Happy New Trading Year

My resolution for this year is to get back into share trading.

Not only that, I will go into the business of share trading. I will trade according to my trading system and business plan, and have the discipline to stick to it at all times.

Trading System

My trading system will revolve around two strategies: The 35-week New High with Bear Range [10, 3.8x] Exit, and the Stochastic[50,10] 50% Crossover.

These 2 strategies yield very similar results in back testing simulations. The average open position for both is a little over 1 year. So it's a medium term trading system. I will elaborate on these 2 strategies in future posts.

Initial Capital & Funding

The initial capital is $10,000. I may add additional funds into my account if it is required.

I intend to use the power of gearing through Contracts For Difference (CFD) and/or Margin Lending trading. The brokers shall be IG Markets and Commsec.

Profits made will be initially reinvested into the trading account, as to build it up to an adequate level.

Position Sizing

The initial position size of trades is extremely important at the early stages of a trading account. The aim is to use suitable position size so that your risk is low enough to prevent you from going going bust early on due to limited funds, while at the same time steadily building your account.

I will use 2.5% of my trading account for each trade (up to a maximum of $5,000). So, initially I will place $250 (2.5%) of equity into each of my trades and use CFD gearing to obtain more funding.

Ideally, I will seek a margin level of 10% (that is, 90% leverage).

Using the 2.5% position sizing rule means that I could take on 26 consecutive losing trades from the outset before going bust. I think the chance of this happening is very, very low.

Monitoring

I am only required to conduct my research and monitoring of open positions on a weekly basis, as I shall be working with the weekly chart only. So, I will dedicate a few hours on the weekend to my share trading business; this should suffice.

I will also keep this blog updated regularly to assist with my trading activities and share my knowledge with those who may be interested.