Holiday trading

Due to being in Florida for a holiday the last week or so I have been doing less trading lately.

Having said that I am working on my longer term positions. I have some of my fresh capital in my margin account so I decided to load up on a few of the trades that I was not able to do earlier. These are ones that were recommended and have seen the prices drop a bit for nicer entry's now... they are all still recommended as the patterns are still intact.

Right now I an running $38.54 per day in my momentum options service and $10.25 in the stock service. The daytrading is down but that is mainly due to some losing trades closed the week before last ...still average daily is $34.25.

These add up to $83.04 per day so far. Not bad considering the small positions I am using right now.

One thing that has me thinking about my current position sizing is the many trades that are in the 5% - 10% range that has the commissions eating up enough of the profit to even turn a trade into a loser, even if only by a buck or two. There are so few losing trades in any of the service trades I have made that if all I did is equal size I would be farther ahead. The trouble comes in when the trade is larger than I can stomach due to a big price.

In the stock trading I have ranged from 20 shares to 200. my net per share profit is $9.54. The largest stock price has been $38.40. In order to handle all of the trades recommended I capped the trade size to about $1200. Bumping all trades to 100 shares would take up about $15,000 in margin or $5,000 in base capital. This would take my $10 daily return to $17 range.

In the momentum options I have averaged 2.6 contracts. Running the numbers as if I had always used 1 through 5 contracts has me netting from $836 to $5,136. As the trade size gets larger the commission costs, as a percentage, get lower. This is a huge factor as it turns out.

For single contract trading the commissions eat up 24% of the profits whereas commissions are down to 7% at 5 contracts. The largest size would have been $3,000 so allowing for 6 trades the commitment is fairly large. The average of all of my trades is $2.24 or $1,120.

This is where I am heading, scaling up from my current average and heading for the 5 contract size for every trade. This is in my margin account so I will have room for that as of late next week.

In my daytrading I am headed for the same thing. Based on this month's trading, losers and all, if I were trading 3 contracts for every single trade I would be at $94 per day instead of $34. My current average size is 2.4 contracts but due to oversizing a couple of losers and undersizing some winners it tends to skew the results.

So, in May I will be bumping up to 100 share trades in the stock trades, 5 contracts in the momentum options and 3 contracts in the daytrading account. As the accounts grow I will bump up as there is room.

Jeff.