Rediscovering The Virtue Of Small Size

Trader rehab continues and so far I’ve managed to stick within my 2,000 share size limit and $1,000 loss threshold. And, although it’s not a hard-and-fast rule, I’ve also been quicker to walk away when I have a series of losing trades if I’m not jibing with the market or I know that my heads just not in it.

The results have been refreshing. I’m currently up about $6,500 on the week on base hits, trades worth a few hundred dollars here and there. Most of my green days this week have actually been less than $1,000 since I’m not swinging for the fences, just looking for solid setups that I know I can trade consistently.

While the consistency has been nice, it was good to have one extremely strong session on Tuesday, which was by far my biggest green day of the week at almost $9,000. All of that profit came from Applied DNA Sciences, Inc. (NASDAQ: APDN), which, despite being a thinner stock than I usually like, was actually a great candidate for my current trading handcuffs.

Because remember, while that may sound like the result of two or three massive winning trades, I’m working within a third of my typical minimum share size. I actually finished Tuesday executing more than 15 trades in APDN across two accounts, and one of my biggest winners was a buy and hold through a more than $1 move.

As I said, APDN wasn’t what I would have typically viewed as a prime trading candidate based on the size of its float alone. While it was gapping up by about 30% in premarket on news of a reverse split, I was cautious about its ability to sustain that level.

However, it turns out that the smaller size might have potentially widened the scope of my ideal setups since I can execute quicker scalps and reduce slippage. I’ll certainly be keeping that in mind as I continue working with small size.

Ultimately, this is a learning experience, as my entire trading career has been. I’m going to have to get used to this new trading style to understand its full potential. Because, as I talked about last week, these restrictions are verifiably designed to make me a more profitable trader than ever before.

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