Ok, I'm going to attempt the impossible and get this thread back on track. The topic is basically about trading in too large a size. My question is this: Should the size of each position a trader makes be judged on the basis of a traders experience (discipline to obey stops) or his account size (money management)?. how do some of you more experienced traders know how much to buy for any given trade?..200..500..800..1000 share lots?, or do you just buy randomly if you know you have the funds in your account to take the trade? right now I dont go over 120, but thats just me...for now. - nathan
Hey cash, do you still hang out in the chat room? Sorry I haven't been there last week, hopefully you picked up some help by the other members. Hit me up on paltalk if you'd like. === Lots of traders like to limit their risk by % of their account. A lot of books have a 2% rule, never risk more than 2% of your capital on a single trade. 6,000 * .02 = 120 I'd say don't risk more than 100$ per trade, I know your still swing trading, so.... scale it that way. Just figured I'd throw that out there in the midst of all this BS around here. Remember, if you are trading in odd lots, that you need to be trading on Nasdaq, don't know if I told you that. They charge you extra on the NYSE... not sure about scottrade though, someone else will have to tell you that. "do you just buy randomly if you know you have the funds in your account to take the trade?" Don't make the mistake that the OP did and blew out his 30k account.
It depends on my systems max drawdown and max intraday excursion. I start my simulations using 10% of my account per position. If this causes an example max drawdown of 5%, then im pretty happy. 10% max drawdown is the most ill accept. I then check the max excursion. If its within my pain tolerance, then im good. Otherwise, I lower the position size per trade until I get the numbers in line with my pain tolerance.
I go in and get out by the end of the day. The volatility today is astounding actually. Must be FOMC tommorrow
Thanks a lot Dan. People who haven't traded, like Mowery, have no idea what trading is all about. They've never taken a significant loss and so they really don't know what it means to be a trader. If your experience as a trader is GREEN GREEN GREEN with no RED, then you do not know what it is like to really be a trader. Trading is about risk; with experiences skewed primarily in the direction of green, it is easy to forget that you are, as a trader, a student of risk. Thanks again