Comments on: Reinforce Position Sizing

By: Position Size to Determine How Many Shares to Buy

Position Size to Determine How Many Shares to Buy — Sat, 23 May 2009 07:25:40 +0000

[...] as commissions, slippage, etc. Please read the book by Van K. Tharp to study the detailed models of position sizing. I will also like to note that it is very difficult to employ position sizing strategies with [...]

By: chrisperruna.com » Blog Archive » The Best of chrisperruna.com in 2007

chrisperruna.com » Blog Archive » The Best of chrisperruna.com in 2007 — Mon, 31 Dec 2007 14:15:06 +0000

[...] Reinforce Position Sizing [...]

By: chrisperruna.com » Blog Archive » The Stock Market and Poker

chrisperruna.com » Blog Archive » The Stock Market and Poker — Wed, 21 Nov 2007 02:46:19 +0000

[...] article explains the basis of position sizing and expectancy and how poker has made me a better trader. By playing poker, I have cemented my [...]

By: chrisperruna.com » Blog Archive » Point and Figure Charts

chrisperruna.com » Blog Archive » Point and Figure Charts — Tue, 06 Nov 2007 15:43:42 +0000

[...] above this setup increase dramatically. As with all trading, you must take the signal with proper position sizing and set your stops without thinking like a [...]

By: Sandro

Sandro — Wed, 19 Sep 2007 12:16:02 +0000

Hi Chris,

As always, great stuff! Do you every consider using volatility stops such a multiple of the Average True Range (ATR)?

By: Layne

Layne — Wed, 19 Sep 2007 07:51:09 +0000

Hi Chris,

Thanks for your articles regarding position sizing as I find them to be very valuable. Please explain how you determine your reward.

Mahalo!

Layne

By: Chris

Chris — Wed, 19 Sep 2007 01:31:39 +0000

Terry,
I agree on all accounts. the 1% risk is onyl an average example. Gap down will hurt all of us. All of us will also cut losing position prior to the full 1% risk. I have to keep the examples as simple as possible so everyone can follow.

By: Terry Zink

Terry Zink — Wed, 19 Sep 2007 00:52:40 +0000

Your example that you give for position sizing is solid and is very similar to my own practices. The one thing I advise is that even though the risk is 1%, I often leave a cushion of space in case the market moves against me.

For example, sometimes my stop loss is 8% while my position is -3%…-4%…-5%… and then a gap down to -11%. My stop loss has been exceeded (so I sell anyways). However, to combat this, I expect the market to gap against me so if my position size tells me to buy 100 shares, I dial it back a bit and buy 80 or 90.

By: Steven Mac

Steven Mac — Tue, 18 Sep 2007 16:42:20 +0000

Hi Chris,

Great post here with some fantastic examples.

Currently, I have to take on average of 3% risk per position due to under-capitalization in order to hold some good quality stocks. Looking back over my journal, my risk has been ranging from:
2.00% (lowest) to 3.50% (highest). Eventually, I would like to get down to the 0.5%-1% levels.

Question:
How much of your total capital will you invest in positions/or have open at once? 40% or 50% max? or restated – what % of your capital do you keep in cash at all times?

My highest has been 48.93% committed to positions (nearly 1/2 of my cash on hand) What rules/guidelines do you follow for this?

Thanks,
Steven