Experienced traders do not have the same share size for every stock trade. Here are some of the things
they think about when it comes to position size.
o The type of trade: is it a short or long?
o How the trader’s day is going. Green overall or down for the day?
o What time of day is it? High volume hours or low volume doldrums?
o Is it the first trade of the day or second trade?
o Have you made money on your previous trade?
o Have you lost money on your trades?
o What is the market doing at that moment? Is the SPY moving up or down? Is the trade you are
in counter trading to what the market is doing?
o What are the spreads on the stock? 5 cent spread, penny spread or a larger size spread?
o What is the set up on the chart? Is it a break out, a high of day play or a bottoms up trade?
Traders should not have the same share size for every trade or stock. Stocks are different. Set ups are
different. Position yourself for success by taking the right position size when you trade. This will help
you to manage risk and set yourself up for a higher probability of profitable trades.
Downside risk is more important than upside reward. Higher risk trade is a stock with more volatility.
Risk and how the stock moves will dictate the share size
Some stocks trade slower than others. Some stocks are fast movers. CHK vs HD or WATT vs AAPL
Take in as many factors as you can when taking a trade and adjust your share size. Is comes down to risk
and what you are able to trade comfortably.