JB

My Trading Plan today was to improve my position size in order to increase my profits.  I thought that the best defense against the challenges of a low volume Market was a good offense – To bring size to bear against lethargic price action.  I came to the battle with two caveats in mind that I learned from my mentor, the former Head Trader at Hedge Fund Live.  First, his golden rule: “You must have more shares when you are right and fewer shares when you are wrong.”  Secondly, the priority he insisted we give to preserving capital must always be paramount.  With those in mind, I came to work this morning intent on improving my performance at scaling-in as my chief strategy to upgrade my position size on trades that gave me the possibility of a significant RRR – Risk / Return Ratio.

 For perspective, let me share that my typical entry size to take a position in John Deere (DE) is 200 shares, Visa (V) similarly is 100-200 shares – although a comparably priced stock, I am much more familiar and therefore more comfortable trading DE than V, hence the greater conservatism in the initial size of the latter.  Likewise, Mosaic (MOS) is a stock I monitor, but seldom trade, preferring instead the more familiar Potash (POT).  However, with the price of POT skewed in my own perspective from the recent influence of acquisition speculation, today I chose instead to trade MOS when the opportunity presented itself.  Coincidentally, MOS is another sixty-dollar stock where I would take an initial position of 100-200 shares, depending upon my comfort level at the time with this also less familiar name.  Typically, if I am able to scale in at all to increase my initial position size, I seldom am able to do more than double the initial position.  My goal today was to overcome that limitation.

 Although I realize there were many good trading opportunities today, my own sense during the day was that the volume was “Low & Slow” and I was struggling to find entry points I thought suitable to take initial positions.  However, when I did, I found success today sticking to my Trading Plan, and carefully, but decisively; scaling-in to larger position sizes that would provide an opportunity to profit quickly if the trade would move ten cents or more in my favor.  In four separate trades today, I established positions considerably larger than had been past practice;  1,000 shares of MOS, two trades of DE, one of 600 shares long and another of 800 shares short, and ended my day with a 400 share position in V.

 Throughout the day, I was never more profitable than a Net $60 after fees and commissions, but was never once negative on the day, thus preserving my capital.  Although I ended the day with a Net Profit of only eleven dollars and some change, the “change” in my discipline to CAREFULLY grow my positions through scaling-in improved the POSSIBILITY of hitting my $200 goal for the day, in spite of the challenges of traversing a low-volume environment.  Although today’s success reflected little Net Profit, I am confident the progress I made in my trading mentality will provide rewards that will compound over, and over, again.  I may have only made eleven dollars toady, but the change in my trading style is a lesson that will add up to significant profit improvement over time.