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In reading all of the many "risk of ruin" posts and the different
commentaries as to trade size, I have a simple question to ask. When a
committment is made to allocate "x" dollars(or percent) to a trade, this
does not necessarily mean that the dollar/percentage of capital has to be
committed in one order, does it?
I almost always scale in and scale out of a trade. I may have three to
five orders that will constitute one trade. If my opening order is
profitable, I will then add to a winning position. If I am wrong, I will
accept that I am wrong, take the loss, which will usually be small, and
look for another trade. In this manner, I have often commited 25% of my
trading account to one position, but the position is built by adding size
from a point of profit. (Seldom will I use margin to trade)
Should this type of entry not be given consideration rather than to make a
hard statement that one will commit "X" percent of capital to a trade?
Sure seems like it is more risk adverse to approach a trade in this
manner....commission is a lot cheaper than the loss of points. Also, I
have been taught that capital preservation should be the first goal.
Al Taglavore
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