Position sizing revisited... Yet again.

John, the host and moderator of the trading room, seems to like to keep everyone informed on a need to know basis... which is not necessarily a bad thing but it can be annoying. He is catering to the "lowest common denominator" which means everything is dumbed down pretty heavily. There are a number of people who should not be in the room as they cannot follow or do not know enough to be able to follow straight forward instructions to execute the trades necessary to profit or even to just execute the trades...period.

For this reason he has indicated position sizing to use along the way without doing a full overview of his expectations in order to ensure that nobody trades too big to affect the room or too small to profit.

Initially we were using "normal" sizing which was no larger than 10 contracts. I scaled my sizing to accommodate equal weighting by price... $1000 to $1200 worth of contracts. I will admit that I went over that on a few trades and it bit me in the ass.

Next the volume came out of the market as there was a bit of a consolidation going on and everything was neutral as opposed to bullish or bearish. Maximum trade size was set at 5 contracts. This was hammered home as a few oversized the trades and it was a problem for the group.

Now we are back to normal sizing as volume is back. For me that puts me trading 2, 3 or 4 contracts...perhaps 5 in some cases as I don't like how much leverage gets into the $1 contracts. Cheaper does not mean they are a better deal.

Today we doubled up on two positions and are treating them as separate trades for all intents and purposes... although each entire position may be closed at the same time... or not. In order to play I have to leave enough room for some of these trades to double up for the purposes of reducing the average cost and to stay with the program. If I do not then when the trade is eventually closed, for a profit, that profit may rely on the average effect and not the original higher cost putting me behind the eight ball, so to speak.

Trade every trade of someone else's plan... and this is a good plan.

More on sizing in my next post.

Jeff.