How much to commit - Aussie Stock Forums

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  1. #1

    Default How much to commit

    If you're risking say, .5% or 1% of your account on each trade and your account is $100,000 would you have your whole account in play or only a proportion of it? That is, would you have 100-200 trades going on simultaneously(which I'm guessing one wouldn't because of the admin. load). If not, then what would people recommend as an optimum proportion to be out working on your behalf? Does it depend on the circumstances pertaining at the time?

  2. #2

    Default Re: How much to commit

    Hi Michael,

    No, i don't think it works like that. I think the 2% rule means you should set your stop losses at around 2% of your capital. Have a look at Louise Bedford's Trading Secrets. She explains it really well.

    With $100,000, i would go into 3 positions, but everybody is different. I am not really an expert, but even i know that 200-300 positions would be insane .

  3. #3
    Can be found on the bid Trembling Hand's Avatar
    Join Date
    Jun 2007

    Default Re: How much to commit

    I think you may have position sizing a bit wrong there. Risking 1% per trade doesn't mean that if you have $100,000 you buy $1000 of stock. What it means is that you buy enough stock that IF your stop is hit you lose only $1000.

    Example. 1% of account is $1000. Stock @ $10,00 level you thing is a reasonable stop @ $9.50($0.50 stop)

    1000/50 = 2000 shares. So you but 2000 shares if the stock moves $0.50 cents you will lose $1000. that 2000 shares is going to represent 20% of your capital.

    Without leverage the max amount of positions you will be able to have is 5
    Who is the happier man, he who has braved the storm of life and lived or he who has stayed securely on shore and merely existed? -Hunter S. Thompson

  4. #4

    Default Re: How much to commit

    Hear that click? That was the light bulb going on! Thanks guys I'd just got locked in to one way of looking at it.

  5. #5

    Default Re: How much to commit

    some people supposedly figure out where they enter and based upon trends where the stop loss/support is.... based upon this gap in dollars and cents, they make 2% risk and hence can determine their position size... i think lol

    i think it goes this way

    say i enter at $10 and i see strong support/trends etc at $9.50 then my stop loss will be put at $9.50 (or $9.49) hence my risk is 50cents.....

    say my portfolio size is 100k then to risk 2% i would buy 4000 shares for $40k and when it hits 95cents a share it becomes 38k..hence 2%

    now this may be wrong as im a novice, id take it with a grain of slat until someone confirms


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