Day Trading How Many Shares You Should Buy!

Day Trading How Many Shares You Should Buy!

Day Trading How Many shares you should buy! Talking about position sizing for DayTrading and how you can determine your risk and reward fast. You’ve gotta be able to determine your stop loss fast sometimes and understanding this simple idea can be the difference in blowing up your account or just having a small manageable loss.

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how many shares should you buy I get this question a lot a lot of people ask me this question they want to know how do I know how many shares of a stock I should buy Patrick if I want to make a million dollars how many shares of TBL tea should I buy well it shouldn’t be about how much money you’re wanting to make but more so it should be about how much money you’re willing to lose talking about that idea in this video so you know what to do stay tuned what’s going on day trading family what’s good it’s Monday markets closed today Martin Luther King Day so I want to make a little video kind of talking about how I’m deciding how many shares I want it by now I’ll admit sometimes I just end up randomly buying the amount of shares that I can buy depending on my buying power so if I know I have $30,000 worth of buying power and I have a ten dollar stock I might end up buying 3000 shares of that stock because a lot of times I don’t plan on losing when I go into a trade I know that sounds crazy but a lot of times I really just know not so much guaranteed but I got a pretty good idea that I’m going to be able to either get out for a small profit or you know a decent sized profit depending on the stock depending on the move that will adjust the amount of shares but normally what I like to do is I like to figure out what’s my risk what’s the reward how many shares can I afford to buy if I only want to risk 10 cents so let’s say I wanted to buy TBL tea here thinking we might get that push above $4 I wanted to buy it here at the $3 and 50 cent right there kind of risking the idea of buying here three dollars and 50 cents for the possible pullback we’ll say down here to the bottom of this candle which would give me a risk of 20 cents so now I know that if I risk 20 cents how many shares am I willing to take now normally I like to trade on the idea of sense in the sense that I’m looking for possibly 40 50 cents on this trade and if I buy 3000 shares that’s $1,500 in profit if I buy 3000 shares and I lose 20 cents I’m losing $600 so it’s easier to think about the sense if that makes sense whoa whoa if that makes sense get it okay but what I’m really looking for here is the idea that if I’m going to risk 20 cents am I willing to absorb that loss because remember at the end of the day we’re trading and there’s a good chance not I don’t say a good chance but there’s a chance that you’re going to lose a trade so you have to be able you have to be willing you have to be able to handle the loss and the best way to be able to handle a loss is by pre defining your risk that risk is not always going to be on point let’s say I say I want to let’s say I want to risk 20 cents here and I risk 20 cents and all of a sudden I get slip edge and now I’m down 30 cents so there’s always the unknowns the variables that we can’t account for we don’t know exactly what’s going to happen with this stock in the future we’re just trying to make the best educated guess I guess you know really at the end of the day day trading you’re kind of just guessing where the stock is going to go next and with the idea of learning patterns learning how these stocks move being able to see the resistance the support and all of that being able to have those indicators were able to then make our guesses more educated so instead of just a 50/50 gamble we’re taking a 70 80 % guess because in the past we’ve been right 80% of the time about the move that is to come and obviously you could be a profitable day trader with only a 51% win rate as long as your losses are much smaller but that’s not what this video is about this video is about how do you determine how many shares to buy so for example tea BLT I’m risking 20 cents and I’m big in I’d be okay with losing 6 dollars on this trade because I know there’s a pretty good chance if this thing does break the three you know breaks out of this downward trend right here at open we get to move up there to $4 I can see already okay from 350 area up there to $4 that’s a 50 cent win so if I have three thousand shares that’s fifteen hundred dollars and there’s a probably even better chance that if we break above $4 we might get four twenty four thirty four fifty you know all the way up there to 550 let’s just be realistic here and think that there’s probably a good chance if the stock does break above $4 there’s a good idea that you know normally when a stock breaks over the whole dollar we’re gonna get 10 20 cents we’re looking at a 60 70 80 cent return here with pretty good probability that we’re gonna break out to the upside so I’m okay with risking 20 cents being $600 and I’m looking for the reward of 1,500 1,600 or even possibly $2,000 and that’s really what I’m doing going into the trades I’m not really thinking about oh my gosh uh how much money am I willing to lose doing calculations trying to figure out all the calculations before going into the trade I’m more so just looking at the cents the point zero zero part of the trade so if I know I’m getting in here at 350 I know that there was support there at the 330s I’m risking 20 cents for the possible 40 60 70 80 cent move to the upside and that’s a pretty good risk reward and really depending on the stock depending on the price of the stock it’s gonna dictate how many shares you can buy as well and with your account your margin and all that yeah look at the opportunities you got to be able to quickly quickly be able you have to be able to quickly figure out what’s your risk what’s your reward and you just saw how I did that just by looking at the chart by establishing my support areas by by area and my possible profit target area so really simple really easy if you’re looking at a chart all you gotta do is just figure out where your support is figure out what’s your risk on the trade if you’re only willing to risk $300 on this trade well then think about that if I’m risking $300 how many shares can i buy well that would be 1500 shares on a 20 cent risk pretty simple pretty easy don’t make it rocket science there’s no perfect equation there’s no spreadsheet that’s gonna make it easy for you to figure out your risk reward you should really just be able to identify right away by looking at the chart figuring out where that support is where that resistance is and once you can just see that you can just instantly be able to identify where all that’s happening and be able to identify what you’re gonna do from there it’s much easier to jump into the trade now I also want to remind you you want to be able to take a deep breath and figure out these things before you enter if you just see a stock going to the moon let’s say you missed out on this 350 buy and all of a sudden the stock is now squeezing higher and all you’re thinking about is bam bam bam hitting the hockey is trying to get in as fast as Paul’s trying to buy as many shares as possible well there’s also a chance that you might get fill it up here the three ETS four dollar area and let’s say this thing doesn’t break over four dollars well now you had you’re risking 30 40 cents maybe possibly 60 cents for not that much upside so you really need to make sure that your entries are on point you have to be able to determine your risk your reward in a very fast manner you don’t have all day you can’t spend an hour trying to figure out where the risk is where the reward is looking at the daily chart here I can see back there in December of 2018 that we had a high on this candle there at four dollars and fifty cents so it makes sense to me that there’s not really much resistance in terms of the four dollar area but we do have resistance here four hours of 50 cents the stock is squeezing higher we got above that resistance here at the three dollar area so I’m thinking there’s a good chance that this thing could possibly get up there to the four dollars and fifty set area and that’s exactly what we got so you have to be able to identify the support the resistance in a very hectic situation cuz you’re gonna have the emotions you’re gonna have FOMO you’re gonna have all this stuff hitting you and trying to basically make you not think clearly if that makes sense so all the stuff is going on everything that’s happening it’s basically happening in a sense that it’s making you get off your game if you’re not able to think clearly and rationally there’s probably a good chance that you might end up just losing a lot of money because you’re gonna end up just buying as many shares as possible cuz you’re just hotkey hockey hockey hockey and that’s one thing that I’ve learned you have to be careful with hockey’s because it makes it really easy to buy and makes it really easy to just jump in on a stock before actually figuring out where your risk is where your reward is and not every single stock is gonna be easy to figure that out you know it’s not always gonna be a clear idea of like where my risk is where my reward is but if you trade with the idea you know when you’re going into a trade you have the 20 cent the 10 cent loss you’re going into that trade with that idea in mind you’re able to instantly identify kind of what your risk is how many shares you could buy also a stock that’s very volatile let’s say a stock it’s going up a dollar two dollars every five minutes it’s going crazy you could also adjust your amount of shares depending on that if you find a stock that’s going really slow you’re the stock is moving you know ten cents every five minutes it’s just nice and slowly moving and you know every little pullback is ten cents then it’s bouncing back it’s showing strength it’s moving higher then you’re able to also load up more shares because you’re getting smaller moves a stock like this it’s going from three dollars from two dollars up $2 to $3 to $5 all that it’s all going crazy when I see us talking like this I kind of when I see a stock like this a lot of times I end up lowering my share size because I know if I buy a thousand shares I get a full dollar move that’s a thousand dollars in profit same idea if it crashes I’m gonna be able to have a smaller risk cuz I’m gonna be able get out faster with a smaller size and if I have a larger size depending on the volume the liquidity over time you’re gonna build that experience you’re gonna see the different setups you’re gonna see the different opportunities but for me I’m really just trying to right off the bat figure out okay I’m risking 10 cents 20 cents I’m okay with that if I risk 20 cents I could buy 3000 shares here and I think that’s really kind of how I trade bits every stock I’m just instantly knowing okay I’m risking this much I’m risking it I’m risking I’m going going going but when you’re buying at a support area when you’re buying the dip you’re able to get that support at that area and you’re also able to kind of have a you’re also able to have a smaller stop loss instead of buying the breakout when you’re buying the breakout to the upside when you’re just buying a stock it’s going higher and higher higher it’s much harder to figure out where your risk is where your reward so you’re buying that dip you’re able to kind of figure out okay I’m buying the dip here off the 350 area I’m buying this dip area bambe abanda buying it I’m risking 20 cents here for that possible move back up there to $4 so really simple really easy but you have to be able to think clearly in that moment have to be able to identify the support and then figure out how is the stock moving what’s the volume is there a lot of volume are you able to get in with the large size remember the larger your position size the harder it is to get out if you’re trying to get out with 20,000 shares it’s gonna be hard to get out at the top because of slippage and also just overall supply demand so if you are taking large supply from the market when you buy your now adding that large supply back to the market when you sell so supply and demand the more volume the more shares you have to sell sometimes if the volume isn’t there as the stock is crashing let’s say the stock goes from $4 up there to $5.00 again and you’re trying to sell up here at the 520 area it’s gonna be much harder to get filled because now the stock’s pulling back the buyers are not stepping in and you have large size and you’re hitting limit or you’re hitting limit orders you’re hitting limit orders you’re trying to get out but you just can’t get out and you end up getting a lot of slippage so yeah I don’t think about that as well that’s one of the issues with trading these stocks is they’re very volatile and when they start to crash it’s much harder to get filled with large size it’s also one of the reasons you can’t just go and buy a hundred thousand shares of TBL tea and hope and pray that it goes to the moon well I guess you could but it makes it much more difficult to get in and get out fast when you have larger size so a lot of times most traders end up having you know 5,000 10,000 shares depending on the action and all that so over time to kind of learn with experience what works best for you the sizing what you’re comfortable with I tell most people when you first start out trading start out with small size small size small size and increase size as you go don’t start out with large size because you’re gonna end up emotionally not being able to handle the risk of having a very large loss so there it is how I figure out how many shares I’m going to buy how many shares you should buy and all that fun stuff really it just comes down to risk reward it’s not so much like oh I could buy 1 billion it’s not so much like I could buy 20,000 shares of TB LT cuz I have the body power it’s more so about what’s my risk what’s my return I’ll talk to you guys later on if you haven’t already hit that subscribe ..

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Comment (1)

  1. Patrick, great video. Can you do a video on all overhead costs of day trading? Commissions, scanners, platforms, brokers, etc. I am curious how much overhead it costs to be a day trader. Also it would be awesome to have a video of your entire thought process in the morning when you are looking for and deciding on something to trade (scanner > EMA 20 > EMA 9 > VWAP > Volume > etc). Just some ideas!

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