Using Position Sizing to Manage your Risk

P osition sizing (or money management) is considered by many successful traders to be one of the most important aspects of trading. Unfortunately, many traders either ignore position sizing or spend to little time analysing the effects on their account balance.

Seer has been designed with position sizing as one of its key functional components and as a result you'll find it easy to use, build and test effective position sizing strategies.

Seer gives you access to the cash balances (including margin), open positions, active orders and trade history of your account regardless of how many trading systems, symbols or time frames being used. This data is always up to date for any point in time during backtesting or when trading live. This allows you to create sophisticated and adaptive rules based upon trading performance and risk profiles using actual cash balances. Even complex position sizing such as Kelly bet sizing, Optimal-F by Ralph Vince, Martingale and Anti Martingale are easily implemented within Seer.

Position sizing benefits 

  •    One of the most important aspects of trading
  •    One of Seers key functional components
  •    Easy to use, build and test effective position sizing strategies
  •    Create sophisticated and adaptive rules

 

Try Seer now!

Why not try Seer now? Or if you are ready to leverage all of the unique features and benefits this unique platform has to offer signup for a Live account.

 Download  

Separating Position Sizing rules from Trading System Rules

Each trading system within an account has it's own Money Management object, allowing you to maintain separate per system rules reflecting the risks of the system or the instruments that it's trading.

Position Sizing/

Seer provides a simple, effective way to separate the trading rules (those that generate buy and sell signals) to the rules that actually place orders in the market. At the high level, this allows the system developer to replace one money management object with another without having to know the details of the implementation. At the low level, the developer is able to analyse the runtime statistics of the system and react accordingly.

The money management object supports the following order types: Market, Limit, Stop and StopLimit, and exposes these orders as functions for the host trading system. When any of these functions is called within the trading system the corresponding event is triggered within the Money Management object for that system. What the Money Management object does with the order is of no consequence to the trading system, it could ignore it, place it in the market or even invert it.

Position sizing stratergies included with Seer

Fractional (2% rule) - Total Equity Model

This position sizing object will only risk 2% percent of the total equity on any one trade. For this position sizing stratergy to be effective, a StopLoss must be called in the system. This stop loss ensures that we exit at the correct risk level. A stop price should be passed into the object, if not, this position sizing stratergy will calculate a stop based upon three ATR.

Fixed Quantity

This position sizing object will always buy/sell the same fixed quantity.

Fixed Percent

This position sizing object will always invest a fixed percentage of capital.

Fixed Cash

This position sizing object will always invest a fixed percentage of capital.

Stop and Reverse fixed quantity

This position sizing object will always hold a position, either long or short for the symbol. On a buy/sell the rules will reverse the position. For example:

On the initial Buy, the object will buy 100 - we are now long 100 shares in the symbol.
On a Sell, the object will Sell 200 - we are now short 100 shares in the symbol.
On a Buy the object will Buy 200 - we are now long 100 shares in the symbol.

Position Sizing

One of the most important aspects of trading