The most valuable aspect in trading you aren't using:

POSITION SIZING

Sizing is the key, you'll make big money only if you own a significant size without compromising on risk.

Here are 10 of them, and they are for free: 🧵

Collaborated with @AdityaTodmal

@AdityaTodmal 1/ For a faster growth, one needs to have a bigger size:

• What difference would it make if a stock moves by 300%?

• But then, what if you had only 1% capital allocation?

• Despite the stock performing spectacularly, your account won't reflect the same, due to small sizing.
@AdityaTodmal 2/ Three types of position sizing:

1. Fixed absolute Rupee amount that one is willing to risk.
2. % risk of the total capital.
3. Basis the edge.

Risk tolerance should be taken into consideration while determining appropriate position sizing.
@AdityaTodmal 3/ Fixed absolute Rupee Amount:

• Eg: Total capital is Rs. 10 lacs and the max risk per trade is Rs. 7500

• Lets say a stock is trading at 1200 and your SL is 1120 (i.e. your risk per unit us Rs. 1200-1120 =Rs. 80)

• Optimum qty: 7500/80 = 94 units
@AdityaTodmal 4/ Percentage risk of total capital:

• Lets say you want to risk 1% of the total capital on each trade.

• Considering the total capital of Rs. 10 lacs, you shall risk Rs. 10,000 i.e. 1% of 10lacs on each trade.

• Quantity to be traded/invested calculation remains the same.
@AdityaTodmal 5/ You can go for size without risking big:

• CMP: 1100
• SL: 1085

• If your max risk per trade is 1% of the total capital, this setup would allow you to allocate 73% of your total capital and still be within your 1% risk limit.
@AdityaTodmal 6/ You can go for size without risking big, example 2:

• CMP: 800
• SL: 791

• If your max risk per trade is 1% of the total capital, this setup would allow you to allocate 88% of your total capital and still be within your 1% risk limit.
@AdityaTodmal 7/ Smaller the stop bigger the size i.e. quantity

• To go for size without risking huge, you need to reduce your stop.

• To avoid getting stopped out on such small SL's, you need to bet only on proven edges.
@AdityaTodmal 8/ Sizing based on edge

• Examples:
- Triangle BO has the highest winning streaks, so go for 2% risk per trade on this edge.
- Volatility Contraction Pattern (VCP): is the next best, so can go for 1.5% risk per trade.
- Inside Bar, works for 50% of the time, so risk 0.75-1%.
@AdityaTodmal 9/ Bet big on your strong edge and less on average edge:

• Conviction on your edge drives sizing.

• To size based on your edge, you need to know what works for you and what doesn't.

• To understand what works for you you should dive into your trading journal.
@AdityaTodmal 10/ Risk management along with position sizing:

• Position sizing is not just the only key factor to be successful in this game.

• The important factors are to know when to go big, when to stay small and when to fold✂️
@AdityaTodmal Larry Hite has two basic rules about winning in Trading as well as in Life:

“Rule 1: If you don’t bet, you can’t win
Rule 2: If you lose all your chips, you can’t bet”
@AdityaTodmal If you enjoyed this thread, here's another one which might be helpful:

https://t.co/TgUggw9R2d
@AdityaTodmal Hope you discovered something new (because that's the point!)

If you did, share it with a friend!

Also show some encouragement for this thread, if its valuable to you.

Hop back up to retweet the first tweet
See past threads here:

@AdityaTodmal

&

@niki_poojary

More from Nikita Poojary

More from All

Master Thread of all my threads!

Hello!! 👋

• I have curated some of the best tweets from the best traders we know of.

• Making one master thread and will keep posting all my threads under this.

• Go through this for super learning/value totally free of cost! 😃

1. 7 FREE OPTION TRADING COURSES FOR


2. THE ABSOLUTE BEST 15 SCANNERS EXPERTS ARE USING

Got these scanners from the following accounts:

1. @Pathik_Trader
2. @sanjufunda
3. @sanstocktrader
4. @SouravSenguptaI
5. @Rishikesh_ADX


3. 12 TRADING SETUPS which experts are using.

These setups I found from the following 4 accounts:

1. @Pathik_Trader
2. @sourabhsiso19
3. @ITRADE191
4.


4. Curated tweets on HOW TO SELL STRADDLES.

Everything covered in this thread.
1. Management
2. How to initiate
3. When to exit straddles
4. Examples
5. Videos on

You May Also Like

These 10 threads will teach you more than reading 100 books

Five billionaires share their top lessons on startups, life and entrepreneurship (1/10)


10 competitive advantages that will trump talent (2/10)


Some harsh truths you probably don’t want to hear (3/10)


10 significant lies you’re told about the world (4/10)