How to increase profit without increasing size?

Discussion in 'Risk Management' started by innovest_11, Jun 30, 2010.

  1. Increase size will increase the anxiety and more unwilling to cut loss, but if i don't, how do i increase my profit? But on the other hand, increase size will also cause bigger losses... More over, it is dangerous in current volatile market

    So do i open many positions? but too many positions cause one to lose focus, and lose money?

    Focus on one stock and put on big size? again, it can also lead to disaster if that stock underperform

    Now watching my account like a hawk ever since i recover my 20% loss in my account, am i becoming afraid of taking risk? or am i correct to be watching over my account rather than taking unnecessary risk?

    Should i be satisfied to be winning small profit everyday?
  2. ummm increase your avg profit target maybe? did decreasenow put you up to this thread?
  3. Increasing the trade expectancy is sufficient for that. How? You figure it out.
  4. Celine


    This is a mln dollar question :) I want to know as well!
  5. TRS


    Easiest answer would be cut your cost of doing business ie: cheaper brokerage.
    Why wouldn't you want to increase size in proportion to growth in acct size, provided your trading vehicle/s can handle the increased size:confused:
    Fix your risk to a percentage, forget the dollars
  6. NoDoji


    Innovest, good to see you're still trading. I hope my comments below help you give up your bad habits, and wrong thinking, and get on the path to consistent profitability (which may be small at first).

    "Unwilling to cut loss" is NOT an option for the professional trader (one who must make a living trading). You are NOT qualified to increase size until you can consistently trade all your prime setups each day, accept stop losses without moving them (except in your favor), and end up profitable doing this for a period of at least a month, with NO losing weeks.

    Once you can do this, increasing size will increase the size of the loss, but the size of your profits will increase proportionally as well and you will increase profits overall. If increasing size results in more losses, then you are likely trading differently as result of larger size and should go back to smaller size, make sure your edge is defined in writing and start over before sizing up again.

    Increasing size is always more dangerous in terms of the impact of a rare event such as a news-based price move that blows through your stop. This is why I decided to size down a couple months ago and will likely trade smaller until I've doubled my trading account after withdrawals for living expenses. Sadly unforeseen medical expenses have made this more of a challenge.

    I think less positions/more focus will work in your favor. Find a few stocks that have strong moves and trade small size until you feel confident in your ability to take all daily setups and manage the trades so you come out net profitable. My personal favorites are POT and AMZN. You can trade small size and still end up with a decent daily profit.

    You need to understand the difference between "taking risk" (which is required with every trade) and "taking unnecessary risk" (which never necessary).

    "Taking risk" is putting on any trade. Once you define your edge, you have to get over any fear of taking risk in order to use your edge to make a profit. You will always have losing trades and will also have losing days, but as a day trader, if you start having losing weeks, your trading style likely involves "taking unnecessary risks".

    Examples of unnecessary risks are:

    Trading large size on margin.

    Averaging down.

    Counter-trend trading without a deep grasp of the price action that precedes high probability counter-trend trades.

    Trading without stops or moving stops further away because you are unable to accept a loss.

    Rationalizing a switch from your intended time frame on a trade to a longer time frame because you are unable to accept a loss.

    I'm almost certain any day trader on this site who has losing weeks assumes one or more of the unnecessary risks listed above. I also believe that trend-following day traders rarely if ever have losing weeks. Since I learned to trade mainly with-trend (or counter-trend only after a reversal signal is put in), I haven't had a losing week and have had very few losing days, despite some piss-poor trade management at times.
    kut2k2 likes this.
  7. bone

    bone ET Sponsor

    Sounds like you don't have much confidence in the markets or your strategy at the moment, so my advice would be to keep taking modest amounts of profit out of the market until your emotional state improves to the point where you feel comfortable about more risk.
  8. The simple answer is to do more cost-cutting without sacrificing the quality of work or product done. :)
  9. Only two processess will tell you what to do and give you the confidence to do it.

    One: enter trading therapy with me for two hours every day at $1000 a day for a year.

    Or two: write down your trade rules simply and unambiguously, convert them to algorithms, code, test, optimize and execute rigorously for a year.
  10. Trading = Guessing. But it should not be like guessing "heads or tails"... it's more like "card counting in black jack"... and putting your money down when the deck is ripe.

    To get better results, get better at (1) guesses you make about taking on risk, (2) being more disciplined about EVERYTHING, especially exercising stops.
    #10     Jul 7, 2010
    JTrades likes this.