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What’s your “open heat” when all your stops get hit?

It depends. On the first logical market bottom I engage with at least two or three stocks, each one with roughly 1% Maximum Risk per trade. I am not talking about the first reaction bounce but rather the first real skill based bottoming “call” based on perceived bullish clues in individual stocks and the broad market indices. Therefore open heat ranges from 3 to 4.5% in most cases. If the market adds another leg down (or leg up) I quickly reduce this to two or maybe even just one name. You can’t afford to lose 4% three times in a row. If you are not sure then simply go with 2 stocks and roughly 2-3% open heat and reduce it to just one if the search for a bottom continues.

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