What Dictates My Position Size.

I am often asked what is the size of a position in any individual company I hold in my investment accounts. The answer to this question really depends on if we are talking about my Dividend account or my Trading account.

Difference Between my Dividend Account and my Trading Account:

My Dividend account contains stocks and ETFs that pay a regular dividend/distribution, can grow that payout over time and most importantly during market stresses/recessions can maintain the payout. This what professional money managers like Warren Buffet mean when they say hold stocks for the long term. If a company you are holding requires the capital markets to continue operating then it is neither a Value or Growth stock.

My Trading account contains penny stocks that are speculative and by no stretch of the imagination should be considered long term holds. These stocks are highly dependent on the capital markets to fund future growth and during market stresses/recessions many go broke as the capital drys up or shares issued at ever cheaper valuations. They are the first to get dumped from portfolios or shorted by professional traders at any hint of market correction. The frequency of trading them depends on what is happening to the venture market overall and can be held for a few minutes or for many months (more on this point below).

Sizing a position:

The Dividend account is pretty straight forward and is something most financial advisors would recommend. With the dividend portfolio the position size is in dollar terms and is dictated by this simple rule of never letting the dollar amount of any one position exceed 10% of the overall portfolio dollar amount. Positions that do exceed are trimmed back and the profits are put away in a cash account and are reallocated sometime in the future. You can view the current dividend/distribution portfolio Here

The Trading account takes into consideration many variables when determining the size of a position and any one position can well exceed 20% of the overall dollar value of the account. As I won't go into all the variables of how large of I position I will take, but instead will focus on the main variable, which is the overall market sentiment for penny stocks as depicted by a chart of the venture exchange.

I like to use 5 indicators when viewing the chart as follows:

1. The trend using candle sticks and bollinger bands.
2. The money flow.
3. The volume.
4. The RSI - Relative Strength Index
5. The CCI - Commodity Channel Index

Based on the above information I will determine my position size and trading style.

When I start increasing my position size:

• RSI and CCI oversold.
• Trend is breaking to the upside from the lower band.
• Trading style: Less Day Trades, More Swing Trades, Some Position Trades.
• Profits are allowed to run.

When I further increase my position size:

• Volume and Money Flow increases.
• Trend continue to towards the upper band.
• Less Day Trades, More Swing Trades, More Position Trades.
• Profits are allowed to run.

When my position size stays the same:

• RSI and CCI neutral.
• Trend is at the upper band.
• More Day Trades, Less Swing Trades, Less Position Trades.
• Proceeds from positions trades are banked.
• Profits are banked.

When I start to decrease my position size:

• RSI and CCI overbought.
• Trend is hugging the upper band.
• More Day Trades, More Swing Trades, Close out Position Trades.
• Proceeds from position trades are banked.
• Profits are banked.

When I further decrease my position size:

• Trend is breaking down towards the lower band.
• Money Flow turns negative.
• More Day Trades, More Swing Trades, No Position Trades
• Profits are banked.

When my position size stays the same:

• RSI and CCI oversold.
• Money Flow and Volume negative.
• Trend is hugging the lower band.
• More Day Trades, No Swing Trades, No Position Trades.
• Profits are banked.

Stock Scan $.05 to $.30 - Jul, 12 2017

An analysis from last weeks' Scan of Stocks between $.12 and $.28 provided some decent day trading opportunities for small gains and a few opportunities for bigger swing trades.

After having a big pop $ABR.ca sold off for the next few days, but for the patient trader this provided a great entry point after the 3rd day of selling. This is often the case when a stock fails to break out as many traders exit their position over the next few days and once they are out the stock will often bounce on good volume.

$TGIF.ca came off the low as expected and provided a nice 25%+ initial gain as well as plenty of day trading opportunities. Personally I like this company and will look to get long again in the near future once the financing is closed, but for now I am happy to trade it for daily gains.

$R.ca also provided a decent little pop back to $.30 and again provided plenty of opportunities for day trading.

This weeks scan was for stocks trading between $.05 and $.30 cents with 500K+ volume, at least 15 trades and closed within 5% of the high.

Each of the stock's chart were then visually viewed and the ones that were hitting new highs after gaping up for a couple of days or are pulling back after a big run or removed. Although these stocks do provide great day trading opportunities for nimble traders they are highly risky at this stage as the stock struggles to find a new floor.

What I look for in the stocks that are left are the following criteria:

1. Stocks that are hitting new lows on large volume.
2. Stock starting to firm up (building a base).
3. Stocks that have been slowly grinding higher.
4. Stocks that broke out on positive news. 

I do not own any of the stocks on this weeks list, but almost took a position in $MMJ.ca today when it was down around $.115.

I also day traded $TGIF.ca two times today to scalp $250 and will look to trade it again tomorrow.

If you decide to look into these names and find something interesting, please share in  the comment section.

Sym -Names	Last	Chg	%Ch	Vol	#Tr	Open-Hi-Lo	Year Hi-Lo
MMJ - C - Matica Enterprise Inc.	0.13	0.015	13	4,409.40	173	0.12  0.13  0.11	0.175  0.005
TGIF - C - Friday Night Inc.	0.25	0.01	4.2	1,791.50	262	0.245  0.26  0.225	0.40  0.05
SNA - C - Star Navigation Systems Group Ltd.	0.075	0	0	732.1	15	0.075  0.075  0.07	0.095  0.015
EL - V - ENGAGEMENT LABS INC	0.075	0.02	36.4	790.5	22	0.055  0.075  0.05	0.265  0.05
MYA - V - MAYA GOLD & SILVER INC.	0.2	0.015	8.1	639.3	66	0.195  0.20  0.19	0.27  0.10
CAY - V - CACHE EXPLORATION INC.	0.255	0.005	2	608.8	39	0.25  0.26  0.25	0.305  0.05
SMB - V - SIMBA ESSEL ENERGY INC	0.07	0.005	7.7	508.9	16	0.065  0.07  0.065	0.115  0.05
FT - T - FORTUNE MNRL J	0.215	0.015	7.5	619.9	69	0.21  0.215  0.195	0.335  0.095
PRK - T - POTASH RIDGE CORPORATION	0.195	0.01	5.4	548.7	104	0.19  0.195  0.18	0.38  0.175

Video on Trading That is Worth Watching

There are lots of videos that can be found on YouTube with advice on how to trade stocks ... most of these videos I pay little attention to, but every once in a while I watch a video that reflects the style of trading (with minor differences) that has worked for me over the years.

Watching the video featured below caused me to reflect on Wednesday's blog post, where I bought two stocks based on two different rules. To review that blog post Click Here.

Here are a few rules I try and apply, which are touched upon in the video:

1. Buying a stock when no one wants it and selling when everyone does.
2. Taking money off the table as the stock moves up.
3. Be patient with a loser (although if it is headed for bankruptcy  then that is another story).
4. Don't take too large of a position in any one trade (a mistake I still make).
5. Holding a core position and trading it to lower my ACB, which in my case means buying another 10K shares on a dip and selling it for a penny profit.

Stock Scan $.12 to $.28 - Jul, 05 2017

An analysis from last weeks' Scan of Stocks between $.15 and $.30 provided some decent day trading opportunities for small gains, but there were no big winners to speak of.

The big disappoint was $RVV.ca; after an initial good start the stock dropped when it became clear an insider unloaded a large block of shares. This may well turn out to be positioning before the next news cycle, but the market hates to see this type of thing.

The one stock of interest that provided a nice gain for me was $COT.ca. On the following Friday after the blog post, the stock did a reverse stock split and traded as low as $1.40 ($.14  pre-split). I entered the trade at that price (put out a tweet) and sold it today at $2.

Trading opportunities like this often happen on the first day of  a reverse stock split and is something I keep my eye open for.

This weeks scan was for stocks trading between $.12 and $.28 cents with at least 500K volume and 20 trades.

The reason for the number of trades is there might not be enough general interest on the stock creating a potential situation, if I bought I might not be able to sell, in other words I would be "holding the bag".

Each of the stock's chart are then visually viewed and the ones that are hitting new highs after gaping up for a couple of days or are pulling back after a big run or removed. Although these stocks do provide great day trading opportunities for nimble traders they are highly risky at this stage as the stock struggles to find a new floor.

What I look for in the stocks that are left are the following criteria:

1. Stocks that are hitting new lows on large volume.
2. Stock starting to firm up (building a base).
3. Stocks that have been slowly grinding higher.
4. Stocks that broke out on positive news. 

Today's scan turned up the following list. I have not done any DD on these stocks, with the exception of $TGIF.ca and $ABR.ca, which I purchased today. I have no idea if I will be trading or taking a position on any of the others on the list, but I will be watching each of them, specifically the ones that had a lot of trades.

Of the list $TGIF.ca I had picked up based on criteria 1 and $ABR.ca based on criteria 4.

If you decide to look into these names and find something interesting, please share in  the comment section.

Sym -Names	Last	Chg	%Ch	Vol	#Tr	Open-Hi-Lo	Year Hi-Lo
TPS - C - Torino Power Solutions Inc.	0.16	0.02	14.3	547.6	69	0.15  0.16  0.145	0.16  0.015
IP - C - Imagination Park Entertainment Inc.	0.29	0.03	11.5	1,064.50	149	0.26  0.295  0.255	0.62  0.03
TGIF - C - Friday Night Inc.	0.215	-0.035	-14	1,857.80	295	0.25  0.25  0.215	0.40  0.05
TMD - T - TITAN MEDICAL INC. J	0.14	0.015	12	1,511.50	245	0.125  0.14  0.125	0.90  0.125
PRK - T - POTASH RIDGE CORPORATION J	0.205	-0.01	-4.7	515.9	53	0.22  0.22  0.205	0.38  0.20
UEX - T - UEX CORPORATION J	0.18	-0.01	-5.3	981.9	75	0.195  0.20  0.18	0.425  0.15
R - T - RED EAGLE MINING CORPORATION J	0.265	-0.03	-10.2	1,482.80	338	0.29  0.29  0.265	1.05  0.225
GEN - T - GENENEWS LIMITED J	0.15	-0.025	-14.3	844.8	123	0.17  0.17  0.15	0.57  0.125
ABR - V - Ashburton Ventures Inc.	0.18	0.075	71.4	17,042.60	1,377	0.115  0.235  0.115	0.34  0.01
ADK - V - Diagnos Inc.	0.16	0.015	10.3	782.8	51	0.15  0.16  0.15	0.20  0.035
KES - V - Kesselrun Resources Ltd.	0.12	0.01	9.1	801	49	0.12  0.135  0.095	0.425  0.08
AVA - V - Aurvista Gold Corporation	0.26	-0.005	-1.9	690.4	47	0.26  0.265  0.26	0.46  0.145
ADZ - V - Adamera Minerals Corp.	0.145	-0.01	-6.5	512.1	70	0.155  0.165  0.135	0.24  0.055
OS - V - Osprey Gold Development Ltd.	0.255	-0.025	-8.9	655.8	138	0.275  0.285  0.25	0.44  0.035
SNG - V - Silver Range Resources Ltd.	0.185	-0.025	-11.9	1,205.10	27	0.20  0.20  0.18	0.29  0.08