Posted by disciple33 on 7th of Jul 2020 at 03:49 pm
Matt, that's important, risking only as much as you should
per your account size. I was referring to the liquidity aspect. You
could probably put $100k on a trade, but I'm guessing you would not
try that size on a small stock like CHFS. How do you determine your
position size when liquidity is the limiting factor?
guys I want to re-iterate I'm stretched thin here with posting
on the trading community, answer emails, trying to trade 4
different accounts, etc, the analogy fits I'm too little butter
stretched over too much toast. The point is I'll miss seeing
quite a few posts, I'm trying to be better at reviewing them but I
do miss posts so if you ask me a question and I don't answer it,
it's 99.99% because I didn't see it, I didn't ignore it. If it's
very important send me a pm
as far as this liquidity question regarding a very thin stock -
again my trade position size video
was NOT about a set dollar amount per trade like $100K, it
was about how much do you want to risk on the trade, is it $200, or
$500, that determines your position size,
not a set $100K or $20Kinto each trade. On CHFS
a stop would have been been 8 - 10 cents, so told you if you were
willing to risk $300 then you would buy 3700 - 4000 shares, Nothing
to do with a set dollar amount into a trade like you asked.
Also of course the liquidity and volatile of the stock matters,
if it's a 50 cent stock am I going to put less capital in that than
I am a $50 stock, of course. It's common sense and there's no
one set forumula that says that you put X amount in this priced
stock and Y in a smaller stock - there's are common sense things
that are going to vary and something you just have to decide for
yourself - if the spread is wide on a small stock - then I wouldn't
place a lot into it.
again my example was as a general guide
on CHFS -would I put $100K into that? The
pattern the stop was about 8 cents or so - so if one wanted
to risk $300 they buy 3700 shares. Again it's not about $100K, it's
about your risk.
also on CHFS it broke out gave a nice trade on a stock like that
at minimum I'd be selling a bunch on the first move because it's
cheap stock. yes it's pulled back the last 2 days but it's
just noise in fact price re-tested the broken trendline today and
held that so far. here's a couple charts, first the daily and
a 60 min, on the 60 min you can see where your stops would
have been and then raised - and why not take some good size off on
that first move up just because it's a cheap high risk stock? Now
on this pullback it's found support so still looks okay, maybe a
stop could be raised to that 0.52 cent area now on remaining
shares
so on CHFS - if you were willing to risk $300 on that stock,
then based on the stop you would only be buying 3700 - 4000 shares,
which is around $2000 - $2200 investment of capital!
again suggest you re watch my video - it had nothing to do with
placing a set amount into each trade like $20,000 or $100,000 for
example. It has to do with how much you are willing to risk, is it
$200, is it $500, whatever - that sets your trade size and
capital size - your capital size is not setting that. and obviously
you can consider things like liquidity etc
one last comment about CHFS as someone asked me how do you
determine what amount to put into low priced stocks like CHFS.
Again it's not about dollar amount it's about what you are
willing to risk. The person used $100,000 for example. Well
using my stop example on CHFS assuming you used a 9 cent initial
stop: and $100,000 would buy roughly 200,000 shares - if that
9 cent stop was hit you would be looking at a -$18,000 you are
risking!! Are you wililng to risk $18K to $20K on a 50 cent stock
if you are wrong and your stop is hit? Hell no! Again
it's common sense guys - how much are you willing to gamble on a
trade - that's what sets your shares and dollar amount you put into
it. You don't use an arbitrary dollar amount like $100K for each
trade you do - the dollar amount is set by your stop relative to
your entry price and how much you would lose if your stop is
hit.
Matt, that's important, risking only
CHFS broke out and came back inside the pattern. BBX ...
Posted by disciple33 on 7th of Jul 2020 at 03:49 pm
Matt, that's important, risking only as much as you should per your account size. I was referring to the liquidity aspect. You could probably put $100k on a trade, but I'm guessing you would not try that size on a small stock like CHFS. How do you determine your position size when liquidity is the limiting factor?
guys I want to re-iterate
Posted by matt on 9th of Jul 2020 at 10:46 am
guys I want to re-iterate I'm stretched thin here with posting on the trading community, answer emails, trying to trade 4 different accounts, etc, the analogy fits I'm too little butter stretched over too much toast. The point is I'll miss seeing quite a few posts, I'm trying to be better at reviewing them but I do miss posts so if you ask me a question and I don't answer it, it's 99.99% because I didn't see it, I didn't ignore it. If it's very important send me a pm
as far as this liquidity question regarding a very thin stock - again my trade position size video was NOT about a set dollar amount per trade like $100K, it was about how much do you want to risk on the trade, is it $200, or $500, that determines your position size, not a set $100K or $20Kinto each trade. On CHFS a stop would have been been 8 - 10 cents, so told you if you were willing to risk $300 then you would buy 3700 - 4000 shares, Nothing to do with a set dollar amount into a trade like you asked.
Also of course the liquidity and volatile of the stock matters, if it's a 50 cent stock am I going to put less capital in that than I am a $50 stock, of course. It's common sense and there's no one set forumula that says that you put X amount in this priced stock and Y in a smaller stock - there's are common sense things that are going to vary and something you just have to decide for yourself - if the spread is wide on a small stock - then I wouldn't place a lot into it.
again my example was as a general guide
on CHFS -would I put $100K into that? The pattern the stop was about 8 cents or so - so if one wanted to risk $300 they buy 3700 shares. Again it's not about $100K, it's about your risk.
also on CHFS it broke out gave a nice trade on a stock like that at minimum I'd be selling a bunch on the first move because it's cheap stock. yes it's pulled back the last 2 days but it's just noise in fact price re-tested the broken trendline today and held that so far. here's a couple charts, first the daily and a 60 min, on the 60 min you can see where your stops would have been and then raised - and why not take some good size off on that first move up just because it's a cheap high risk stock? Now on this pullback it's found support so still looks okay, maybe a stop could be raised to that 0.52 cent area now on remaining shares
so on CHFS - if
Posted by matt on 9th of Jul 2020 at 10:50 am
so on CHFS - if you were willing to risk $300 on that stock, then based on the stop you would only be buying 3700 - 4000 shares, which is around $2000 - $2200 investment of capital!
again suggest you re watch my video - it had nothing to do with placing a set amount into each trade like $20,000 or $100,000 for example. It has to do with how much you are willing to risk, is it $200, is it $500, whatever - that sets your trade size and capital size - your capital size is not setting that. and obviously you can consider things like liquidity etc
one last comment about CHFS
Posted by matt on 10th of Jul 2020 at 10:07 am
one last comment about CHFS as someone asked me how do you determine what amount to put into low priced stocks like CHFS. Again it's not about dollar amount it's about what you are willing to risk. The person used $100,000 for example. Well using my stop example on CHFS assuming you used a 9 cent initial stop: and $100,000 would buy roughly 200,000 shares - if that 9 cent stop was hit you would be looking at a -$18,000 you are risking!! Are you wililng to risk $18K to $20K on a 50 cent stock if you are wrong and your stop is hit? Hell no! Again it's common sense guys - how much are you willing to gamble on a trade - that's what sets your shares and dollar amount you put into it. You don't use an arbitrary dollar amount like $100K for each trade you do - the dollar amount is set by your stop relative to your entry price and how much you would lose if your stop is hit.
yes clearly going to matter
Posted by matt on 7th of Jul 2020 at 03:51 pm
yes clearly going to matter how liquid the stock is etc and if it's supper cheap price you are going to just want to put less capital in it.
again that gold blog post review is good for newer folks