Good Evening Financial Rock Stars! After much planning, I've sketched out one doozie of a post tonight that covers many different aspects of the markets.  The first thing I'm going to review are my current positions and my current rationale on the broad markets.  From there, I'll be covering the educational portion of tonight's post that deals with position sizing and the way I use position sizing to my advantage.  After that, I'll be reviewing what's going on with my Virtual Options Portfolio, and finally I'll be doing a Pre-Friday Market Review, coming at all of you guys with my top 15 charts for tomorrow's trading session.

As listed, let's review what's been going on in my portfolio throughout this week:

• Monday and Tuesday were dead days for me, as I didn't buy anything and stayed 100% cash.
• During Wednesday's market session, I added the following positions at the following prices:  DRYS @ 7.42, KOG @ 2.53, HERO @ 5.46, and HW @ 5.27.
• I caught the following tickers at good times throughout the day, as most of them either followed suit and broke out as I predicted or floated along their ascending trend line (e.g. KOG).  As the last 45 minutes rolled in, every single ticker in the list that I bought made a major reversal and declined to the daily lows.
• At this point late in the market session Wednesday, I decided to sell DRYS @ 7.18 for a -0.24, -3.23% loss.  The entire Shipping industry collapsed in a matter of 30 minutes and I had no interest dabbling in a sketchy industry.  I held HERO, KOG, and HW into today's market session.
• It was an ugly morning, as all three of the tickers I held either declined further or remained unchanged.  I stopped out of HW @ 5.00 for a -0.27, -5.40% loss early in the morning, but held HERO and KOG into the afternoon.
• The afternoon reversed in favor of the bulls at around 2:00pm ET when the intraday resistance was broken and the market indices broke out.  I sold HERO earlier in the afternoon @ 5.88 for a +0.42, +7.75% gain, which was way too early for a sell as noted by HERO's 6.18 close.
• Into the close this afternoon, I took my daily profits and held KOG overnight into tomorrow.  I am predicting that this afternoon's market breakout will persist into the morning, giving me the slight possibility of being able to hit my profit target of 2.75 for KOG.

The position update allows for a perfect transition into my next topic for the evening:  position sizing.  In my opinion, position sizing is one of the dying arts of trading, very similar to traders that don't use daily or average volume as an important entry/exit indicator.  Position sizing is important with all buying/selling orders but becomes institutional when it comes to OCO (Order-Cancel-Order) brackets.

But what does the phrase "position sizing" entail?

When I think position sizing, I think the price size of the position you're about to undertake in terms of the total cash balance of your portfolio.  For example, let's say I had a portfolio size of $100,000 (which I most certainly do not).  I want to buy XYZ at $10 per share, and I want to take a 10% position size.  This means that I would take $10,000 from my total cash balance (10% multiplied by $100,000) and buy 1000 shares of XYZ at $10 per share.

This isn't the ONLY thing that I think of when I think of position sizing.  Position sizing also intermingles with price targets, which I outlined in this Mental Take article.  Let's go back to that $100,000 cash balance portfolio example.  Suppose I want to make a total of $5000 profit from my $10,000 position size in XYZ.  This would mean that my price target from my 10% position would have to be $15 per share for XYZ, which is then my profit target for my 10% position size.  Although an absurd move from $10 to $15 (a 50% gain), your total profit target of $5,000 is in conjunction with a $5 move in XYZ on a 10% position size.

Simple, right?

Let's bump it up a notch.  We have our $100,000 portfolio, and we want to make 50% again in total profit off of our $10 XYZ position.  This time, however, we've stepped up our certainty of a $5 move higher and have invested a 30% position size into XYZ - a $30,000 investment.  XYZ makes its move and we take our profit at $15 per share - this time, however, our 50% investment with price target at $15 has made us $15,000 instead of $5,000.  Because of our "certainty" and added risk in our investment in XYZ, we took more profit and walked away a happy camper.  We did this by using position sizing and price targets.

Pretty cool, huh?

This is something ALL traders must conquer, no matter what level they're at and how long they've been trading.  My position sizes that work best for me with my portfolio size can be seen below:

• 5% - Tester Position Size:  Used to feel your way around the ticker you're interested in; tests the waters.
• 10% - Standard Stock Position Size:  Used in all stock trades.
• 15% - Standard Option Position Size:  Will be used in all option trades when instituted in my trading strategy come January 2010.
• 20% - Day Trade Position Size:  Used for momentum day trades and ONLY during active trading hours.

Speaking of Options, let's move on to my next topic discussing my Virtual Options Portfolio.  I decided to try something at the back end of last week during Options Expiration, and that was to invest in BIDU 430 strike Calls on Wednesday when BIDU was trading around 414.  Why did I do this going into Options Expiration?  I did this in order to visualize what can happen as we neared the Options Expiration mark.  I concluded one main point from this learning demonstration:

1. Options Expiration lowers the total profit you can make on your option trade.

Tonight, I invested in "Trading Options for Dummies."  I will be outlining different topics from this book every time I make a Virtual Options Trade - stay tuned, as I expect to dabble in my Virtual Options Trading Portfolio from Monday to Friday of next week.

To wrap up this extremely long and informative post, I've charted my Top 15 charts (10 Micro/Small Cap, 5 Large Cap) going into tomorrow's trading session.  The charts and explanations can be seen below (all charts will be in a 6 Month, Daily format):

CORS

Symmetrical triangle, waiting for more volume accumulation to roll through ticker - parabolic bottom in volume looking promising for a possible price push.

KPPC

Neutral flag w/ great volume accumulation out of today's market session - looking for continued upside w/ 5d/10d SMA Momentum Cross.

CLZR

** See KPPC description above - identical price setups **

HL

** See KPPC description - again, identical price setups **

GSX

Great multi-day bull flag developing with decreasing overall volume and low volume distribution days - looking for a big move out of GSX soon if volume accumulation begins to roll through.

KFN

Bump 'N' Run price setup on low overall volume - prepare yourself for any kind of move out of KFN, I am looking for continued upside if the Financial sector remains stable for the near term.

SFI

Although somewhat complicated with all the SMAs, they're necessary in order to point out the conflicting price possibilities that could occur.  Multiple scenarios with SFI, trade according to how the Financial sector (specifically the Regional Banking industry) is trading.

CPE

Symmetrical triangle w/ low amounts of overall volume - waiting for volume spike either way to determine the next move in CPE.

CBL

Slightly rising pennant on mixed volume - supported by 50d SMA, looking to see if the SMA can prop the price up in the near term.

NVAX

Supported by ascending trend line and 100d SMA with a developing 5d/10d SMA Momentum Cross on low volume accumulation - if the SMA Momentum Cross completely develops, I see a large move higher out of NVAX.

LVS

Neutral pennant w/ a good amount of volume accumulation out of today's market session - price supported by 50d SMA, looking for continued consolidation out of LVS.

RIMM

The double bottom possibility we discussed last night came true - not only that, but the 200d SMA was a confirmed hold and the volume accumulation was solid.

MDR

** See LVS description - extremely similar price setups w/ MDR's gaining more of an edge based on today's volume accumulation **

GRMN

One of my favorite Large Cap tickers, needs more volume accumulation to push price above the 39.58 price resistance.

BIG

Over-extended Bump 'N' Run setup with a choppy intraday market session today - watching tomorrow to see if the old resistance (now support at 26.62) props the price up.

Ladies and Gentlemen, I leave you with visions of higher markets, fake earnings prosperity, and charts galore.  Good luck tomorrow, and trade intelligently!