Traders Ask; Position Size of 1/3?

BellaMike Bellafiore's (Bella's) Blogs, Traders Ask4 Comments

Question:
I basically swing trade. I always try to put on a position in 1/3’s. How does that work daytrading? Is there time to do a position that way? I like to have another good entry point to add to a trade. How is that possible in a daytrade. Maybe I just am not used to that fast of a trade. Do you look tic by tic?
Thanks,
G H
Oregon

Bella Responds

I will enter 1/3 of my usual tier size for a position.  We trade in lots, generally of 1,000 shares.  So for purposes of this discussion we will discuss some times I might start a position with 300 shares.

Some times I might enter for 1/3 of a position:

a) IPO

b) After hours

c) parabolic stock

d) large spread

e) more risk

f) get a taste for a position that may have a chance

g) someone else’s idea

With all of these examples I may start very small seeking information on the tape that I can control my risk.  Once I have done this I may increase my tier size for these set ups and trade away.

Hope that helps.  Good job by you working on your trading game!

Mike Bellafiore

Author, One Good Trade

 

 

4 Comments on “Traders Ask; Position Size of 1/3?”

  1. Thanks Mike. That is what I do also. almost identical reasons for entry. Different time frame tho Markets are fractals, etc….I ‘ve been tape reading for a long time, sometimes just get a strong feeling without being able to pinpoint why. Still have to maintain money management discipline, tho.
    Thanx,
    Greg H.

  2. Hi Mike. Very interested in this question also – what prompts you to add your second and then third position. Do you add as soon as the next bar moves in the direction of your trade? Do you only add upon a dip after a move in your direction? If your trading with 5 minute bars do you zoom down to say 1 min to find a dip?

  3. Mark,
    I am starting with 1/3 of a position. This is different than starting with one lot and then adding another lot and then adding a third lot. In the example above, I am starting with 1/3 of a position and maybe adding to one position.
    Bella

  4. I swing trade too. It’s a way for me to test the waters. Once I know which is profitable, then I can completely invest in that trade.

Leave a Reply