Intraday trading and Percent-Risk Position Sizing

It seems like many people who trade intraday just trade a certain number of contracts, or shoot for a certain dollar amount, with regard to trade sizing.


I'm curious to hear from people who are using percent-risk position sizing on intraday trades. I really have just two questions:


1) Are you using this approach?

and


2) What percent risk do you use?



With regard to this second question, for longer term trading i tend to use about 2% in my trading, and i've generally read that 1% - 2% is a reasonable size.

If you are using this approach for intraday trading (daytrading), do you use a smaller size? 2% seems kind of aggressive when you're making 5 - 10 trades per day, but then again if its the right size for longer term trading, it seems like it should apply to intraday as well. Not sure why frequency would matter, but it 'feels' a bit aggressive to me intraday.


Thanks

 

when Im swing trading I use like you do, 1-2% of my balance as the risk.

Im still getting adjusted to doing a "little" bit of daytrading, so I am using a smaller risk amount because I havent quite got the hang of it just yet.

Sorry I couldnt be of more help.

On the swing trading, I use 1% to 2% becuase frankly, that is what I have read many times on an appropriate risk ammount.

for disclosure I am a terrific long term(1 yr hold) investor, ok swing trader and very novice daytrader. Definitely still learning and growing on the shorter term.

 

Thanks for the feedback. I use 2% swing trading almost exclusively.


The thing about using it daytrading is that it wouldn't be horribly unusual to lose 5 day trades in a row. Not saying it happens frequently but it's also not a rare event.


I mean, with a 2% risk on an intraday basis, you are going to end up with 5%-10% drawdowns on a pretty frequent basis, thats just the reality. I suppose it should work out fine given the probabilities involved, but that seems somewhat risky.


Anyway, if anyone is actually using this model intraday over a long term, i'd be interested to hear your approach/risk percent.


thanks

 

Intraday trading percent risk per trade for me is 0.1%. 2% is way to high.
A low level of percent risk demands a large bankroll most intraday traders do not have and as a consequence they fail. It is as simple as that.

 

wow

that seems awfully conservative. you could lose net-20 trades in a given day and only be down 2%.

A lot worse than that can happen any given day when position trading.

thanks for your input though -- you do confirm my suspicion that folks may be using much smaller size for intraday trades.


are you using your capital for other purposes then while using such small size? seems a little inefficient..

 

id be curious as to how you manage that too, i dont think i could cover my trade commissions with that low of a risk to make the trade worth it.

perhaps i need to change brokers. can i ask who you use?

sorry huggiebear dont mean to be asking ?'s on your thread, ill stop

 

not a problem.



you can cover your commissions, and you can also live on the profits, if your bankroll is big enough -- to his/her point.


that said, my concern would simply be that .1% would be overly conservative and an inefficient use of capital. of course, i could be way offbase.


hoping i get some other replies as i know there are quite a few folks day trading on here.


for now, i think i'm going to use the following logic to get to my % risk:


1) I am willing to lose up to 3% of my portfolio value in a day (max) (i chose this because that is a relatively bad day when position/swing trading)

2) I never really lose more than net-5 trades in a given day (and thats rare, and they prob wouldn't be at "max-loss")

3) That would mean i could risk about .6% per trade.



Funnily, i have been feeling most comfortable sizing at about .5%, without really working my way to a figure.

So for now i will go with .5% per trade. I have been wagering, losing, and winning substantially more than that lately and had a feeling i was heading for eventual disaster.

 

I have a max risk per trade and a max loss per day.

When trading stocks, it's rare that I risk more than .2% on a trade, really rare.

But now that I'm trading ES in larger size and also trading CL, I had to get my head around a larger risk % per trade and per day. I was focusing too much on the potential loss and forgetting the potential profit; that's what kept me in sim so long with CL and ES.

My max loss per trade was $250 and max loss per day was $500 with stocks. Considering my average risk per stock trade was actually around $60, this worked out fine.

Very recently, I re-oriented myself to be comfortable with a max risk per trade of $500 and a max loss per day of $2000 and was able to transition to trading futures live with confidence.

Interestingly, once this re-orientation occurred my daily profits picked up considerably.

 

thanks nodoji!

so are you at .4% per trade now on futures?

 

The $500 is approx .8% of my account per trade, but keep in mind this is a max loss scenario, which I might only use if I wanted to chase an entry and didn't want to risk getting shaken out. For the most part, I'm risking $250-$375 on ES trades, and $100-$200 on CL trades.

I'm trying to get into trades in the direction of the momentum and I often place my stop @ b/e right away as a result, and re-enter if shaken out until I catch the move. For example, This morning I shorted ES @ 1192.00 when it broke down the pre-market base after creeping down along a falling 20 MA. This is an "A+" setup for me and I expect price to react accordingly, so I don't give the trade a lot of room to hand me a loss. By the time the trade was on, I was able to place my stop at b/e. Also I shorted ES @ 1204.50 right at the close as it was falling and moved my tight stop to b/e very quickly.

In sim I had great success with averaging down strategies, but I'm not sure I could handle the draw downs if I did that in my live account, so I prefer to stop out and re-enter.