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August 23rd, 2007 by eyal | Filed under Day Trading. |
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Choppy and tricky day for me. I took 3 positions: short PLCE and long LLNW and CFC. I made a data entry error in my position sizing calculation excel spreadsheet which led to a positions about 2 times the normal size on PLCE. I decided to keep the double size since it wasn’t that much more risk (unlike the previous time I had a sizing error which led to a 10 times larger position and an immediate scale out). The other two positions didn’t work either. I ended up with -3.5R for the day which isn’t that nice but is only a 1.2R more than I would have had otherwise without the error so I’m not going to fuss too much about it.
In my spreadsheet for Position Sizing I calculate both the number of stocks to trade (according to my capital, % risk wanted per trade, planned entry orice and stop price) and the dollar amount at risk as a result (altough I know in advance how much I want to risk). I take a quick look at that last figure before entering the order, just to make sure no mistakes were made.
I made other irritating execution mistakes in the past - I entered a trade, then set a stop, but instead of specifying it as STP order I stayed with the default of LMT order, so I was thrown out of the position immediatly. That happened to me twice :-)
That’s not a bad idea actually to show the re-calculated amount at risk. I was going to make other changes to the spreadsheet to minimize this error and will add this one as well. Thanks.
Yeah I’ve mad that error a few times before too, I’ve also tried to “close” positions and ended up doubling them by selecting the wrong direction (buy/sell). When you make hundreds of trades per year there’s no way to avoid some errors such as these. The important thing is to manage them well when they do happen and try to reduce the same thing from happening again.