How to prevent trading too big size?

Discussion in 'Risk Management' started by innovest_11, Apr 11, 2012.

  1. I have the problem of trading too big size, or too many positions

    So should i do the following:?

    - convert margin account to cash account so that i will not buy too big?

    - Or make my trading account smaller so that i cannot buy too big or open too many positions?
  2. DimoDD1


    Why trading too big size is a problem ?
    And how much is too big ?
  3. You would think risk management, but in ET, you never know if that is ever a priority :)
  4. I would just make account smaller, you don't want too much of your cash in one place in case of _____________.
  5. Get someone else to execute your orders who will stick to risk limits. Or automate them.
  6. ocean5


    It happened to me in the past,and i had to ask my broker to limit my position size.But then i was trading equities at a prop.
  7. Trade smaller
  8. Yesterday got into overtrade mode and revenge trading, this does not always happen, but it happen once very few weeks, and it is enough it cut -20k off my account

    Initially i was trading 10k size for 1 stock and some smaller 1k size other stock, then the loss by mid day is -6k, sold all and cut loss.

    Then revenge trading got over me, wanting to win back the 6k loss, and i over trade 10k size on one stock and 5k size on the other one, then the loss balloon from -6k to -20k

    Once size got too big, i tend to hold too long (too greedy) and also sold too late (reluntant to cut loss) and market buy and sell 10k slippage quite a bit

    Now i'm thinking of retricting my account to smaller amount so that i cannot buy too big size. But hesitate to do it as sometime i do have profit
  9. You can prevent overtrading, which is normally a function of the frequency of the trades but can also be related to size, by automating and backtesting your strategies.

    If you have no backtests or automation capability you probably shouldn't be trading anyway, but you certainly could position and swing trade stocks based on fundamentals or just buy and hold 5 years on market leaders without, and only trade/hold profitable companies.
  10. Makes sense to me!
    #10     Apr 12, 2012