Position Sizing

Can Make Or Break A Trader's Results

Proper Position Sizing Is Important

You can have multiple losses in a row and recoup everything in one trade with appropriate Position Sizing. This is not to be confused with the Martingale strategy popularized in the world of gambling.

YOU must decide how many contracts to trade based on: Dollars risked per trade Your account equity size The liquidity of the market The tick value of the market Your trading experience level Which strategy you are using Which trade number you are on The speed/volatility of the market Trading is ALWAYS at your own risk.

The following are 3 examples of Vinny E. Mini's position sizing structure: Example 1: Trade 1: 1 contract = "Toe In Water" ("TIW") Trade 2: 2 contracts = Quarter Position Trade 3: 4 contracts = Half Position Trade 4: 8 contracts = Full Position Trade 5: 10 contracts = Full Plus

Example 2: Trade 1: 2 contracts = "Toe In Water" ("TIW") Trade 2: 4 contracts = Quarter Position Trade 3: 8 contracts = Half Position Trade 4: 16 contracts = Full Position Trade 5: 20+ contracts = Full Plus

Example 3: Trade 1: 4 contracts = "Toe In Water" ("TIW") Trade 2: 8 contracts = Quarter Position Trade 3: 16 contracts = Half Position Trade 4: 32 contracts = Full Position Trade 5: 40 contracts = Full Plus Trade 6: 50 contracts = Max

In futures trading, the term "contracts" bears similarity to: -"shares" in stock trading -"contracts" in options trading -"lots" in foreign exchange trading

Vinny E. Mini uses the above position sizing structures with the Trade Tracker to take advantage of the concept of cadence or sequence of wins and losses.

AlgoBox™ Digital Trade Tracker showing a complete trading session of five trades plus one bonus trade.

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Examples

WATCH: The Trade Tracker in action, tracking wins and losses. A single click signifies a win (green chip), while a double click signifies a loss (red chip).

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WATCH: How the Trade Tracker is utilized in accordance with the position sizing structure, counting sequences of wins and losses.

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WATCH: Another example showing the Trade Tracker in action, counting sequences of wins and losses.

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ATM & Stop Losses

The size of your stop loss and how many contracts traded determines your monetary risk. If you do not apply a stop loss to your trade, your ENTIRE ACCOUNT EQUITY OR MORE is at risk!

AlgoBox™ ATM stop strategies, for automatically placing stops and targets, on NinjaTrader 8.

All AlgoBox™ ATM stop strategies have a default of 25 tick stop losses. The monetary risk is calculated by the tick value of the market being traded, multiplied by the number of ticks of the stop loss, multiplied by how many contracts are traded: Market Tick Value (V) x Stop Loss Number of Ticks (T) x Contracts (C) = Monetary Risk (R) V x T x C = R This formula may assist you in determining YOUR OWN position sizing structure for each trade. Remember to factor in commissions, which may vary from broker to broker.

Trading is always at your own risk.

Vinny E. Mini has his own "max loss" per day of $15,000 where he ceases all trading. This loss amount is based on the day's starting equity and is possible due to having a large account size. You must determine your own max loss amount based on your own circumstances (account size, risk tolerance etc.).

Click here to learn how to set your Daily Loss Limit for NinjaTrader.

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Video Tutorials: Position/Contract Size

WATCH: Vinny E. Mini discusses account size, contracts, margins and MUCH more!

Continue to: Position Manager Buttons

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