Hey everyone! I’m a new trader ( 4th week in sim ). I’ve been thinking a lot about risk/share size and I thought of a really straightforward program that calculates share size based on your max loss per trade dollar amount and I wanted to share it.
Take for example $CAG today. Say you wanted to take an ORB at $31.55, setting your stop loss at $31.30 below VWAP.
So, we are risking .25 cents per share
The program has one input. "Enter Max Loss"
So, say that the maximum amount for any one trade you're willing to lose is $100 then ...
we input 100 and ...
The output tells us that for a .25 cent stop loss, we can take 400 shares. So if we bought 400 shares at 31.55 and stopped out right at 31.30, we'd lose ~$100.
or... say your $ANDREW and you're down to risk $400 a trade, then...
we input $400 and ...
The output tells us for a .25 cent stop loss we can buy 1600 shares! So, if we bought 1600 shares at 31.55 and we stop out right at 31.30, we'd lose $400.
Since I'm new I just decided on a $50 daily goal, a daily max loss of $30 and a max loss per trade of $10, so here's my output ...
I could only take 40 shares!
The program has slight rounding, and of course you're not going to always take stops in 5 cent increments, but it definitely helped put things in perspective for me.