LD Lossdog Research
topic

position sizing

9 matching records.

Q&A

When Tom buys the dip on shares of a company based on price extreme, how much does he buy? What is the position size? Does he follow a rule or does the size change based on the conviction?

The speaker explains that the position size changes based on conviction. He starts with the smallest increment, typically 500 or 1,000 shares, and then decides to add more based on how the stock moves. The speaker also mentions that he uses a minimum allocation approach and builds up his position over time.

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Actionable takeawayPosition size should be adjusted based on conviction, starting with a small increment and increasing based on market movement.
position sizingtrading strategy
high confidenceVerify in video at 17:20 ↗
Q&A

How much should I be risking per trade at that account?

For an account size of $170,000, the speaker suggests risking no more than $10,000 on undefined risk trades and between $1,000 to $1,700 on defined risk trades. The risk percentage is around 5% of the account size.

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Actionable takeawayRisk management should be based on account size, with defined risk trades having lower risk percentages and undefined risk trades having higher risk percentages.
position sizingrisk management
high confidenceVerify in video at 33:12 ↗
Q&A

How do you defend such moves?

Staying small is the primary defense against large market swings. Position sizing should be between 1-5% or 6% of your account, with 3% as a barometer. It's an art, not a science, and you need to stay comfortable with your risk tolerance.

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Actionable takeawayStaying small is the primary defense against large market swings. Position sizing should be between 1-5% or 6% of your account, with 3% as a barometer.
position sizing
high confidenceVerify in video at 1:21:14 ↗
Q&A

How do you think about position sizing differently on a $50 stock versus a $500 stock when you're selling puts?

The speaker explains that position sizing should be based on buying power and the price of the underlying. For higher-priced stocks, smaller position sizes are used to avoid overexposure, while lower-priced stocks allow for larger positions. The key is to ensure that the trade fits within the trader's overall capital allocation and risk management framework.

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Actionable takeawayPosition sizing should be adjusted based on the underlying stock's price and the trader's buying power to ensure proper risk management.
position sizingrisk management
high confidenceVerify in video at 21:50 ↗
Q&A

If you're uncomfortable with an existing position, should you close it?

The speaker suggests closing a trade if the IVR has dropped significantly, if the underlying assumption has changed, or if the position is too capital-intensive or deemed too risky. Reducing the size of the position is recommended as a quick and impactful move to provide mental relief and clarity.

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Actionable takeawayClose a trade if the IVR drops significantly, the underlying assumption changes, or the position is too risky. Reducing the size of the position is a quick way to manage risk and provide mental relief.
position sizingrisk management
high confidenceVerify in video at 1:15:17 ↗
Q&A

If you see a move like this, do you use wheel strategy or rolling to short it until it's settled on XYZ level, or do you prefer to short, take a profit, and walk away?

The speaker prefers to sell calls or call spreads rather than using the wheel strategy. The speaker believes that the stock is unlikely to continue its upward trend and that the risk-reward ratio is more favorable with shorter-dated options. The speaker also emphasizes the importance of position sizing and the need to consider the time frame of the trade.

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Actionable takeawayThe speaker suggests that selling calls or call spreads is a better approach than the wheel strategy for shorting MU. The rationale is that the stock is unlikely to continue its upward trend, and the risk-reward ratio is more favorable with shorter-dated options.
MUposition sizing
high confidenceVerify in video at 01:27 ↗
Q&A

What would a position be if you're hedging?

The speaker explains that hedging involves strategies like selling a call or a put, which do not add capital. However, the speaker is opposed to adding capital to positions and prefers reducing trade size as a more effective hedging method.

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Actionable takeawayHedging can be done through strategies like selling calls or puts without adding capital, but reducing trade size is preferred for risk management.
hedgingposition sizing
high confidenceVerify in video at 1:01:45 ↗
Q&A

When do you start reducing size and taking a loss on a position that's gotten out of hand?

Traders should start reducing size or taking a loss when a position becomes uncomfortable and emotionally disturbing. The key is to avoid adding to the position and make adjustments to reduce risk, such as rolling out in time or reducing size. If the position is causing significant emotional distress or financial harm, immediate action is necessary.

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Actionable takeawayReduce position size or take a loss when a trade becomes emotionally uncomfortable or financially harmful.
position sizingrisk management
high confidenceVerify in video at 19:15 ↗
Q&A

How do I balance account growth with proper position sizing?

Balance account growth with proper position sizing based on opportunities, not forcing trades. Wins are more important than collecting premium, and you should adjust based on market conditions and opportunities.

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Actionable takeawayAdjust position sizing based on opportunities and market conditions, prioritizing wins over premium collection.
position sizingtrading strategy
high confidenceVerify in video at 24:54 ↗