Position Sizing and leverage

I get questions about position size and leverage at times and i must say IT DEPENDS.

......... My very first question every day is How can i make 50 cents.....

I try to asses the goal and risk of the trade first ....then I place a trade based on the fixed amount I am willing to lose should the trade go against my plan......
First i try to guesstimate 2 or 3 scenarios as to what direction the price will move..then decide the most likely path.......then I look for a past pattern structure ie: a resistance point or a flag structure to hide my stop behind.......the distance from my entry to the most reasonably protected stop location is my risk level....let say a stop that is 25 points away from my entry.... then my target needs to be at least minimum 50 points away from entry ..... I dont like to risk more than $200 on a trade.... so if the stop is too far away i will either reduce my size or pass and wait for a better entry....


I like to use front month Options high in the money with a Delta of .75 or better as a proxy for stock........I dont hold for more than a day so i am not concerned with experation time..... i want only the close corolation to the point for point price to value of the underlying stock....if you havent traded with options befor get a demo account and learn to trade with 1 contract and have a goal to make $50 a trade ....the most important goal is to learn to lose money less than you make it .....start with 1 contract which represents 100 shares of stock...Spy is $92 / share @ 100 shares = $9200 ..........whereas 1 option contract is $10 x 100 = $1000 which will have a delta of 1.00 and will move close to penny to penny with the stock price ......so for $1000 you can control 100 shares for the day or two ( I dont hold for more than two days) .... and get all the benifet of a day trade without the $9200 premium as well.....

Be cautious when using live funds with options and dont over leverage . These are great but are akin to Dinamite in the inexperienced hands.......I like to trade SPY, QQQQ, IWM , DIA because
there is plenty of daily volume in the options to easly enter and exit...... be carefull of very low volume options.....you may not be able to get out when you want or need to...