The Workshop · The Trade Desk · one trade at a time · 8 of 11
The same trade at half size and at double size are three different products. Equal dollars is the wrong rule; equal risk is the desk's.
SHOP finished at +16.9%. What that meant in dollars depended on one setting you make once: how big a line is for your account. Try yours.
A line is the account times the percentage: $10,000 at 5% is $500. At SHOP's posted close of $142.34 that is 3.51 shares, and the desk prints exactly that, fractions included, because most brokers fill them now. If yours does not, the ticket rounds and says so. Twenty slots of 5% is a fully invested book with no leverage, which is how the house book runs.
Here is the part most people skip. Over the sixty sessions before it was posted, SHOP moved about 4.0% on a typical day. The calmest name in the universe at the time, Procter & Gamble (PG), moved about 1.1%. Put the same dollars in each and the SHOP line swings 3.5 times as much as the other; your book's volatility is being set by whichever name is wildest. The desk sizes each line so that a typical day moves it by about the same amount: fewer dollars in the wild name, more in the calm one.
| name | typical day | equal dollarsthe same amount in each line | equal riskthe same total, split so a typical day moves each line by the same dollars |
|---|
Key insight. Size is the dial that turns one strategy into three. Equal dollars lets the wildest name set your risk; equal risk lets the rules set it. The second is what the tested numbers assume.
Settings on your page hold the two numbers; every line on Today's list then prints your shares beside it, and your tracker's dollar P&L uses them. The manual's chapter: sizing, in the tracker chapter. The arithmetic of why size matters is The Math, lesson 7.
Keep this: set the line once, as a share of the account; let the desk size for equal risk; never let one name decide how much your book moves.
Analytical tools and historical measurements for educational and informational purposes only; not investment advice or a recommendation. Replayed figures are hypothetical: today's rules applied to past prices, after modelled costs, and no account was traded on them. Hypothetical results have inherent limitations and do not represent actual trading. Past performance, including backtested results, does not guarantee future outcomes. Trading stocks involves substantial risk of loss.
The Workshop is education, not advice. Replayed numbers are averages over many trades, after average trading costs (2 bps a side on a stock, 1 on a fund, included for fairness; yours vary by broker and liquidity) unless stated, and are not forecasts; the live record is on the engine page. Analytical tools and historical measurements for educational and informational purposes only; not investment advice or a recommendation. Replayed figures are hypothetical: today's rules applied to past prices, after modelled costs, and no account was traded on them. Hypothetical results have inherent limitations and do not represent actual trading. Past performance, including backtested results, does not guarantee future outcomes. Trading stocks involves substantial risk of loss. About · Support · Terms · Privacy · Refunds Open the deskManualThe EngineChangelog