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$$/ symbol (Position size) for a 50k acount balance


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$$/ symbol (Position size) for a 50k acount balance

  #1 (permalink)
 emini_Holy_Grail 
Dallas,TX
 
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I know it depends on individual trading style and r/r
but by average,
how much $$/each symbol for a 50k account balance

how much $$/each symbol for Descretionary Trading
how much $$/each symbol for Automated Trading

I am sure Automated, we can do more symbols, but if I do 1k 0r 2k/symbol.
doesnt sound crazy? too many symbols to analyse and manage ?

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 Tymbeline 
Leeds UK
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I'm slightly surprised that your questions have been sitting unanswered for a week or so (though on the other hand, I can also appreciate that it's perhaps not easy for people to judge exactly what approach to take, in offering a response.)

Position-sizing just isn't (or shouldn't be) determined by the criteria you're asking about. It depends on all kinds of statistical/probabilistic criteria, many related to specific issues like win-rate, maximum anticipated loss-size, risk of ruin, and so on. It isn't possible (or sensible) for anyone to try to put figures on what you're asking about without knowing a wealth of information not offered in the question, but it would be unusual indeed - to put it really mildly - for it to be wise to expose to risk more than a maximum of 2% of your allocated trading funds on any individual trade (whether discretionary or automated). Many would probably say 1%.

("Discretionary" and "automated" are not really quite counterparts: trading can be non-discretionary and still manual rather than automated).

A very good overall introduction to both the concepts and details of position-sizing, which one of your other recently-started threads also actually prompts me to recommend to you, is provided by the book Trade Your Way to Financial Freedom by Van K Tharp: I think you'd find it extremely helpful.

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 PeakGrowth 
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emini_Holy_Grail View Post
I know it depends on individual trading style and r/r
but by average,
how much $$/each symbol for a 50k account balance

how much $$/each symbol for Descretionary Trading
how much $$/each symbol for Automated Trading

I am sure Automated, we can do more symbols, but if I do 1k 0r 2k/symbol.
doesnt sound crazy? too many symbols to analyse and manage ?


It depends on what the maximum amount of positions your system opens at a time and your max drawdown tolerance.

If it opens 10 at a time, then you generally would need to reduce the risk exposure for each so you don't end up risking 1% for each position, and have 10% total risk open (or whatever your max risk is). This is particularly important if the positions you have opened all have the same macro risk - i.e. all US stocks.

Also rather than looking at % risk per trade, look at drawdown. if your max drawdown is 20%, your stop loss is 1% at 1x leverage and your max tolerance for MDD is 40%, then theoretically you can double your bet by having a 2% stop loss with a MDD of 40% and still be within your maximum drawdown tolerance.

The best systems manages its risks (drawdowns), you want to get as small a drawdown as possible so you can gear it as much as possible.

i.e. reference CALMAR and MAR ratio
https://en.wikipedia.org/wiki/Calmar_ratio

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Last Updated on July 19, 2015


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