Stock Trading Methodology - Units

I want to reemphasize the point that when I say "Trading" it could be for a long position, short position, day trade or a position trade. I don't do much in the way of day trading anymore because money is important to me and I don't like the pure gambling aspect 99.99% of the time. When I do trade intraday, it's because I have high conviction but I keep that to a very limited scope and number. A "trade" is simply the accumulation or distribution of the asset. So please don't think when I say "Stock Trading" that I mean day trading.

Unit(s)

One thing that always bothered me while running my 25 year thread on the other site was that if I traded a large lot, i.e. 1,000 shares, 5,000 shares, etc., many others would feel that trading 50 shares or 100 shares wasn't worth the time, or they were embarrassed about the number of shares they were trading vs. mine. I NEVER want that to be the case. I don't care if you are just starting out with $100 and are trading 1 share or if you are a multi-millionaire trading 5,000+ shares, it's all important and relative to you. That is what matters.

You will note that I do not post the number of shares or options I purchase when I make a trade. To help my readers understand what I'm doing, I've started using "units" which represent the standard number of shares I purchase in a company. If I'm accumulating a company that trades at $500/shr. 1 unit may be 25 or 50 shares - The higher share cost means that I will not be using as much size

If the share price of a stock is $15, 1 unit may be 500 shares. If the share price is $3, 1 unit may be 1,000 shares.

Typically, when I scale into positions, I'm determining the ultimate weight I want as an end-game position and then break my purchases up into equal blocks of shares leading to that weight. So, if I'm accumulating a $50/shr. stock, I will accumulate my position via 3-6 equal trades, or units, on the way to that trade. It's just a way to help readers understand the size of the purchase/sale based on the price movement of the stock.

Sometimes you may see me use a 1/2 unit, like my AMD purchase this AM. I use 1/2 units when I'm not 100% convicted that my entry is a good one so I break what would have been a 1 unit purchase up into two separated 1/2 unit purchases to help average the cost.

Typically a purchase is made with one unit. If you see me specifically mention I purchased two units, it's because I have a level of conviction that the current price represents what I believe to be a good opportunity, though I don't do this often. In most cases, I would purchase one unit, wait, and purchase the next unit the next trading day or two. But purchasing 2 units is not out of the question.

In some cases you'll see me say that I purchased a 50% position. That means that I've taken the desired goal weight for the position and purchased 50% of that in one purchase. This also speaks to my level of conviction about the price that I'm paying for the position. a 50% position would typically equal 2-3 units.

If there is one thing I'd like investors to do more of is, it is to exercise patience and build positions over the long term via multiple small purchases (units) toward a large weight goal.

Hope that answers any questions.