Position Size 100%

Discussions about Money Management and Risk Control.
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ktee
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Position Size 100%

Post by ktee » Sun May 25, 2003 5:34 am

I appreciate that this is a Turtle trading site so I am not sure whether discussion on alternative trading methods is acceptable...? I shall continue until directed otherwise.

Money management is unquestionably the crucial aspect of any trading strategy. And in this respect you often hear comment/questions regarding the size of any one position in relation to total trading equity. My own trading strategy requires me to be fully marginalised when I am in the market, ie 200% of my trading equity.

When I first started off, that meant that I was trading only one position at a time - $5,000 is hardly worth splitting up if we are looking at cost effective brokerage.

My stop loss is 1%, my minimal profit target is 10%

In broad terms you only have to be right 20% of the time for this to provide profitable results. There are two premises that guide this style of trading.

Firstly, excellent entry. Not only does your stock need to be delicately poised for the next move up but the main index (in my case the Nas) must be geared toward moving up (strongly). Easier said than done, but never the less, it is quite achievable.

Secondly, and related to the first, the index is the main driver for the timing of your entry. Short term (3 to 10 days) market timing is the only 'predicting period' practical in the market.

There is no greater power than compound interest and that is why, when I play, I do so with 200% of my equity with a strict 1% stop loss entered moments after the buy order.

I'd be interested in others views...

Kevyn T

Kiwi
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Post by Kiwi » Sun May 25, 2003 7:51 am

Kevyn,

I'm pretty sure no one will try to stop you talking :D

You may find an issue in that the site is orientated to system trading (rather than discretionary trading). However, I suspect that the Dave Trends style of trading (I thought he'd stopped posting after the market top), could be systematized and many would be interested in the setups and triggers. You might want to share that side of it.

You'll find little argument about the importance of money management either. Many here use computerizable systems to a significatnt extent because they can be backtested to tune money management to give optimal returns for an expected future drawdown. Go for it!

John

ktee
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Post by ktee » Mon May 26, 2003 6:24 am

Not for me to defend Dave Trends John, but contrary to your intimation, the bear market experienced since the market top has only served to endorse the Newbreed style of trading.

However, your comment has raised a very interesting question regarding the impact on trading strategies this prolonged bear market has had. I shall post in the appropriate section of this forum a general query on this subject

Thanks
Kevyn T

rayv696
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Re: Position Size 100%

Post by rayv696 » Tue Jun 17, 2003 7:59 pm

the dollar risk determines the position size.....
ktee wrote:I appreciate that this is a Turtle trading site so I am not sure whether discussion on alternative trading methods is acceptable...? I shall continue until directed otherwise.

Money management is unquestionably the crucial aspect of any trading strategy. And in this respect you often hear comment/questions regarding the size of any one position in relation to total trading equity. My own trading strategy requires me to be fully marginalised when I am in the market, ie 200% of my trading equity.

When I first started off, that meant that I was trading only one position at a time - $5,000 is hardly worth splitting up if we are looking at cost effective brokerage.

My stop loss is 1%, my minimal profit target is 10%

In broad terms you only have to be right 20% of the time for this to provide profitable results. There are two premises that guide this style of trading.

Firstly, excellent entry. Not only does your stock need to be delicately poised for the next move up but the main index (in my case the Nas) must be geared toward moving up (strongly). Easier said than done, but never the less, it is quite achievable.

Secondly, and related to the first, the index is the main driver for the timing of your entry. Short term (3 to 10 days) market timing is the only 'predicting period' practical in the market.

There is no greater power than compound interest and that is why, when I play, I do so with 200% of my equity with a strict 1% stop loss entered moments after the buy order.

I'd be interested in others views...

Kevyn T

Corn Elius
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When to pyramid

Post by Corn Elius » Fri Aug 08, 2003 5:20 pm

How does one pyramid?

If you normally get into a trade when the risk is less than 3%, why not add to the position if the equity allows you to? Just keep checking the equity growth.

For example, start with 100,000. You are asked to take a $2,000 risk trade. It's less than $3,000 (3% of $100,000) so you do take the trade. The trade goes well, and you eventually have $110,000.

If you took a trade now, the risk might be $1,500, so you would add 1 contract to your position, because 3% of $110,000 is $3,300, and that would allow you to buy 2 contracts at $1,500 risk each.

Any comments?

Hiramhon
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How does one pyramid?

Post by Hiramhon » Sat Aug 09, 2003 9:10 am

A lively discussion of those very topics is found at this URL:
http://traderclub.com/discus/messages/1 ... #POST14300

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