #2 using "rule 2 for increasing size after a price retracement".

oem7110
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Post by oem7110 » Sun Mar 31, 2013 9:20 pm

sluggo wrote:You could call this your "increase size after a price retracement" rule.

One possibility is to think of five or ten different "increase size after a price retracement" rules. Write them down, and test each one of these rules against historical price data using software like Trading Blox. Then you would get simulated trading results for each of the candidate rules.
...
I know testing will tell you the result, but I would like to know what approach will be tested. How many positions would you add after breaking previous top?

Do you have any suggestions on how to handle the position sizing in different approach?

Thanks you very much for any suggestions

sluggo
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Post by sluggo » Sun Mar 31, 2013 11:02 pm

think of five or ten different "increase size after a price retracement" rules

oem7110
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Post by oem7110 » Mon Apr 01, 2013 12:28 am

sluggo wrote:
think of five or ten different "increase size after a price retracement" rules
Could you please show any popular example?

Thanks you very much for any suggestions

huss1652
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Post by huss1652 » Wed Apr 10, 2013 3:25 pm

Here is one simple idea. Place a stop just below the retracement. Then risk a fixed % of capital, based on risk from entry to stop, or risk only profits of positions currently being held in that instrument up to a specific % risk of capital, whichever comes first.

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