Author Topic: Position sizing or money/risk management  (Read 2788 times)

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Offline ihashishin

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Position sizing or money/risk management
« Reply #-1 on: November 19, 2009, 02:37:13 PM »
hi i need some help/opinions as i've been going over my trades:
turns out i started slipping mid oct so its been one month, coincidently thats also when the index started falling.
also since the first of october ive been trying some position size variations - i've been giving my positions sizes ranging from
aggressive (10% < aggressive <= 25%) to
timid (2.5% < timid < 10%)

what i think has happened is that even though my calls are still 60% correct the varying position sizes have amplified my losses (down -5% this month to date (largest loss since feb2008 to date)) they also amplified my profit (my high for the month was +8% which is the highest i have had during a month in the last one year)

dont know if that trade off of risk/reward is worth the swing of 13%, for now ive scaled all my positions below 5% as my confidence seems to have been effected...

your opinions/comments would be extremely helpful concerning the trade off between volatility and performance
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Position sizing or money/risk management
« Reply #-1 on: November 19, 2009, 02:37:13 PM »

Offline Admin

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Re: Position sizing or money/risk management
« on: November 19, 2009, 02:43:49 PM »
hi i need some help/opinions as i've been going over my trades:
turns out i started slipping mid oct so its been one month, coincidently thats also when the index started falling.
also since the first of october ive been trying some position size variations - i've been giving my positions sizes ranging from
aggressive (10% < aggressive <= 25%) to
timid (2.5% < timid < 10%)

what i think has happened is that even though my calls are still 60% correct the varying position sizes have amplified my losses (down -5% this month to date (largest loss since feb2008 to date)) they also amplified my profit (my high for the month was +8% which is the highest i have had during a month in the last one year)

dont know if that trade off of risk/reward is worth the swing of 13%, for now ive scaled all my positions below 5% as my confidence seems to have been effected...

your opinions/comments would be extremely helpful concerning the trade off between volatility and performance

u need a break mate
and some rethinkin on your trading system
do let me know how you trade may be i might be able to help u


Offline Sadiq Jafri

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Re: Position sizing or money/risk management
« Reply #1 on: November 19, 2009, 06:43:02 PM »
hi i need some help/opinions as i've been going over my trades:
turns out i started slipping mid oct so its been one month, coincidently thats also when the index started falling.
also since the first of october ive been trying some position size variations - i've been giving my positions sizes ranging from
aggressive (10% < aggressive <= 25%) to
timid (2.5% < timid < 10%)

what i think has happened is that even though my calls are still 60% correct the varying position sizes have amplified my losses (down -5% this month to date (largest loss since feb2008 to date)) they also amplified my profit (my high for the month was +8% which is the highest i have had during a month in the last one year)

dont know if that trade off of risk/reward is worth the swing of 13%, for now ive scaled all my positions below 5% as my confidence seems to have been effected...

your opinions/comments would be extremely helpful concerning the trade off between volatility and performance

Hi. Volatility by its implications means that most if not all of your stops become vulnerable. When mkts are moving against you or when they are range bound, scale down your position sizes to minimal (timid in your vernacular). Larger position sizes are merited only in trending markets where the risk/reward has a higher probability of playing out on the reward side. We can try and help more if you can be specific about your trading style or positions. Good luck.

Offline Admin

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Re: Position sizing or money/risk management
« Reply #2 on: November 20, 2009, 01:37:37 PM »
Discuss about Position sizing or money/risk management

Offline ihashishin

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Re: Position sizing or money/risk management
« Reply #3 on: November 20, 2009, 02:09:53 PM »
thanks farzooq for starting this
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Offline ihashishin

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Re: Position sizing or money/risk management
« Reply #4 on: November 20, 2009, 02:46:00 PM »
u need a break mate
and some rethinkin on your trading system
do let me know how you trade may be i might be able to help u
Hi. Volatility by its implications means that most if not all of your stops become vulnerable. When mkts are moving against you or when they are range bound, scale down your position sizes to minimal (timid in your vernacular). Larger position sizes are merited only in trending markets where the risk/reward has a higher probability of playing out on the reward side. We can try and help more if you can be specific about your trading style or positions. Good luck.

@farzooq: a break meaning i should stop trading for a bit? my trading system seems to work with a higher percentage of wins vs losses, isnt that enough to keep the same system? or do you mean as in tweaking parts of the system?

@sadiqjafri: i have read your point of view that you should only use large positions in blatantly trending markets before but my problem was different.

let me explain:
over the last two years i have been trading using largely the same system and it has made me money more or less consistently. my problem lies somewhere between greed and optimisation: i started trading nov2007 and up until june2008 i made roughly 9% while the market clocked -9%, my second year (j08-j09) i clocked in 10% while the market clocked -42%. this year june09 to end october my return was +10.5% with the market at +28%.
the greed/optimisation thing came in in beginning october because since the beginning of the year i have been trying to get myself to increase my position size, from the stable 2%(timid) to 10%(aggressive) average i have been maintaining, in the attempt to better my returns but i couldnt manage to do this. practically i always had this inherent hesitation to pull the trigger on a larger position (more then or equal to 10%) in a trending market.
which brought me into october when i forced myself to take either a aggressive position of a timid one, so i kept my best position as the largest (~25%) and four to five other positions as ~10%.

this worked from the first of october to the 16th, but on that 400 point and subsequent days all my positions correlated and bang next thing i knew everything moved against me though i walked out of october with a negligible loss of -0.05%.
when i used the same strategy of position sizing in nov, only my biggest positions moved against me - which though keeping my accuracy at 60% has made me record my second largest loss using this system :(

i basically use a mixture of technical ~75% (momentum, resistance/support and SMAs) and fundematals ~25% (choosing which scripts to trade)
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Re: Position sizing or money/risk management
« Reply #5 on: November 20, 2009, 02:51:39 PM »
break from trading yes for a week or two

let us also know your trading system

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Re: Position sizing or money/risk management
« Reply #6 on: November 21, 2009, 04:07:40 PM »

when i used the same strategy of position sizing in nov, only my biggest positions moved against me - which though keeping my accuracy at 60% has made me record my second largest loss using this system :(

i basically use a mixture of technical ~75% (momentum, resistance/support and SMAs) and fundematals ~25% (choosing which scripts to trade)

how much was the loss in nov and dont u use stops ??

Offline ihashishin

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Re: Position sizing or money/risk management
« Reply #7 on: November 23, 2009, 12:42:13 PM »
the break sounded like a good idea so for my trading portfolio i've scaled down to three positions of 3% each which i have been holding from last week (NBP, NETSOL, HUBC) with stop losses

and im probably going to be pretty inactive till after eid...

will answer your questions and update you on research that i carry out over the next few days
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Offline ihashishin

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Re: Position sizing or money/risk management
« Reply #8 on: December 10, 2009, 01:50:53 PM »

when i used the same strategy of position sizing in nov, only my biggest positions moved against me - which though keeping my accuracy at 60% has made me record my second largest loss using this system :(

i basically use a mixture of technical ~75% (momentum, resistance/support and SMAs) and fundematals ~25% (choosing which scripts to trade)

how much was the loss in nov and dont u use stops ??

hi im back!!

my loss for november was 4.5%

i think what happened to me was i made one mistake and then started stressing over my colossal losses making all my subsequent trading decisions biased and incorrect, now my accuracy is coming back and my fear of loss is subsiding

im really sorry about not completely disclosing my exact methodology but i read quite a few articles advocating complete non-disclosure when it comes to that, as 'they' say that telling other people how "exactly" you trade would lead to them trading against you. im not so sure about that and still wouldnt hesitate telling you what im trading and buy/sell points but feel a little uneasy telling how i got those figures, whats your opinion on such disclosure?

on another note i took the break you recommended and back tested my system over multiple time frames and different securities and by the grace of god it seems robust.

i also tweaked/increased the size and changed the point of application of my stops a little bit while doing that, as there seems to be a little bit more variance in trends since jan this year and im noticing more big-boy technical traders in the market who seem to try and take out the obvious stoploss points of smaller traders - effectively trading against people like us.

what my plan is now is to trade smaller and leave the increased position sizing i was trying over the last couple of months for when the market is blatantly trending and when my confidence comes back -  might miss some opportunities but thats infinitely better then losing money.

thanks again for the advice, and i hope i can return the favour and help you both in the future if you need the help
« Last Edit: December 10, 2009, 01:53:37 PM by ihashishin »
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Re: Position sizing or money/risk management
« Reply #9 on: December 10, 2009, 04:35:24 PM »
well nice to know u are back from your break i hope u got out of nbp at the right time

i dont think disclosing anyones system is of any harm
well if u dont want to disclose it thats fine

mrkt is rangebound and volumes are low so trading with small positions is need of the hour

stops are must sometimes they do get hit and share price bounces back and u regret having stop
but it also saves u from bigger losses

favour could be to keep sharing your buy and sell calls as per ur system so that members could benefit

Offline Learner7

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Re: Position sizing or money/risk management
« Reply #10 on: December 12, 2009, 01:35:19 AM »

hi im back!!

my loss for november was 4.5%

i think what happened to me was i made one mistake and then started stressing over my colossal losses making all my subsequent trading decisions biased and incorrect, now my accuracy is coming back and my fear of loss is subsiding

im really sorry about not completely disclosing my exact methodology but i read quite a few articles advocating complete non-disclosure when it comes to that, as 'they' say that telling other people how "exactly" you trade would lead to them trading against you. im not so sure about that and still wouldnt hesitate telling you what im trading and buy/sell points but feel a little uneasy telling how i got those figures, whats your opinion on such disclosure?

on another note i took the break you recommended and back tested my system over multiple time frames and different securities and by the grace of god it seems robust.

i also tweaked/increased the size and changed the point of application of my stops a little bit while doing that, as there seems to be a little bit more variance in trends since jan this year and im noticing more big-boy technical traders in the market who seem to try and take out the obvious stoploss points of smaller traders - effectively trading against people like us.

what my plan is now is to trade smaller and leave the increased position sizing i was trying over the last couple of months for when the market is blatantly trending and when my confidence comes back -  might miss some opportunities but thats infinitely better then losing money.

thanks again for the advice, and i hope i can return the favour and help you both in the future if you need the help

Its a proven maxim:
Only a single system cannot be successful in all type of market conditions i.e., trending, sideways, choppy, high fluctuation, direction less, etc. etc. backtest and you will get the ponit.

Good luck, keep doing what you doing. ;) 

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