From Starter to Full Position: A Risk-Managed Approach to Trend Trading

My Position Sizing, a Guide:

(position sizing = what % of your account you risk on a trade)

I personally use a combination of conviction-based sizing and pyramiding, meaning I sized based on how strong my thesis is + add size as the trade works.

Here's a loose version of my style, as it applies to a+ setups.

To start, I have zero problem putting 35%+ of my account into a high conviction, thematic long idea in a strong market environment.

So let's say we have one of those situations in front of us.

I have a $100K account, and I am putting up $35K for this trade.

Starter position is typically 10-25% of full position, with entry during a basing of price or a retest of prior breakout at key levels.

Stoploss is a daily candle close below those predetermined levels, usually around <5% on commons...so essentially you're only risking 5% of the starter position (<2% total risk to acct).

Next add is another 20-30% of position size, and again I'm *pyramiding*, so only adding as the trade proves me right (usually on higher lows).

> breakouts holding

> pullbacks bought

> relative strength

> thematic leader

> key levels respected

I'm adding on weakness within a strong uptrend on a leader.

Next is the meaty add....typically increasing position 35-45% to position size, now I'm roughly at 80-90% of my full position.

By this point:

- the trend is solid/established

- the market is confirming

- stock is behaving

I tack on the last 10% of the position on any flushes within the trend or shakeouts that hold structure.

Full $35K position now.

But you're probably thinking: 1) where does my stoploss move to? 2) when do I exit?

Well as you are adding / increasing position sizing, you raise your stop to reduce risk.

Simple example:

- starter entry at $100, stop at $95 (risking 5%)

- second add at $110 on a dip

now instead of keeping stop at $95…

you might move it up to:

- $100 (breakeven on starter)

- or higher depending on structure

So now you’ve increased size, without increasing total risk.

For exiting + scaling out, I usually take profit for a few reasons:

> any abnormal extension from trend (ex: stock pops 15% on news)

> if the catalyst has passed

> thesis fundamentally changes

> momentum starts to stall (in theme or mkt env)

> I hit my price target or level

...else I stay in.

I can go into this more in depth, but here are some youtube videos on pyramiding + similar strategies.

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