That makes it all the more important to set a schedule of
sizes on short positions.
Not exact matches
Accordingly, the Strategic Growth Fund is now back to a fully - hedged investment stance - meaning that the Fund continues to be fully invested in a broadly diversified group of stocks that appear to have some combination of favorable valuation and favorable market action, while at the same time, the Fund carries an offsetting
short position of equal
size in the S&P 500 and Russell 2000 indices (using option combinations that mimic
short futures contracts) intended to mute the impact of broad market fluctuations
on the Fund.
Therefore, we're not in a hurry to enter multiple new
positions (either long or
short) ahead of the holidays, but will still consider new stock and / or ETF trade entries (possibly
on the
short side and / or inverse ETFs) with reduced share
size if an ideal trade setup with a firmly positive reward - risk ratio presents itself.
In this mode, we can either go long or
short; however, our
position size on all
positions is light because market conditions are not ideal.
A cash
position of a
size that makes sense gives you a high level of
short term control; you aren't reliant
on someone else's money.
In my small unique book «The small stock trader» I also had more detailed overview of tens of stock trading mistakes (http://thesmallstocktrader.wordpress.com/2012/06/25/stock-day-trading-mistakessinceserrors-that-cause-90-of-stock-traders-lose-money/): • EGO (thinking you are a walking think tank, not accepting and learning from you mistakes, etc.) • Lack of passion and entering into stock trading with unrealistic expectations about the learning time and performance, without realizing that it often takes 4 - 5 years to learn how it works and that even +50 % annual performance in the long run is very good • Poor self - esteem / self - knowledge • Lack of focus • Not working ward enough and treating your stock trading as a hobby instead of a small business • Lack of knowledge and experience • Trying to imitate others instead of developing your unique stock trading philosophy that suits best to your personality • Listening to others instead of doing your own research • Lack of recordkeeping • Overanalyzing and overcomplicating things (Zen - like simplicity is the key) • Lack of flexibility to adapt to the always / quick - changing stock market • Lack of patience to learn stock trading properly, wait to enter into the
positions and let the winners run (inpatience results in overtrading, which in turn results in high transaction costs) • Lack of stock trading plan that defines your goals, entry / exit points, etc. • Lack of risk management rules
on stop losses,
position sizing, leverage, diversification, etc. • Lack of discipline to stick to your stock trading plan and risk management rules • Getting emotional (fear, greed, hope, revenge, regret, bragging, getting overconfident after big wins, sheep - like crowd - following behavior, etc.) • Not knowing and understanding the competition • Not knowing the catalysts that trigger stock price changes • Averaging down (adding to losers instead of adding to winners) • Putting your stock trading capital in 1 - 2 or more than 6 - 7 stocks instead of diversifying into about 5 stocks • Bottom / top fishing • Not understanding the specifics of
short selling • Missing this market / industry / stock connection, the big picture, and only focusing
on the specific stocks • Trying to predict the market / economy instead of just listening to it and going against the trend instead of following it
Long -
Short Equity, or LSE, takes the EMN strategy (though they're not exact clones if we're to judge by their holdings and
position sizes) and overlays a tactical equity strategy that targets an average 50 % exposure to the MSCI World Index, with the ability to adjust its exposure by + / - 20 % based largely
on valuation and momentum.
Hi Justin Great article I also took
short usd / jpy not just
on your advice but because I trade what I see and that's the way I seen it I dropped
position size because I had doubts but it is great that you explain the losers as well as the winners as this really shows your honesty and integrity in all your teachings When it all went wrong I thought thought to myself how are you going to explain that one and you have done so perfectly Never trust the markets hey!!!
I can't tell you how many times at meetings at the hedge fund we had tough discussion
on position sizing, more frequently
on short positions.
Setting
position sizes on shorts is always harder than longs.
I crafted a visually appealing resume for him that targeted the
size and scope of
position he wanted to focus
on and to make a long story
short, within 7 days of distributing his new resume, he had 4 interviews with top construction companies and an offer was already
on the table at double his previous salary.