Increasing Position Sizes | Podcast Episode #470

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Hey everybody, this is Ryan Mallory with shareplanner.com Swing Trading in the Stock Market. In today’s episode, I’m going to be talking about increasing my position size.

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Now, I’m not talking about just, you know, 1 trade here or 1 trade there where I’m taking a bigger position size than what I would normally do, which I actually don’t even believe that’s a, a good method in trading.

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I’m talking about actually increasing your, your position size for all of your trades going forward.

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And so of late, I have actually changed my position size of how much I allocate to an individual trade on a percentage basis.

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And I’m going to reveal that to you later in this show. But right now, what I want to tell you about is why position sizes matters.

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Because when it comes to position size, a lot can hinge on whether or not we’re successful or we’re going to lose on a trade based on our position size.

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Because the position size can create a lot of emotion and a lot of volatility if we’re not prepared to manage a position size that large.

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On the flip side, we can be very nonchalant about a particular position in the stock market if we don’t have that much exposure to begin with.

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So what you want to do is you want to find that that balance between the the position being meaningful and the position not being so meaningful that it creates a lot of emotion because you can make it, you can make that position as meaningful as you want.

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Like you go up to 100% long on a on A1 stock, that’s going to be a pretty meaningful position there.

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But where it runs into problems is that your emotions are going to be fried.

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You don’t want that kind of emotion being injected into your traits. And so you have to find that balance between what is meaningful and where you can handle and control your emotions.

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Now.

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Before I was, I used to trade about 12 1/2 percent on each one of my traits.

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I’m definitely not doing that now. And what I’ve gone up to is 16% on all my trades.

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So that’s going to give me about 6 1/4 full position. So we can just round down and say 6 full positions at any given time.

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And there’s a number of reasons for that. But one, one of the things that I would also like to say is that often times as traders, we get caught up in the number of shares that we own on a, on a stock.

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Or even worse, you’re drawn to stocks that are trading at a lower dollar amount because you can buy more shares.

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In the end, the number of shares doesn’t mean anything. It really doesn’t.

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If you get 5% of a return on your trade, it doesn’t mean matter if it was done with a 100 shares or 1000 shares, if it was done with one share, still doesn’t matter.

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It’s still the same thing. What it comes down to is the amount of capital that you’re putting towards each trade.

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That’s where your focus should be, not the number of shares that you have.

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And they will actually stay away from really good quality trade setups simply because they can’t get enough shares of that stock, Not realizing

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And they, I don’t know if it gives you like a sense of like self worth or what, what that is. But it’s just something that I’ve noticed over the last 20 years.

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People get obsessed with how many shares that they have and they will actually stay away from really good quality trade setups simply because they can’t get enough shares of that stock, Not realizing that, you know, if you own $100 in stock in a stock that’s trading at $50 a share, yeah, you only have two shares of that.

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Or if you have, you know, 100 shares in a stock that’s trading at a dollar, guess what? You still own the same amount in either one.

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It just doesn’t matter how many shares that you own. And so I think too many people get caught up in that.

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Don’t get caught up in that. I in any of my positions, I can never tell you how many shares I own because it really doesn’t matter to me how many shares that I own.

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It absolutely means Jack squat to me because there’s nothing from a trading standpoint that that knowledge helps me with.

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So when I’m putting in my my trades, I’m looking at the amount of capital that I’m willing to put towards that trade.

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And so like I said, I, I used to trade at 12 1/2 percent.

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Now I’m up to 16%.

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Again, it goes back to finding that happy medium between what’s, what’s manageable from an emotional standpoint and what’s meaningful.

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And so that 16% mark, I don’t want to go up to 17. I don’t even want to go up to 18.

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Definitely don’t want to go up to 20 at 16%. I found that that was a, A level for me and it may change in the future.

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I think that the, the position sizes that we take on will change over the course of your career.

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It doesn’t mean that I’m less interested in the market, far from it, but I’m picking and choosing more of my spots than I have than ever before.

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I think some of that comes with refining my top down trading strategy over the years and how how well that has helped me to be able to pick and choose my spots rather than just trading for sport.

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I’m trading for purpose now. Also, something that has a purpose is swingtradingthestockmarket.com.

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Yes, I am going to plug this service into this podcast like I do every every time I do one of these, but swing trade in the-stockmarket.com.

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If you enjoy the the the podcast and the content that I provide and you want to see it in action, you can do that with Swing Trade in the-stockmarket.com.

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With it, you’re going to get all of my stock market research each and every day. That’s going to be multiple videos sent to you, whether it’s mega cap updates or updates on the

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general stock market like the S&P 500, the Russell 2000, some of my indicators, the NASDAQ 100. Also, each morning I send out a watch list of the stocks that I’m I’m currently looking at for

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potential long and short setups. And I’m going to give you a little bit of my thoughts on the market.

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Plus I’m going to, I’ll follow up with you that afternoon with a watch list review video where I go over all those charts to see which ones are working, which ones not.

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And then finally, the beginning of each week, I sent out a master bullish and bearish watch list of where I’m going to be getting all my trade setups from.

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So it’s a really cool service. And in the process you’re supporting this podcast.

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That’s all I’ll say about it. That’s all I’ll say.

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I don’t want people think that’s all I’m trying to do is just plug a service. But like everybody else, you got it.

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You got to pay the bills. So any case, my trade frequency has gone down.

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I have found more ways to unearth unnecessarily unnecessary losses. You hear me talk a lot about it.

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I was like, OK, one of the things that I think a lot of people really hurt themselves with this by taking on trades that were completely unnecessary, that didn’t make sense, that had no logic to it.

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And when you can get those very lot of unlogical and like obvious trades out of your, your system and out of your trading, you’ll see a huge improvement in your performance.

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Well, I, I was able to do that years ago. I was able to get a lot of those unnecessary losses out of the portfolio.

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But one of the other things though that you’ll continue finding yourself doing is is to, to find like some of the more minute unnecessary or even maybe borderline unnecessary losses out of your

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portfolio too. And I, I’m always trying to refine them.

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I’m trying to find more ways to eliminate the losses that I should never that that maybe I didn’t necessarily have to take.

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And that’s that’s something that’s kind of like improving a golf score, right?

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In theory, right, No, nobody’s ever going to get to that level. But in theory, if you want to perfect your golfing, you have to hit a hole in one on every shot.

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Again, nobody’s going to do that, just like nobody’s going to be a perfect trader. But you can always lower your score in golf and get closer to that mark.

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And likewise, as a trader, we can keep trying to lower the number of unnecessary losses that we’re taking.

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We’re just reducing the number of losses in general. Because when you do that and you can continue to maximize your profits in the process, then you’re

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you’re looking at a scenario where your overall performance is improving. Now, what you don’t want to do is that you find you find a way to avoid some losses and in the

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process you’re, you’re wiping out a slew of winning trades because you’re trying to, to eliminate just one losing trade.

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But in the process, you might be wiping out five really solid winning trades because of it. That’s kind of like throwing the baby out with a bathwater.

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You don’t want to do that. So when you’re trying to fine tune your trading strategy and you’ll be doing this the rest of your

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life or as long as you’re trading at least. And, and it’s something that I’m doing on a day-to-day basis, looking at different opportunities

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that I can exploit to improve my trading. This is one of the things that started coming up.

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I started realizing, hey, I’m trading a lot less than I used to. There’s probably good reason then to see if there’s an opportunity to increase my position size and

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to make sure that when I increase my position size, that one, that the trade setups remain meaningful to me.

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And two, I’m not increasing it so much that the emotions are out of control. And so I got up to about 16% and I was fine there.

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I didn’t want to want to go much higher than 16% of my position size. I could tell from the emotion standpoint that was that was a happy medium.

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When I went above that, it didn’t work. When I went below it, it didn’t add anything to my my trading demeanor.

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So I stayed right there at 16%. So that’s what I’m saying.

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I used to be at about 12 percent, 12 1/2 percent. Now I’m at 16% and this is also going to help me bridge the gap between not trading with enough

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exposure in the markets, like when the markets are getting high and they start moving to the upside. This helps me bridge that exposure.

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It helps me to have more exposure in the markets as a result of for instance, when I was at when I had three positions in the portfolio before that would represent about 3037, 1/2% with 16%, it gives

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me about 48%. So there’s a much bigger difference in exposure to the market.

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And one I’m almost, I’m just a little bit over a third of My Portfolio exposed to the market. The other with the same number of positions at 16%, I’m about half of My Portfolio or just a little

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bit under half of My Portfolio is exposed to the market. That’s a big difference and that’s something that I want to take advantage of.

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So a couple of things that’s led me to to be more able to unearth some of the areas that I can that I can eliminate unnecessary losses.

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There’s been some things that definitely helped me over the years. One, the 30 minute rule, not chasing stocks in the 1st 30 minutes of trading.

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That has saved me from more unnecessary losses probably than any other rule in the book really, because that first 30 minutes is so unreliable.

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And as a result, if you’re using something like a 30 minute rule, some people will use like I’m not trading in the first hour rule.

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I don’t necessarily think that’s that, that you have to go that far, but but I don’t blame you if you do.

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I go 30 minutes after the 1st 30 minutes if I’m looking to play a breakout and let’s say it triggers in the 1st 30 minutes.

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OK, let’s see if it breaks the highs of the day with and if and if the reward risk ratio is still good, I’ll make that trade that.

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That is one way that you can avoid a lot of unnecessary losses where you’re picking and choosing your spots a little bit more strategically.

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When you’re trading that first 30 minutes and you’re getting caught up in that hype train far too many times you witnessed the best price of the day reached in the 1st 30 minutes and then the stock

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market fade. You also see that a lot when we see huge gaps to the downside and everybody gets excited like, oh

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man, I’m going to be short in this market today. And you get short right at the market open and then you watch the market go against you the rest of

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the day. Also extremely frustrating to deal with from from an entry standpoint.

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I always tell people that my most, I don’t know, I would say that that my least favorite time in a trade is the first day that I get in because so much of that trade hinges on what was your entry

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price in terms of how does it look at the end of the day. Often times you’ll see a stock that you get into it finishes green on the day you got long in it,

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but you’re actually in the red because you got in towards the high of the day and there might have been a little bit of an intraday pullback that never quite recovered.

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That 30 minute rule keeps you from really regretting some of those decisions. You ultimately you can’t avoid that happening from a standpoint of, OK, every time I get in, it’s

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just going to keep going higher. When I, when I get into the stock, I’m not going to have any like, you know, the first days of a of a trade were the the stocks in the green, I’m in the red.

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I hate those, but they’re they’re not entirely unavoidable.

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But what is a avoidable by having the 30 minute rule is getting into a stock in the 1st 30 minutes of trading, getting caught up in that hype train and then watching the trade against you the rest of

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the day. Really want to avoid that.

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So the other one that has helped me too with with not chasing stocks because I think a lot of your unnecessary losses do come from chasing, whether it’s in the 1st 30 minutes or what I like to do is

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I always keep pivot points on my 5 minute charts. And when it starts to get above the R3 level, I get a little bit more concerned about entering into

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a new position when a stock’s trading above its R3 pivot level. Now I’m not going to get into to what the pivot level equations are, but most of your trading

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platforms do have them. You can just slap them right there on an intraday chart.

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Really, really helpful. But it also can keep you from chasing a stock way, way overextended.

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And then finally, I would say one of the things that’s helped me find find the unnecessary losses in My Portfolio is just refining my top down trading strategy getting better and better and better at

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that. That is been something that keeps you out of a lot of trades that are not going that that appeared to be going in your direction.

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That might be doing really well.

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But if the market, the sector and the industry are not lined up, you may be just getting into like a, a, a false notion of or a false sense of, of, of comfort with a trade that is ultimately going to

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pull back and go against you.

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industries that I’m looking to trade in, I’m not going to get into that trade. And that has getting better and better that over the years has really helped me to refine my trading

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and also eliminate unnecessary losses. If you enjoyed this podcast episode, if you’re watching it on YouTube, I’d encourage you to like and

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If you have any questions, please feel free to e-mail me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.