In my SPA3 Income portfolio, which I started in February, a very profitable sale of SOXL was triggered at COB Friday, so sold MOC Monday. That left me with 4 positions. A buy of UWM was triggered at COB Monday, so would be the final and 5th position. SWS App recommended Position Sizing was then going to leave approx 25% of my funds in Cash. I’ve placed the MOC order for Tuesday, as per the recommended Position Size. But it does feel strange having so much left in Cash when my portfolio is “full”. The good thing is that my UWM purchase should only be valued about 30% bigger than the other 4, so not too heavy.
Anyone do something different? Or have other thoughts?
I have the same thoughts Mark
A lot of cash after the SOXL trade but on reflection, if you fully invested that cash it would result in a disproportionately large trade in UWM compared to the other open positions so I’m happy to leave it as is and follow the system strictly.
The bonus is you can be sure your MOC order will be fully filled
I also sold SOXL and realised a big profit. My Position size setting is “Cash Available” so BC Trade ticket for UWM is about twice the value of my previous positions.
My aim with SPA3 Income is to keep my portfolio value fixed at the value I started it with and withdraw excess profits. If I place the trade using the Cash Available to determine the position size for UWM I will be investing my profits into this trade.
The other options for position size are Portfolio Value or Open Profit at Risk. (see formula in the screenshot).
Using Open Profit at Risk will result in a trade value about half that of Cash Available, but still bigger than what I planned if I was to withdraw all the profit in excess of my portfolio starting value.
By way of example:
Portfolio starting value: $50,000
Positions after sale of SOXL: Open = 4, Vacant =1
Portfolio Value at end date: $62,000
Open Profit at Risk: $8,000
Cash Balance: $22,000
Position size using Portfolio Value = $12,400
Position size using Cash Available = $22,000
Position size using Open Profit at Risk = $11,600
Ideally, I would like all my positions to always be based on my original Portfolio starting value, so $50,000 divided by 5 = $10,000, but would also like to grow the portfolio balance to keep up with inflation and have a bit of a reserve in it so am happy to settle on position sizes to be based on Open Profit at Risk.
I’d love to hear from Gary and Team on how the Public Portfolio will handle it’s profits, position sizes and Portfolio Value.
The main reason why Cash Available should not be used is that other open positions will exit over the next few days/weeks. When they do, and especially if UMW remains open for much longer, the new positions will be too small relative to the size of the portfolio.
Portfolio Value Position Sizing takes into account ALL unrealised open trade profit.
Open Profit at Risk Position Sizing divides the Open Profit at Risk (what we will lose in the trade if it fell to the ATR_TS) by 2, removes it from the Portfolio Value to then calculate its position size. This allows the day to day market fluctuation to be considered when taking the new position.
At the time of this post - the SPA3 Income - USA Public Portfolio is a SPA3 Income portfolio that is traded for growth. All profits and dividends are reinvested into the portfolio. Its position sizing will continue to use the OPAR method.