I've been paper trading for about 8 months after blowing up my first 5k suretrader account due to incorrect sizing, not knowing enough about the market and massive suretrader fees. I've gotten much better but one of my largest problems is position sizing on a small account. I turned multiple 10k accounts into over 1m practice trading, but when I think about it I probably started out with slightly more size than I'm comfortable risking in real life. In real life I'm going to have a 27k account, I'm risking the 2k. My current sizing is 1-3 200 3-10 150 10-20 100 20-30 70 30-60 60 something about it doesn't feel right though, It's much easier trading with more money. This feels overly complicated and it's easy to lose big on larger stocks because they have wider swings, especially if it has a 10-20 cent spread. On a large TOS account I may make 1k-40k on a good trade but on the small account I may only make 1-100 dollars and get killed by the spread. I should also mention, I'm using both TOS and IB paper trading. TOS seems much easier, my new IB paper account is only using bats data, is this part of my issue? Or am I overthinking it
also, losing the 2k isn't a huge issue, It's just that I'm already 2k in the hole from last year. I actually turned a profit after losing 30% on my first day, but it was really difficult to make a lot of money because fees were half of my loses.
Forget the price when choosing a position size- What really matters is how much money you're risking per trade. For stocks, each penny equals $1 with a position size of 100 shares. So if you're trading a $50 stock that isn't very volatile and your stop loss would be at $49.50, a 100 share position would be $50 of risk, etc ....
Right, but that's kind of my issue. I'll make a great play on a smaller stock and give it all away to a somewhat volatile larger stock with a small % loss.
IMO rather than position sizing, which is of course important, you should be examining why fees are half your loss. What's up with that?
OP You're about 9 ways screwed up..., and the vast majority of the info you've supplied is useless First I'm making assumption you intend on trading stocks (since you mentioned stocks) - but did not mention whether you're a day.., a swing trader - or investor I'll assume day trader (since it all the rage) Takes $25K minimum to day trade - you're starting w/ $27K..., risking $2K So you're willing to risk 100% of your buffer - that's nuts Like hell it isn't For argument sake - let's say you found a workaround for the $25K min Losing $2K of $27K is nearly 7.5% - that is piss poor risk management & nuts ======================================== First responder to you post said forget price - that's plain stupid feedback ============================== That you're new at this.., and want to trade multiple stocks - that's equally stupid Trade 1 and get good at it Yes..., and no - but explaining it would be a useless exercise at this point..., in my view Trading is never "easier" ====================== You've no clue what you're doing - none ==================================== Anyway When calculating position size / risk per trade Stock's price matters Position size matters Stop loss price from actual entry matters And so does the PT price if one desiring a sustainable RR ===================== Now..., unless you extract your head out of yer ass rather abruptly Thank You in advance for your money - Santa being on the way and such RN
First of all, I found a position size calculator and upped my size slightly from what I was initially expecting.. with the way that I manage my risk. I think you're missing my point, I don't RISK the 2k, That's the money I'm risking over a period of months/years before going back to the drawing board.. I'm not willing to just lose the 2k in 1 trade, I'm willing to lose 1 percent of 2500. Sorry If I didn't make that clear. You're wasting your time if you're betting with 100 dollar positions, like seriously, what am I trying to make... enough to buy a pack of gum, or what about commissions? I did turn a profit even without knowing what I was doing, I think I had a day where I payed 300 dollars in commissions and only had lost 100 dollars to the market.. I think when the account was done, I lost 800 dollars to the market but the extra 1000 was from platform fees and commissions on trades. Also trading is MUCH easier with more money considering commissions. If you buy a stock at 1 dollar with 100 shares and it goes to 1.10, you're going to pay half your commission rate just to do the trade assuming most brokers. If you up that size by 900 you're going to easily pay your commission with a profit after. I don't really get your point, of course trading is difficult, but size sure makes it easier to turn a profit. I should add, yes I am a daytrader. My scanner finds stocks under 8b market cap under 40 dollars up 15 percent on the day with at least 1k trades and 500k$. I also have another scanner for crashed plays, I really don't see much of an edge trading large cap stocks. You're competing vs much larger smarter players, I've found small caps a lot more predictable by far as long as they are liquid. I also don't like to trade stocks with a spread over 10 cents.. and that's the problem with using a flat share rate. I sometimes trade IWM too using 100-200 shares, my risk target is usually within 10 cents.