Hi Allen,
It helps to keep the trade size/value proportional to the value at risk to make it a percentage of what is held.
Over time with success in portfolio growth (which is our goal) keeping the dollar minimum order size fixed to the original investment will shrink the Hold Zone's size somewhat. For a smaller holding, our minimum trade should be based upon the commission cost relative to the trade size. Once the portfolio value has grown, then the minimum order value can be switched to a percentage of the then-current portfolio's value.
In my case, I use a percentage of the current share count for the Share minimum order. I also use a percentage of the Portfolio Control as the minimum dollar order value. Since Portfolio Control, over time, tends to track the portfolio's value, this keeps the trade value proportional. Also Buy and Sell orders are then of equal value. In rough numbers, this would mean that if I'm using 5% of shares and Portfolio Control with zero Sell SAFE that I'll be selling approximately 5% of either/both. But on the buy side, the dollar value controls the minimum order size. In this example, it would be 5% of PC, but that works out to about 6% of share count usually.
The main thing is to contain trading costs when the portfolio value is relatively small. Maybe $10 on a $500 trade is acceptable on a new small account, but when the account has grown in value it would be nice if the $10 cost is a smaller percentage of a much larger trade.
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