Say you are day trading 10,000 What one may want to think about doing is Continue to trade that position size during the day, But then leave Medium and short term trades in place. Leaving $2000 on the table in the direction of the potential of the Medium and longer term trends.
Let your winners run, let your losers go.
Then you make money from your 8k trade during the day. but if it keeps running, you make even more money from gaps.
and.... if it rolls back and becomes a loser, you sell it At Roughly par... but that losing position is only on a $2K trade size. which means, roughly You lose maybe $50 on the longer term trade, but in those longer term trends you can build significant gains. $500-$2000 in gains
the downtrend managed to get plenty scary, I wish it had only pulled back like 120-150 pts...
it has me cautious..
Just for perspective... Pre october, in a relative fassion these are 500 pt moves... We are very complacent, with what are VERY HUGE MOVES... it just doesnt' seem like it because we have become desensitized. From Jan of last year to July 500 and 250 pt moves would have FREAKED US OUT... and it seems to be just par for the course right now.
Wednesday, February 25, 2009
position sizes
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3 comments:
That is an excellent strategy and one that I've come very close to over the last few months.
I have been burned too many times holding things long term, so I've become a grunt day-trader, but once the discipline is learned money can be made.
80-20 is a good ratio of short term vs long term holding. Let the winners ride in the 20% tranche. This has worked well, but now I am getting a lot of GLD and SLV as percentage of portfolio. FCX is doing well this week.
Trading WFC long and short on days is profitable. It is fairly predictable on sentiment with big volumes.
Your thoughts?
My comment is that you get caught up in the emotion of all of this. On both sides. and it's tough, I know.
I know, I get there some times... But I like to use that as a good indicator.
I try and ask myself are we More top or bottom. and the neutral position is cash.
Brian williams, saying that he was turning to the experts on CNBC the other day was just fucking crazy.
the only thing that Half the people on cnbc know... is that they know the difference between treasury and the fed and the sec.
as opposed to congress.
and as opposed to the public who don't even know the difference between the house and the senate.
and any idiot on the street at this point is screaming at the top of his lungs about how we are bailing out toxic assets from the banks...thinking that somehow some Cash in the bank was involved in some kind of industrial accident.
Simple Meme's for simple people.
O-BOMB-A.
Like sentiment is, I'm scared shitless to be short. I wish I had the balls to go all in, take 4 grand and go to Thailand for a few months.
Congress knows more about glass steagle now than whey they revoked it.
I love the woody brock thing "I just want to be Less wrong than everybody else."
Hmmmm... as I sit here trying to give you bennifit of my Wholistic mind.
Right, you look at it like a wave of emotion, I'm still not taking the B word. but like you look for divergences in the Technicals...
You can look for divergences in emotion...
Things seem Less crazy now that they have been... will we shift back to euphoria? will it just be a short term move to just some small "hope" which will mark another short term top in sentiment.
But still there is a Loss of confidence, then the tide starts to turn, and we have more Positive emotions, and we then start working on more confidence... all the way to euphoria.. then the tide shifts, and starts going back out....
This is a tough trading environment, as it should be.
When I looked at it a year ago, seemed to me that the market would act in a darwinian way, where the bad traders get knocked off over time, and even if I feel like I can swim with the sharks...
being defensive is a great way to win the game.
and smaller position sizes at high risk points, should have great returns. No reason to play aggressively(meaning with too much money)
Hopefully that is "something"
Like I say... "I don't know.. I just want to be less wrong than everybody else"
You know, there is a method of meditation called Emotional Clearing...I'm not sure if it's some eastern meditation or some western variant.
as things have been so nasty over the past month.. I keep swearing it would be smart to look into it.
I've been doing some very aggressive mental health exercises over the past weeks. I just wanted to suggest that (I'm not saying you are crazy, I'm saying we are all crazy... I mean shit.. you should have heard some of the comments I've made to people. I've called them morons and talked about how massively ignorant they are.... Bla bla bla...
I just figured, I'd point to it as a way to deal with some of the immense stress we are all under.
but I've never actually looked into it, so I'm not sure about it's usefullness, Emotional clearing.
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