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How do I manage my position size? - Tom Basso knows the answer

created Natalia Bojko20 May 2021

Does position size matter? If so, how big? Successful trading is largely based on many factors that positive result i synergy translate to profit. Meanwhile, a book (in Polish) about the essence and sense of managing the size of the position in our strategies is hitting the Polish market. It was written by Tom Basso, who has been dealing with professional capital management for 28 years. It is both stocks, currencies and futures contracts known to every trader. He has already started his adventure with the world of investments at the age of 12by buying mutual fund units with the money he earned from delivering newspapers. In today's review I will try to explain to you what you can expect from this item.

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Managing the size of the item - Loosely, but is it specific?

managment_of_position Taking the book for the first time "Position size management" Tom Basso to hand, I had very mixed feelings. The trading world has accustomed me to the fact that in the proverbial "bricks" there is real, reliable and detailed knowledge. Meanwhile, the item released by Basso is rather small and so it flattens out expectations towards the content. Meanwhile, after the first few pages, I already knew why it is like this. All his thoughts put on paper are very specific. I would say that it is incredibly succinct in its message and, moreover, it does not diminish the clarity of its content. Less experienced traders, thanks to the tables, formulas and explanations "with their own words", will in my opinion be able to understand everything.

Thanks to the volume of the content of the book, it is not overwhelming. I am sure that with a moment of free time it can be devoured in a day or two. It is really read at a good pace. Sometimes it requires more concentration, especially when Basso shows by examples (usually in the form of a table) specific methods of managing the size of the position.

Will anything change in my trading?

When reading educational books, we usually expect answers to specific questions from them. We want them to contribute something to our trading, bring a more objective point of view on specific topics or give us a new, fresh picture of the situation. Position size management is one of the highly technical parameters. We manage an open order differently for profit, differently for loss, and we make other calculations in our head before we make a transaction. Some traders do it "haphazard", others treat this element of the strategy randomly, some have thoughtful patterns for it, and there will also be some who have no idea how to start at all. Tom Basso provides specific instructions on investing and the size of the positions to include with specific risk parameters. There are simple formulas in the book that are useful for everyday calculations. Experienced traders and beginners are sure to find clear instructions to help with trading.

Algorithms and capital management

Tom Basso's book deals with another interesting topic. Namely, trading with the use of algorithms. There are plenty of skeptics and optimists in this topic, but the point of a professional trader who uses them to help manage their trades is interesting. Here, for obvious reasons, the author does not specifically disclose what systems are meant (on what principles they are based on), but nevertheless indicates that this is not an element that is detached from professional trade.

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Why control?

It seems to me that the main message of this book and the author himself is to bring trading down to your comfort zone. Something like a new and fresh idea "Comfortable trading". Basso points out the need to adjust the trading style, including the size of the position (as a parameter that determines our well-being with a given size of the instrument in the game), to ourselves - weaknesses, risk tolerance, impulsiveness and beliefs. Everything Tom presents in his work comes down to gaining full control based on the size of the deposit and the management of open positions.

Summation

Tom Basso

It is worth getting to know the point of view of an experienced person and broadening your mental horizons with a new look at our well-known patterns. The knowledge provided by the author can be used in both long-term and short-term trading. Its versatility allows you to customize risk management parameters.

Tom Basso says:

"A trader's education never ends."

Not without a reason Jack D Schwager in the book "Market Wizards" gave him a nickname Mr. Peaceful. Basso works with his positions in a very balanced way and pays a lot of attention to controlling the position size.

The book is coherent and short, but it enriches the knowledge and awareness of item size management in a very precise way. Basso shows that simple methods are not only easy to learn but also effective. This is an item that every trader cannot miss on the shelf.