Ideas on how to scale up to trade larger size?

Discussion in 'Trading' started by KCalhoun, Jan 5, 2009.

  1. KCalhoun


    Hi -

    I've found for myself over the years that I tend to limit my share size in trades to no more than 1K shares/trade... often 100-300 shares is the average size.

    But then I realize that on a good day, my best profit is then limited to 3-4K, and many days less than that. I can make more than that selling trading systems (and I want to focus more on trading vs the vendor side of it, esp. in 2009), so my question is:

    - any ideas/tips on how to best scale up? I'm concerned that unless I'm trading most-liquid stocks (AAPL/DRYS etc) if I put on 5k share size during a given minute, it'll move the price (since many stocks trade <20K shares/minute).

    - also getting comfortable trading large size (5K+ shares) many times a day is something that I need to get better at. I'm not so much interesting in scalping quarter-points, but I do want to start trading size aggressively 1Q 1009 especially, as I think we'll see some great moves.

    I'd appreciate any insights from those who've gone from the 100-1K share size (on stocks >$10/share) up to 5K+ in your trades... as I believe that's one strategy I need to start using, to post significant 6/7 figure gains... which is hard to do when trading 100-300 shares at a time...


  2. JamesJ


    similar issue here...
    i scale up with my account size, but i already got to a point where i really get worse prices cause of the size...
    and that's in places where you don't really expect it...
    i mean even a DRYS or a GM can give you quite a bit of slippage on a 10k order at certain price levels... and my trading strategy is in a very short time frame with fast entry exit, sort of scalping, and i'm not the only one doing it, and often many guys have their stops at same price levels, that's why the slippage occurs...
    (particulary on momentum based entries).

    i say to myself, "well, you can't trade your strategy with 10M+, and that's why it actually works, 'cause it's not that interesting for the really big guys"
  3. JamesJ


    latest example.

    DRYS stop 10k at 13.50:

    price was long time below, there was a huge iceberg order sitting there last time it went there.


    see image.

    i reckon if i had my stop at 13.51 i would have got 13.53 and higher... so maybe average 13.54/55

    btw. it was a very good entry
    • drys.jpg
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  4. This interests me too. I trade Australian stocks and have similar goals, and issues with volume. The only solution I have is to look for larger, slower moves where I can feed in capital over time.
  5. trom


    Learn to use dark liquidity.
  6. 1) Consider buying uptrending stocks on a re-test of the upside breakout. For example, if a stock breaks out above $50/share, rallies up to $53 and then declines to around $50, ( it's re-testing the previous breakout) consider buying it at that point. At this point, ideally, the stock rallies above $53 and then retraces back to $53 where you can add-on to the original position. You'll have to resist any urge to sell the stock BEFORE the next expected re-test. Obviously, this works "well" in an uptrending market. You could get out of the entire position when a re-test exceeds a prior breakout.

    2) You could merely buy an uptrending stock that has had three, consecutive, lower, daily closes and then hope for a resumption of the uptrend.

    3) You can do the opposite for downtrending stocks.

    4) If a multiple of 1000 shares is psychologically difficult for you to deal with, consider trading 100-share multiples of "expensive" stocks; i.e. CME, GOOG, BRKB, BRKA et al.
  7. KCalhoun


    great ideas, thanks... for example I've been trading LVS MGM ZLC mostly today, all entries under 500 shares... TRMP I sold a few k for a decent $ from earlier hold... good idea re smaller shares on higher priced instruments... thx..