A Traders Quick Guide to Position Sizing

Posted By: Steve Burns

on: January 07, 2016

I base my position sizing in my trades on the fact that I never want to lose more than 1% on any one trade. If I am trading with a $100,000 account, I don’t want to lose more than $1,000 in a losing trade. A stop loss level has to start at the price level that you know you are wrong, and work back to position sizing. If the support level on your trade is $105 for your entry and you set your stop at $100, then you can trade 200 shares with a stop at the $100 price level. 200 X $105 = $21,000 position size for 200 shares. This is about 20% of your total trading capital with about a 5% stop loss on your position that equals a 1% loss of your total trading capital.

1. A 20% position of your total trading capital gives you a potential 5% stop loss on your position to equal 1% of total trading capital.
2. A 10% position of your total trading capital gives you a potential 10% stop loss on your position to equal 1% of total trading capital.
3. A 5% position of your total trading capital gives you a potential 20% stop loss on your position to equal 1% of total trading capital.

The average true range (ATR) can give you the daily range of price movement and help you position size based on your time frame and your stocks volatility. If your entry is $105, your stop is $100, and the ATR is $1, then you have a five days worth of movement against you as a stop.

Start with your stop loss level and volatility to give yourself your position size. The more room you want on your stop determines how big of a position size you can take.

If you only risk losing 1% of your trading capital when you are wrong, then every trade can become just one of the next 100 with little emotional impact. Ultimately, you can survive losing streaks and increase your odds of prosperity.

PUT - CALL ratio (PCR) indicator

Put-call ratio (PCR)

Oggi parleremo del famosissimo indicatore tecnico Put/Call Ratio. Si tratta di un indicatore che riesce ad individuare correttamente il sentiment grazie alla divisione dei venditori e dei compratori all’interno del mercato delle opzioni. Il Put/Call ratio più utilizzato è quello del Chicago Board Options Exchange (CBOE):

Come interpretare l’indicatore Put/call ratio (PCR)

Prima di iniziare facciamo una precisazione:

• Posizione Put = Posizione di Vendita
• Posizione Call = Posizione di Acquisto

L’indicatore Put/Call Ratio è un indicatore che mostra dunque il volume delle posizioni Put in relazione al volume delle posizioni di tipo Call. Le posizioni Put (di vendita) vengono quindi utilizzate per bilanciare la forza del mercato oppure per scommettere sul suo avanzamento. Il rapporto Put/Call (Put/Call Ratio) è al di sopra di 1 quando il volume delle posizioni Put supera quello delle Call e sotto ad 1 quando il volume delle posizioni Call supera il volume delle posizioni di tipo Put. 

Tipicamente, questo indicatore viene utilizzato per misurare il sentiment di mercato. Il sentiment di mercato viene considerato molto ribassista quando il rapporto Put/Call si trova a livelli relativamente alti, oppure eccessivamente rialzista quando si trova a livelli relativamente bassi. Gli analisti possono volendo anche applicare delle medie mobili e altri indicatori per “pulire” ulteriormente i dati in modo da derivare degli altri segnali di rilievo.

Calcolo del Put/call ratio (PCR)

Il calcolo del Put Call Ratio è estremamente semplice e non necessita di operazioni difficili per ottenerlo. Si tratta di un semplice rapporto (una divisione semplice quindi). Ecco come si ottiene il Put/call ratio (PCR):

Put/Call Ratio = Volume Put / Volume Call

Interpretazione del Put Call/Ratio

L’interpretazione del Put/Call ratio è molto simile a molti altri indicatori di sentiment. Il rapporto Put/Call viene usato come un indicatore per misurare gli estremi rialzisti e ribassisti. Si tratta di un indicatore in controtendenza, che si muove al ribasso quando troppi trader sono bullish. Gli indicatori in controtendenza invece si muovono al rialzo quando troppi commercianti sono al ribasso.

I trader acquistano delle posizioni PUT in modo da assicurarsi contro un declino del mercato oppure semplicemente per scommettere sul ribasso del mercato. Mentre le posizioni di tipo CALL non vengono utilizzate per scopi di copertura, vengono comprate come scommessa puramente direzionale sull’incremento dei prezzi. Il volume delle posizioni Put incrementa quando le aspettative per un declino aumentano. Inoltre, le posizioni di tipo Call aumentano quando le aspettative per un rialzo aumentano. Il sentiment del mercato tocca gli estremi quando il rapporto Put/Call si muove relativamente verso dei livelli massimi o minimi. Questi estremi sono di tipo fisso e non possono cambiare nel tempo. 

Il rapporto di Put / Call alla sua estremità inferiore mostra una tendenza al rialzo eccessiva a causa del volume call che sarebbe significativamente superiore a quello Put. Dal punto di vista del trading in controtendenza, l’eccessiva tendenza al rialzo sosterrebbe una linea attendista e la possibilità di un declino da parte del mercato. Un livello Put/Call alle estremità superiori mostrerebbe un ribasso eccessivo a causa del fatto che il volume put sarebbe significativamente più alto rispetto al volume delle call. Un ribasso eccessivo sosterrebbe l'ottimismo e la possibilità di una inversione rialzista.

Put/Call Ratio: in conclusione

Essendo un indicatore in controtendenza, i segnali forniti dal Put/Call Ratio spesso saranno a favore del trend principale.  Il volume delle call aumenta nel caso in cui ci fosse un rally, mentre aumenta il volume put nel corso di un declino prolungato. Quando il rapporto di Put / Call raggiunge una delle estremità, ci suggerisce che gli investitori sono eccessivamente rialzisti o ribassisti. Crediamo che sia estremamente importante sfruttare l’indicatore Put/Call ratio in combinazione con altri indicatori, come ad esempio gli oscillatori di momentum oppure con i pattern grafici, in modo da confermare i segnali forniti da questo indicatore molto utilizzato tra i trader professionisti.

6 Reasons Bitcoin's Rise Is Different This Time

By Investing.com (Clement Thibault/Investing.com)CryptocurrencyJun 25, 2019 07:02AM

• Bitcoin is back—with a vengeance. It's now trading beyond $11,300 levels, a point the digital currency first hit in November 2017, when it was on its way toward $20,000, where it peaked before 2018 began.

BTC/USD Weekly

But after losing 80% of its value in 2018, many investors may have already written it off, dismissing the cryptocurrency as just another asset bubble on its way to zero. Still, though the coin appears to be rising from the ashes, there seems to be far less excitement about its upward momentum right now, in marked contrast to its previous move higher.

Could 2019's new Bitcoin bullishness be different from the 2017 frenzy?

The FOMO Index

One of the major characteristics of the previous bull run was the extreme degree of interest from retail investors, coupled with daily coverage of Bitcoin's price moves in all major news outlets. Is this bull also being fueled by retail? While not a perfect indicator, Google Trends can help clarify how robust retail interest actually is.

1. 'Bitcoin' Search Volume

Google Trends Search Volume for Bitcoin 2016-2019

Searches for the term ‘Bitcoin’ had a relative strength of 39 in November 2017. Trends are measured against their peak performance, so 39 indicates the volume of searches for the month was 39% of the maximum achieved. The ultimate volume reached was 100, a month later, in December. The relative strength of 'Bitcoin' searches thus far in June 2019 is only 12, three times less than it was when the cryptocurrency previously crossed $11,000 on its way higher.

2. Search Volume for 'How to Buy Bitcoin'

The stark difference between now and then is particularly evident for the search term ‘How to Buy Bitcoin.’ As well as providing an indicator of general curiosity, it also offers a view into the approximate number of new investors interested in the asset. Unsurprisingly, searches for the term peaked at 100 in December 2017, with November coming in at 41. For June 2019, the relative strength is just 5, eight times lower than it was in November 2017.

It appears that this time around, mom and pop investors are barely driving Bitcoin’s price versus their influence a year and a half ago.

Network Metrics 

Accessing the current state of the Bitcoin blockchain, including the number of active addresses, fees paid, number of value transfers, or the mean size of the transaction can tell us whether Bitcoin’s price is overheating. All data below from coinmetrics.io.

3. Active Addresses

Active addresses identifies the number of active participants. In November 2017, 1.15 million addresses were active on the day Bitcoin crossed $11,000. This past Sunday, when the digital currency first crossed that threshold, only 875,000 addresses were active, 24% fewer than in 2017.

4. Network Fees

This metric is a particularly good way of seeing if the network is overloaded with transaction requests. Since miners prioritize transactions with higher fees, the mean fee is a good way to see how congested the network is. During November 2017, the mean fee for a transaction was $6.5 USD versus $2.3 on Sunday. No sign of overheating there.

5. Value Transfers

The adjusted value of transfers on the Bitcoin network is also lower now than it was in November 2017. Back then, the average amount of BTC transferred daily was 384,000; currently it's 177,000, less than half the daily amount previously registered at the $11,000 price point.

6. Mean and Median Transfer Sizes

Finally, the mean and median transaction sizes are also indicating the market is still subdued. The mean transaction size in November 2017 was 2.2 BTC vs today's 0.82 BTC. Likewise, median transaction size then was 0.012 compared to just 0.007 BTC today.

Conclusion

Clearly, this Bitcoin bull hasn't reached an extreme just yet. That's surprising considering the cryptocurrency's recent run-up of 207% year-to-date, having jumped from ~$3700 to ~$ 11380 in just a short time.

Significantly, these gains occurred even without the level of retail interest seen before the 2018 crash. Of course, at that time many investors lost 80% and more on the asset, something that's bound to scare the uninitiated. And given Bitcoin's history of volatility, there still could be another roller-coaster ride ahead. If this upward momentum continues, given Bitcoin's previous history of robust surges and violent plunges, once a critical mass is reached, look out for another parabolic ride higher andlower.

Best way for interested investors to proceed? Focus on metrics going forward. During the last bull run $11,000 was hit as the market was overheating; that's not the case yet.