Q&A – Saturday morning mailbag: Time & sales, position sizing, Canadian brokers, position sizing, & more!

Video #1 questions:

1. What is up with Interactive Brokers’ Time & Sales feature? It seems to have multiple prints of large trades that don’t occur?
2. How do I enable AQS Stock Loan / Borrow in IB? (I suggested seeing my post on that and then signing up to my email list so you can see another post on it; there is a link on the right-hand side of my blog).
3. How should I determine my position size for trades?

Video #2 questions:

1. Do you know about using Canadian brokers to trade penny stocks or to evade the PDT?
2. How did you get the nickname Reaper?
3. It seems that the term ‘short squeeze’ is used too loosely? How do you tell if something is a real short squeeze or if it is just momentum buyers?
4. How do you find stocks that you buy that are potential pumps?
5. What are IB’s commissions for very low-priced stocks?

Disclosure: No positions in any stock mentioned. This blog has a terms of use and you can find all my disclaimers and disclosures there as well; my full terms of use is incorporated by reference into this post.

0 thoughts on “Q&A – Saturday morning mailbag: Time & sales, position sizing, Canadian brokers, position sizing, & more!”

  1. I like your response to Position Sizing…
    It’s hard with under $10k and not being able to take a large position size when the value of the stock is $6+..
    I found myself taking a 70% position size on a stock valued at $12.00 but because I was looking for only .50 cents in movement, it was necessary to have atleast 300 to 500 shares in the stock if i’m even going to play the stock at all… If i reduced my position size to only 30-40% which should be the max, I would have only taken a 100 – 200 share position size, and that means with the lack in volatility of the stock, I would have gained at most $50 to $100 in profit if it were to move .50cents.

    My method is calculating how much i’m willing to put at risk… say $100… that means if i take a position size in at stock short biased at $3.90 and my stop is at $4.01 where resistance is, i’m willing to risk .11 cents in the wrong direction… $100/.10 = 1000 share position size… Normally i’m only willing to risk %1 of my portfolio… if the porfolio is only $5k then i’ll risk $50 with a possibility of loosing .10 cents in the stock so my position size is only 500 shares. $50 loss / .10cents = 500 shares

  2. Thanks for touching on one of my thousands of pet peeves.

    It constantly annoys me how whenever someone has a stock short and it goes up they start yelling “Its a short squeeze!”

    It could go up 2 cents, but if they are short and it doesn’t collapse immediately, its automatically a short squeeze..

    1. On that same note, I am annoyed when people have to rationalize the end of day movement with either “short covering”, “profit taking”, or “overnighters getting in”.

      It’s not something anyone can quantify – just an unhealthy way for people to talk themselves into a position or a market bias.

  3. I don’t think Anyone should Follow what i wrote by the way… As several people are explaining, i’m putting way to much at risk. @geckler @legacytrades @stockguy22

    I Know Tim Sykes although I never risk more than 30% on any of his type of trades would strongly disagree.. and i’m sure Reaper thinks its retarded too…

    My excuse… I’m 23, I would like to build a portfolio, I’m learning, this is all I do other than working my other job meaning I don’t have a life at all and Trading consumes everything I’m doing right now… And I have faith in my ability to Reduce Losses ASAP… To me a loss of $100-50 in any one trade is too much…

    I’m doing everything I possibly can to reduce losses, as that is more important right now. Practice makes perfect and the average person does not succeed in this business with less than 2years practice and I’m willing to accept that.

    As of right now… I have nothing to loose, except this capital I built, and my priority in life is dedicating as much attention to my portfolio as possible, as I turn this into a career.

    1. “My excuse… I’m 23, I would like to build a portfolio”

      You know JohnC, you can build up cash for your portfolio through other means than trading.

      Imo 10k is not enough to start trading fulltime. yes you claim not be worried about losing it all which is good, but if you lose your bankroll you will still need another one to trade with later.

      If you are so busy, why don’t you cut extraneous expenses and deposit the money into your account instead of taking excessive risk? e.g. cut cable if you don’t watch tv, get rid of a gym membership and work out at home, cut down on high priced food, turn the thermostat down to 68, sell crap you don’t need on ebay, sell your car and take the bus etc etc

      paper trade for practice till you more capital,Then once you have sufficient capital you can do what you want.

      A lot of very successful traders and investors spend very little money (at least at first).

      Excessive risk is excessive risk. Being careful and cutting losses quick certainly helps mitigate problems but that doesn’t change the fact that there is an appropriate amount to risk per trade. Even the best have to allow for the unknowable and random.There’s no other way around it.

      There is potentially extreme danger in what you are doing that you will force trades you shouldn’t.

      well I hope it works out well for you.

  4. Pfffft!! In my opinion your 1000X better off then 99% of pennystockers. At least you have a formula and a plan.

    I bet an enormous majority of pennystockers just keep adjusting the share quantity down and hitting submit until the order goes through!

    “Damn, not enough buying power for 1000 shares, I’ll try 950!”

  5. This feature is getting so popular (understandably so)
    that perhaps you ought to archive the individual answers somehow.
    I could see a lot of these questions being repeated to you over and over. Could save you some time

    thanks as always, I really liked your answer on position sizing. That’s an aspect most traders don’t utilize well.

    FWIW I didn’t like Montreal, It is very very beautiful but man the people there seem to have a grudge against Americans , even the polite ones who know a little french.

    I hope that was an isolated set of experiences, but an old roommate of mine who happened to be from there assured me that it was not 🙁

  6. Hey,

    for the person that wants to know about Canadian brokers… I know some things about it because I’m Canadian and have had 3 brokers in the last 7 months.

    thinkorswim === is in Canada, bought out by TD but not taking new clients , maybe in the spring.

    IB === it what I use and it’s the best in Canada, no RRSP’s though and for penny stocks it gets expensive compared to what I heard others use is Questrade…it’s good and cheap but what about shorts ? will they have any when you want them like IB does ? click the link below and read the review.

    off the top of my head I think most of the penny stock trades I done and they are usually around 80 cents to 2.00 cost me about 25.00 35.00 or so., I usually put in $10k but I get the shares to short them with IB, so I don’t care when I made 1000.00 profit if I paid 35.00 or 9.95 in fee’s … I might trade 3 or 4 of these cheapo’s a week, but if you do more maybe IB is not for you.

    don’t go with the ROYAL…that place is a joke.

    don’t go with iTrade, I lost 3k because of them in the summer ,also …the platforms are expensive and they have half the features etrade has…Scotia bought etrade…and changed the name. plus many other problems.

    you will have to search this site below, i think maybe it was tradefreedom that has cheaper trades or questrade…..not sure, read the reviews…

    http://www.milliondollarjourney.com/think-or-swim-discount-brokerage-review.htm

  7. BTW , there is no PDT rule in Canada, but I think IB uses US rules, I have more then 25k so I don’t know if they follow the rule in Canada for sure.

  8. This will not make me very popular, but as I have noted before, under capitalization is one of the biggest problems most traders have, in conjunction with improper bet sizes per trade, relative to the balance size of your account.

    I agree with Tastylunch.

    Fact is, you sadly have to beat commissions failed trades and other expenses, but you cannot take on wrong bet sizes relative to your stake, so you need to save up and paper trade *until* you can trade seriously.

    For some reason, many traders, even penny players, think they can start outright with 2-3K accounts, barely qualifying for margin, and succeed while also beating expenses as described above, trading position sizes of no less than 1000 shares a pop, or much more, totaling half or more of their total funds per trade in play, which is silly.

    It is hardly exaggerating to say even a PDT account with like $26,000 is under capitalized. I think this issue is a great cause of failure among traders, you have to have enough money to accelerate the grubstake and sustain momentum in growing the account, and making 50 bucks per win is not going to do it, and you cannot get the bigger ones without improper sizing on small accounts, which is an unbalanced risk profile.

    Yes, it is theoretically possible to grow a small account gradually and eventually have a 50K+ balance via trading your way to that level, but counting on that is optimistic.

  9. Reaper,
    One of these days please do a post on how you and other traders handle the wash sales rule. Since I am an active trader (15 to 30 trades per day) I elected the MTM accounting and do not have to worry about it. Many new traders get snared with this rule and end up losing at tax time.
    MM

  10. I agree with Tastylunch and BigT.
    I’m going to dedicate more time to accumulating wealth outside of trading. My experience is simply not worth risking the capital I have… I saved up enough to purchase a fairly decent used car, in cash.
    I’ve barely accumulated any wealth trading as you can see in my performance.
    It’s actual proved to be nothing but a waste of time so far, between the blog, and trading experience, although I have learned alot.

    Thanks though as almost everyone has pretty much suggested Work before Trade.

  11. Hey guys,

    I’ve been trading for just over 5 years now with the last 3 or so almost daily. I have made a lot of friends and seen tenfold as many try their hand at this profession only to throw in the towel.

    IMHO, the real factor is experience. When you not only know what to do but are able to pull the trigger and do it, you will have reached the level one needs to succeed. How long that takes depends on so many factors. My best advice to anyone who is starting out or has been trading for less than three years is to focus on learning how to trade as opposed to building capital.

    Find the passion to continue to learn. It will not be easy, but nothing worth struggling for every is.

    Thanks to twitter and chat rooms we see folks who make big trades. That can be any of us once we have gained the knowledge and mindset to do so.

    Let me know if I can be of any assistance.

    Monk

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