Relative Risk and Account Growth...and Other Odds

Today was "Newbie Day" in the trading room as this month's batch of new sign ups joined... that typically makes it a slow day as we planned on only one trade. John called out the one main and added a quick put in the QQQQs. I already had that trade on the go so I doubled it and then went over to the momentum account and doubled that longer term put as well. The market is heading down so why not catch today's highs to lower my average costs and increase my position sizing on some small priced options... about $1.

I added a relative risk function to my current tracking spreadsheet that gives me the percentage account usage for ten trades at $2.50 contract price average for sizes from 3 to 10 contract trades. It runs off the current balance as I enter the day's trades so I get a sort of live indicator.

Anything under 80% usage is clear to trade and right now 4 contracts put me at 77%. I currently have 9 trades (6 and three are double sized which counts as two per) and the average price is $1.97. My account cash balance is actually near my initial start up so I am only using about half of my total account and I am already near my 10 trade maximum target... lots of rubber room.

I guess that, since I have almost doubled this account since April 1 putting only the profits at risk is a good thing. Soon I expect that I will be putting less and less of the profits at risk which effectively reduces my relative risk.

BTW, my doubling up on the QQQQ trades has me at paper gains of $300 after the afternoon sell off... I would have been at $28 otherwise. I like the "would have"s when they were avoided and the "did"s are better.

I am well set up with puts for the upcoming drop in the market and, should we all be wrong, not putting initial capital at risk in any account now. That and all my gold plays are doing reasonably well.

Jeff.