@bustermove18 I think i would do things similar to everyone else, not doing anything too different technically. Obviously im still looking for positions with max risk reward but using lot sizes for me is much easier than dollar values on a trade because i know what the tick values will be so i can calculate my risk fast.
Lets say someone had a 20k account, So willing to lose $200 max on a trade (1% of the account).
Say if they wanted to buy a stock that was 5c that had a support line at 4.9c and I wanted to set a stop loss at 4.8c. I use tick value to determine that quickly. Two ticks, (which I know if I take a position of 100k shares ($5000)) ALWAYS equals $200 when trading a stock under 10c. (100k shares under 10c always equals $100 per tick)
Lets pretend for example that same stock was 20c and support was set at 19.5, stop loss set for 19. I know 20k shares ($4000) = 100 a tick for a stock above 10c. (20k shares always equals $100 per tick above 10c)
If for whatever reason the stop loss happened to be 4 pips away instead of 2, I can just half the lot sizes to achieve the same risk exposure. 5c trade 50k shares = 4 pips risk = $200 20c trade 10k shares = 4 pips risk = $200
I just find it much easier to calculate all these things on the fly using lot sizes & ticks rather than calculating risk using the value of the capital used (get out the calculator lol).
This may be handy for people just beginning to use lot sizes rather than dollar amounts. Pricing Steps for the asx - (i think this is correct apologies if i have messed anything up) Up to 10c = 0.1c Ticks (1000 Shares = $1 per Tick) 10c to $2.00 = 0.5c Ticks (1000 Shares = $5 per Tick) $2 up to infinity = 1c Ticks (1000 Shares = $10 per Tick)
Hope that clears up what i was talking about, i don't believe i do anything different i just adjust lot sizes and see how many ticks i'm away from my preferred stop loss rather than saying ill use 1k, 2k or 3k on a trade as it makes it difficult to calculate things in the heat of the moment.
