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I am day trading currencies - I have been studying position sizing, as
explained by Van Tharp, and trying to figure out a good way to utilize it in
my day trading. I understand risk management and try to make sure that I cut
my losses quickly and efficiently - when I feel strongly about a market
trending, I will let profits run and exit on a market order, or a limit or
MIT. My trouble right now is first defining position sizing clearly in a day
trading context, and then applying some sort of position sizing discipline to
my trading. My concept of it in the simplest terms is basically number of
contracts purchased: you want to have more contracts on winning trades and
less on losing trades in the end. So entering each trade with 2 contracts,
you could add to those when the trade trends in your direction, or just lose
the 2 if it goes against you in a short time frame. I am struggling with
whether to make it mechanical, like if the market moves 10 points to the good
from my entry and indicators still look good, then purchase 2 more contracts
and adjust a new 4 contract protection stop down close to the new entry point
- I am just beginning to play with this and am finding it hard to wrap my
brain around the risk/reward ratios involved with this scenario. Does
anybody have any thoughts on approaches to position sizing in a day trading
context?
Thanks and g'day
Kent
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