How small do you trade after a decent size loss?

Discussion in 'Psychology' started by a529612, Jan 9, 2007.

  1. How small do you trade vs the usual trade size after taking a decent size loss, say of 5-10% capital?
  2. was a fluke or did you break rules?

    if it was a fluke, then forget about it & keep trading.
    if you broke rules, then trading smaller probably won't help...
    try not watching for a little bit and take a deep breath.

    then come back with a big grin and kick some ass.
  3. I don't ever allow myself the chance to lose 5-10% of capital. That would be more than 10 trade losses in a row to reach 5%.
  4. I use 1 % risk. If I lose then I bet with 1 % risk. My rules do not change because of a losing trade.
  5. Agreed 1% risk. I do not ever change my rules after a decent size loss. What will happen is the next trade will be a huge winner but instead of using your normal size you took it with 1/5th and the gain does not over take your previous loss.

    Size should be determined by the strength of the initial setup. (ie: are we going against a trend or with one)
  6. i trade smaller after a big gain
  7. battle, I dont understand why you trade smaller after a large win, or winning streak? please elaborate, unless IT is a monster gift and your systems auto adjust daily based on each days PnL, I dont see the logic. everything I have been told, and read has the opposite mentality.
  8. it makes sense from a statistical reversion to the mean point of view.
  9. how does it make sense from a mean reversion point of view? all my systems are mean reversion, and as daily PnL scales up, so does the base shs size. i am not arguing, just would love to hear the logic...
  10. After a huge gain the next day of most systems will usually produce a small gain or even a loss.

    I see a lot of traders watch a good system make huge gains for multiple days. Then jump in full size. Well, thats right about the time it starts to enter a draw down period. This is the equivalent of a newbie chasing a huge uptrend intra-day.

    The best thing to do would be wait for a few back to back losing days, then start.
    #10     Jan 12, 2007