September 6, 2008
Maximum Position-Size Strategies and Trading Consistency
The maximum position-size strategies are catered to traders who desire to make a living rather than grow their capital. Once a trader has sufficient capital, the result is taking positions that are equal in size to further the odds advantage.
How to decide a maximum position size
Whether scalping, Day Trading, or investing, professional traders set a maximum position size to determine how much they will be trading and keep it standard for each trade. Developing a trading plan around a maximum position size is much easier, as all trades will be uniform and produce around the same results when used in the same strategy.
Your trading style may impact how much you are willing to trade with each position. Short term traders usually favor very high trading amounts, sometimes 1000 shares to make each tick on a stock chart worth $10. A change in a share price by $.50 represents a $500 gain. That0s a nice return for the day trader living on his or her trading account.
Why limit yourself
The best way to grow capital is to slowly scale up your trading. When in the capital building stage, a trader might prefer to trade 500 shares […]
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1 Comment on Maximum Position-Size Strategies and Trading Consistency »
May 13, 2009
Euro @ 8:27 pm (Trackback)
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