BC TRADERLION
Saved by @SeekerHari

A Guide to Position Sizing

--- Thread 🧵 ---

 To perform in the market, position sizing needs to be the main focus.

This is what ultimately separates the good from the great.
It will make no difference on your account if you have a 100% gain in a name with only 1% of your equity.

It will make a huge difference on your account if you have a 100% gain in a name with 20%+ of your equity.
There are 2 consistent ways to position size in the markets 👇

1️⃣ Position Size Based on Risk
2️⃣ Position Size Based on Number of Edges
1️⃣ Position Size Based on Risk

Before you take a position in a stock, you must know how much you are willing to lose on a trade.

We recommend never risking more than 1% of your overall account equity on any single trade, especially if you are in the consistency phase.
Example 1:

▪️ Buy Point: $100
▪️ Stop Loss: $99
▪️ Total Risk: 1%

If your max risk per position is 1% of your overall equity, this setup would allow you to take a 100% equity position and still be within your rules if the trade goes against you.
Example 2:

▪️ Buy Point: $50.50
▪️ Stop Loss: $49.00
▪️ Total Risk: 3%

If your max risk per position is 1% of your overall equity, this setup would allow you to take a 33% equity position and still be within your rules if the trade goes against you.
You must still be focused on taking your best setups and capitalizing on your best edges, but understand that your position size is based on allotted risk.
2️⃣ Position Size Based on Number of Edges

To position size based on # edges, you must have a great grasp as to what your edges are in the market.

🔸Strongest edges = biggest size
🔸Weakest edges = lowest size
Examples:

▪️ Highest Volume Ever: Up to 25% of equity
▪️ Volatility Contraction Pattern (VCP): Up to 20% of equity
▪️ IPO Base Breakout: Up to 15% of equity
With the rules above, you could have up to 60% of your equity in a name meeting those three characteristics.

You must still trade with a risk first mindset though, knowing where you will exit the trade and how much of your account you are risking if the trade goes against you.
Things to Remember:

▪️ Conviction drives Position Sizing
▪️ $STUDY of your edges is the only way to build conviction
▪️ Whatever style you choose, you must do it consistently
We also have a great presentation that @anishsikri gave on this topic.

You can find that here 👇

https://t.co/hcAKEG8WX1
@anishsikri If you found this thread to be helpful, please like & retweet the first tweet!

If you want more similar content, please follow us
@TraderLion_

Let us know how you position size in the comments below 🔽

More from TraderLion 🦁

TraderLion
TraderLion
@TraderLion_
10 Lessons I Learned While Working With William O’Neil (Thread)

↓

1. The importance of trading psychology and emotional/physical well-being

Trading psychology and physical/emotional well-being is probably one of the least discussed, yet most important aspects of becoming a successful trader.

However, the large majority of traders spend little time if any focusing on this aspect of their trading and instead, dedicate their time to methodology, technique, and “special indicators.”

Start by taking good care of your physical and emotional health.

This means getting enough sleep, eating well, exercising, etc.

Next, pick up a couple of books and study trading psychology. Two excellent books on this subject are, “Trading in the Zone,” by Mark Douglas and “The Psychology of Trading,” by Brett Steenbarger

2. The importance of sound rules to avoid emotional decision making.

Having a sound set of rules that are proven to work is essential to success in the stock market. Why is this so important? Two words. Human nature.
PSYCHOLOGY , TRADERLION
TraderLion
TraderLion
@TraderLion_
20 lessons from trading legend Stan Weinstein:

Volume is a gauge of how powerful the buyers are... Never trust a breakout that isn't accompanied by a significant increase in volume.

1/20
TRADING
Advertisement
TraderLion \U0001f981
TraderLion 🦁
@TraderLion_
4 Simple Steps to Avoid Downtrends 📉 (a thread)

🧵


1. Know the difference between an uptrend & a downtrend 📈📉

At TraderLion, we identify an uptrend as stocks/markets that trade ABOVE a RISING 21DSMA and 50DSMA.

A downtrend occurs when stocks/markets trade BELOW a downsloping 21DSMA/50DSMA.

Let's look at an example 👇

$QQQ from 2020 shows what an uptrend, downtrend, and even chop period looks like.


2. Know when it is really time to make money on the long side.

Swing Traders: when markets/stocks are above the rising 21D
Position Traders: when market/stocks are above the rising 50D

We can take this one step further by understanding what a Power Trend is 💪

The trend is really your friend when we have a Power Trend in the general indexes. A concept coined by the @IBDinvestors team, we must have the following:

✅ Low > 21ema for past 10 sessions
✅ 21EMA > 50SMA for at least 5 sessions
✅ 50SMA slope is positive
✅ Market closes up
TRADERLION
TraderLion \U0001f981
TraderLion 🦁
@TraderLion_
8 Steps to building a Trading System (Thread)

🧵


Individuals must keep their personality, lifestyle, and risk appetite at the forefront of their minds when building their trading system.

In this thread we will break down the components of a successful trading system for consistent returns in the markets 👇

Components of a Successful Trading System

1. Market
2. Time Frame
3. Edges
4. Entry Tactics
5. Setups
6. Rules & Risk Management
7. Journaling
8. Post Trade Analysis

Let's discuss the first component, The Market.

The financial markets are divided into the following 👇

1. Equity
2. Bond
3. Futures
4. Forex
5. Commodity

Each market requires a different set of knowledge, skill, experience, and know-how.

Once you know which type of Market you want to trade, you must now choose your Time Frame.

Day Trade
Swing Trade
Position Trade
Combination of all the above

Time Frame often aligns with a traders personality, lifestyle, goals. 🧠
TRADERLION
TraderLion \U0001f981
TraderLion 🦁
@TraderLion_
8 Chart Patterns by William O'Neil

Let's break them down one by one🧵


Perhaps the most famous basing pattern found in the market is the Cup with Handle pattern.

✅ Chart resembles a cup with a handle
✅ Base length: Minimum 7 weeks
✅ Base depth: 20-30%
✅ Buy point: high of the handle
✅ Handle length: 1 week
✅ Handle depth: no more than 15%


There is also a Cup without Handle pattern.

✅ Chart is just a cup, no handle
✅ Base length: Minimum 7 weeks
✅ Base depth: 20-30%
✅ Buy point: High of left side of cup


The Double Bottom chart pattern is also very common & is one of the most powerful patterns to learn.

✅ Base resembles a "W"
✅ Base length: Min. 7 weeks
✅ Base depth: < 40%
✅ Buy point: middle of "W"
✅ Second low must undercut first low


The Flat Base pattern is another well known structure coined by William O'Neil.

✅ Base resembles a shallow consolidation
✅ Prior uptrend must be greater than 30%
✅ Base length: Minimum of 5 weeks
✅ Base depth: < 15%
✅ Buy point: High of structure
TRADERLION , ALL , CHARTS

More from Traderlion

Greg Duncan \U0001f6a2
Greg Duncan 🚢
@GregDuncan_
Why Patience is so Important as a Trader

🧵👇

Have you ever felt like everyone around you is making money and you're not?

That's how I felt today after the market closed, while I was reflecting on my week.

In fact, over the past three months I've felt like this on multiple occasions!

If we look at my equity curve (EC), updated as of today's close, we can see multiple periods in which my account balance did not change.
TRADERLION , SWINGTRADING
TraderLion \U0001f981
TraderLion 🦁
@TraderLion_
There is only one proven way to prevent blowing up your account:

Setting Stop losses.

Properly setting & implementing stop losses will save you millions over your career.

Here's a top down guide with everything you need to know about Stop Losses, broken down step by step 👇🧵

In this 🧵, we'll cover:

· The Goal of Stop Losses
· How to Place a Proper Stop Loss
· Answers to Frequently Asked Stop Loss Questions
· General Guidelines to Protect Your Account

& tons of examples!

Let's jump in 💪

Overall Goal of Stop Losses 👇

The goal of a stop loss is to cap your downside while maximizing the upside from proven setups.

It is impossible to be correct on every trade you make, so it is very important that you implement stop losses to contain your losing trades!

Let's look at some examples to show you how important stop losses can be:

$PTON (Weekly!)
$TSLA (2020 B/O)
$NVDA (1999 IPO B/O)
$AMPH (Last Week's Action)


In each of the examples above, you could have used proper stop losses to capture massive upside gains & protect yourself from huge downside losses!
TRADERLION
Advertisement
TraderLion \U0001f981
TraderLion 🦁
@TraderLion_
There are thousands upon thousands of stocks that you can trade.

But how do you narrow it down to the best of the best?

In this thread, we'll highlight the 3 most important steps you need to take to create a Focus List (& how you can apply these lessons immediately)

👇🧵

By the end of this thread, you'll be able to:

✅ Scan quickly and effectively to build a Universe List
✅ Narrow it down further to a Weekly Focus List
✅ Find the best stocks possible to trade

It's that simple so let's jump in.

· Scan quickly and effectively to build a Universe List

🔎 Pullbacks
🔎 Breakouts
🔎 High Volume
🔎 Fundamentals
🔎 Momentum Edges

Here are the criteria you can use in your favorite scanning platform for each:

Pullbacks Edge 🚨:
· Above your favorite Key Moving Average Scan (> 10EMA, 21EMA, 50DMA)
· % Off Highs Scan (< 20%)
· Reverse Pocket Pivot Scan

Breakouts Edge 📈:
· 52 Week High Scan
· Volume > 2x Avg. Scan
· Price > 5% on Session Scan
TRADERLION , TRADING GUIDES , TRADER LION
TraderLion \U0001f981
TraderLion 🦁
@TraderLion_
Building a Daily & Weekly Routine Workflow to Increase Profitability

--- Thread 🧵 ---

The stock market is one of the most complex systems in the world, with parts that change every single second.

As individual investors, we need to bring a level of consistency to our system that can prevent us from feeling overwhelmed.

Routines offer this consistency.

As a retail trader/investor, you must have a set routine for your daily review and weekend review.

This is non-negotiable if you want to outperform the market or increase your current levels of profitability.

In your Daily Routine, you should review the following 👇

🔹 General Markets
🔹 Current Positions
🔹 Emotional Review
🔹 Focus List
🔹 Summary


General Markets (10 min)

The goal is to identify if the wind is at our backs.

You should note whether there has been a recent cluster of accumulation/distribution, where price is with respect to the KMAs, & the index's relationship to the highs.
TRADERLION
TraderLion \U0001f981
TraderLion 🦁
@TraderLion_
8 Chart Patterns by William O'Neil

Let's break them down one by one🧵


Perhaps the most famous basing pattern found in the market is the Cup with Handle pattern.

✅ Chart resembles a cup with a handle
✅ Base length: Minimum 7 weeks
✅ Base depth: 20-30%
✅ Buy point: high of the handle
✅ Handle length: 1 week
✅ Handle depth: no more than 15%


There is also a Cup without Handle pattern.

✅ Chart is just a cup, no handle
✅ Base length: Minimum 7 weeks
✅ Base depth: 20-30%
✅ Buy point: High of left side of cup


The Double Bottom chart pattern is also very common & is one of the most powerful patterns to learn.

✅ Base resembles a "W"
✅ Base length: Min. 7 weeks
✅ Base depth: < 40%
✅ Buy point: middle of "W"
✅ Second low must undercut first low


The Flat Base pattern is another well known structure coined by William O'Neil.

✅ Base resembles a shallow consolidation
✅ Prior uptrend must be greater than 30%
✅ Base length: Minimum of 5 weeks
✅ Base depth: < 15%
✅ Buy point: High of structure
TRADERLION , ALL , CHARTS

You May Also Like

John Papa
John Papa
@John_Papa
Choosing the Right JavaScript Framework

Thanks for joining me @pluralsight to talk about javascript frameworks. We had 150+ awesome questions, so I'll try to answer the ones I couldn't get to online right here in a tweet stream

Watch the video -->
https://t.co/G7zeiKhXme


Q. Do arrow functions really make dealing with JavaScript's "this" keywords easier?

A. Yes! When using arrow functions, the scope of "this" is effectively passed in from the outer scope. See here in this REPL

1/n


Q. Where does Polymer fit in? Is it considered a framework like the others?

A. @Polymer is an excellent way to create web components, which are ideal for creating sets of interactivity that can be shared in web apps.

2/n

Q. Have we gone framework crazy?

A. At one time, quite possibly. A few years back we literally had framework overload. I feel it really has solidified into a few very strong choices.

3/n

Q. [Is] there no more need for @polymer?

A. See my previous question on this ... but in general, I think there is a lot of room for Web Components with frameworks.

4/n
ALL
Khatvaanga
Khatvaanga
@khatvaanga
Sri Gurubhyo Namaha.


After the phenomenon called Sri Chandrasekhara Bharati came another one - Sri Abhinava Vidya Teertha [1954-1989] the 35th Jagadguru. Srinivasa was born on Nov 13, 1917. He was initiated into Sanyasa by Sri Chandrasekhara Bharati in 1931. He was Jagadguru for 35 years.

He was chosen and specifically trained to take over Peetadhipatyam from Sri Mahaswami. He is majorly responsible for the way Sringeri currently is. He built various buildings for devotees, Gajashala, Gooshala etc.

Acharya on conversions:
Once a person approached Sri Acharya that some other religions are trying to convert Hindus and requested Sri AVT to do prevent these conversions.

AVT replied - what do u mean by religion? Religion i.e. mata is related to 'mati' or intellect.
Caste is called 'jAti' which is related to janana or birth.
Ex- breed of a cow. we cannot change its qualities to resemble another breed by changing its name.
ALL
Advertisement
Respectable Lawyer
Respectable Lawyer
@RespectableLaw
There's been a lot of talk about the missionary killed by the natives of North Sentinel Island. They're probably so aggressive because of this weirdo, Maurice Vidal Portman. So here's a big thread about this creep and some facts from my decade-long obsession with the island.


The Sentinelese are often described as “uncontacted,” but this not strictly true. They had a very significant contact in 1880 with Commander Portman.

Portman, the black sheep third son of some minor noble, was assigned by the English Royal Navy to administer and pacify the Andaman Islands, a job he pursued from 1880-1900 with the full measure of his own perversity.


Portman was erotically obsessed with the Andamanese, and he indulged his passion for photography by kidnapping members of various tribes and posing them in mock-Greek homoerotic compositions.


During his 20 years in a sexualized heart of darkness, Portman measured and cataloged every inch of his prisoner’s bodies, with an obsessive focus on genitals.
SOCIETY
Vigilant AFA
Vigilant AFA
@AfaVigilant
One fascist to watch in 2021 is Joseph Charles "Oakman" Golinske of SE MI. He's been a Proud Boy for a couple years, but took a break recently from the group and promotes himself through the "Oak Nation" channel on Telegram.


Most people may be familiar with him as the tall guy in the Proud Boys bridge shot, from their August 17, 2019 attack on Portland, which featured an American Guard bus trying (and failing) to bludgeon antifascists with hammers.


He was also with his g/f at the time (Dominique Tota, left of Tarrio), and that's definitely a twitter account folks will want to block/report because he posts on it.


He's been plenty active at the pro-Covid/anti-mask/ReOpen protests in Lansing MI, seen here with Jerry Wayne and an effigy of Gretchen Whitmer, who his militia friends tried to kidnap and publicly execute.


Outside of the Proud Boys, his solo "career" with Oak Nation features the same misogyny, classism and gateway to far-right domestic terrorism the Proud Boys themselves feature. Here's him peddling oxychlorinque and bragging about harassing service workers.
FOR LATER READ
Robin Berjon
Robin Berjon
@robinberjon
Recently, the @CNIL issued a decision regarding the GDPR compliance of an unknown French adtech company named "Vectaury". It may seem like small fry, but the decision has potential wide-ranging impacts for Google, the IAB framework, and today's adtech. It's thread time! 👇

It's all in French, but if you're up for it you can read:
• Their blog post (lacks the most interesting details): https://t.co/PHkDcOT1hy
• Their high-level legal decision: https://t.co/hwpiEvjodt
• The full notification: https://t.co/QQB7rfynha

I've read it so you needn't!

Vectaury was collecting geolocation data in order to create profiles (eg. people who often go to this or that type of shop) so as to power ad targeting. They operate through embedded SDKs and ad bidding, making them invisible to users.

The @CNIL notes that profiling based off of geolocation presents particular risks since it reveals people's movements and habits. As risky, the processing requires consent — this will be the heart of their assessment.

Interesting point: they justify the decision in part because of how many people COULD be targeted in this way (rather than how many have — though they note that too). Because it's on a phone, and many have phones, it is considered large-scale processing no matter what.
TECH