Poll: How much money do you typically trade with? (Anonymous)

[MasterSteve]

I'm working on a strategy using flow scanning to enter positions. (See here) I started a paper account with $3,500 to catch all of the alerts. I'm going to be testing this strategy with a real account of $1,000 starting in the next couple of weeks.

I'm choosing $1,000 because that's what I think the average account value of a new trader is. But, I want the recommendations to be useful to the majority of the users of this website as well.

I’m posting this anonymous poll to find out how much people trade with, so I can suggest position sizes accordingly.

 

[skynetgen]

Mmm. Are you asking account size or Risk size? Trading stock and options has drastically different position sizes so the question is ambiguous

 

[MasterSteve]

Mmm. Are you asking account size or Risk size? Trading stock and options has drastically different position sizes so the question is ambiguous

That is a good point. Wanted to get account size for trading options, or how much you usually trade options with.

 

[codydog]

assuming you're posting options in liquid stocks, what difference does a/c size makes? most options orders tend to be filled by algos

 

[MasterSteve]

assuming you're posting options in liquid stocks, what difference does a/c size makes? most options orders tend to be filled by algos

Well, a couple of things. There are many plays to be made in today's volatile markets. Your account size limits your buying potential to only a fraction of the possible "good" plays out there. You want to lower your risk by only entering with a small part of your account into any play. By keeping the sizes of the orders we want to follow in mind, I limit my recommendations to only useful trades. So if a majority of users trade with only $1,000, I can keep my recommendations to between $150 and $200. If the majority uses $5,000, I can widen my recommendation range to between $300-$700.

 

[skynetgen]

Well, a couple of things. There are many plays to be made in today's volatile markets. Your account size limits your buying potential to only a fraction of the possible "good" plays out there. You want to lower your risk by only entering with a small part of your account into any play. By keeping the sizes of the orders we want to follow in mind, I limit my recommendations to only useful trades. So if a majority of users trade with only $1,000, I can keep my recommendations to between $150 and $200. If the majority uses $5,000, I can widen my recommendation range to between $300-$700.

Imho reformulating poll to "what is your typical risk size" would be less confusing. Risk size determines position size. With typical intraweek option the minimum practical risk size is around $300-$500 ( which allows to buy 1-2 ATM contracts on most stocks(. So most people can trade that.

 

[codydog]

not sure how to poll this, but i'd be curious what people think - how much are you prepared to lose weekly in the hope of making X? eg, would you lose $500/week in the hopes of having a 5x or 10x winner in a Y week period?

or, how much of a p&l swing are you prepared to accept? eg, is a 10% up/down swing daily/weekly too much? if you had such a loss, could you continue or call it quits?

 

[MasterSteve]

Imho reformulating poll to "what is your typical risk size" would be less confusing. Risk size determines position size. With typical intraweek option the minimum practical risk size is around $300-$500 ( which allows to buy 1-2 ATM contracts on most stocks(. So most people can trade that.

I agree I should have worded it differently. I wanted to get an idea of how much people had as well, probably better split in two questions. My thought was even if you typically risk $500 but only have an account of $1000, the recommendations might not work as effectively for you. Better to have multiple positions working for you.

 

[MasterSteve]

not sure how to poll this, but i'd be curious what people think - how much are you prepared to lose weekly in the hope of making X? eg, would you lose $500/week in the hopes of having a 5x or 10x winner in a Y week period?

or, how much of a p&l swing are you prepared to accept? eg, is a 10% up/down swing daily/weekly too much? if you had such a loss, could you continue or call it quits?

That would be interesting. I know of a lot of traders that have a set 20% loss or 25% loss. I don't have that because I think if the fundamentals of the trade are still in order and there is enough time left, you're better off keeping in the trade. Can't pick them all right perfectly. Of course, this has burned me in the past too. I think you've got a good question as well. What are people willing to lose weekly in order to get one of the big winners? Some of the callouts go down significantly before they rocket back up. I can't tell you exactly what will happen in this market, but I can give you better odds to make decisions. Look at DPZ and the callout on 10/7 for a crazy example.