Increasing your trade size.

Discussion in 'Psychology' started by LessOnLeeson, Jan 31, 2008.

  1. I have a great edge. It's time to step up my trade size and I don't mean over-leverage myself. But it's affecting me psychologically. Any suggestions on how to deal with this?
  2. Add 100 more shares. Then get used to that amount. If you're trading 500 go to 600 if you're trading 200 go to 300. Then, a few weeks later, add another 100 shares. Keep going until either A) your edge stops working or B) the increase in size adds slippage so substantial that it actually becomes detrimental to your P/L to have that much size.
  3. I would also like to hear suggestions... this is the number one thing I am struggling with.

    It is almost perfect correlation. If I trade small size and don't care about money I end up doing very very well. If I add size and try to make big money I strike out hard?!?!

    Truly an amazing phenomenon.
  4. minmike


    Personally, automating the majority of my trade helped me. Other wise, slow and steady build size.
  5. Preface this with the fact I trade futures, thus adding contracts generally in 1 or 2 or 3 lot increments (or taking them off).

    I have found that if I simply trade a fixed percentage of my account - generally a fixed percent risk; after each trade happens this is then readjusted with the new account balance.

    What this does for me psychologically is allow the graduall increase without a big difference in the p&l.

    Make 'em pretty, Chris
  6. lindq


    At first glance, this may sound like a truly ridiculous suggestion, but it worked for a friend of mine who was having a very difficult time once he got to the point where a .25 move was pretty serious dollars.

    He opened two equal accounts at IB and linked them via a master account. So each trade entered into his master account was sent to each sub account.

    Yes, I know. The same money was in the trade. But the power of psychology is so strong, that it helped him overcome his problem by "feeling" that each trade was only a few hundred shares. It also gave him some security in case one account was hacked. And because IB's commisions are based on shares, there was not a great extra expense.

    This was an unusual solution. But hey, whatever works.
  7. gangof4


    i am struggling with this as well. my issue is that the step up is dramatic, as i trade the HSI futures. moving from 1 to 2 contracts, given the volatility, is fucking with me. i 'double down' when i believe the situation (ie: risk/reward) warrants- now the double isn't from 1 to 2, it's 2 to 4. because 150 points can come in a blink, that's $4m USD-boom. i trade with stop limits (stop markets are suicide on the HSI), but still.

    granted, one of my problems is the crap interface of TWS booktrader- takes an extra 2 market unforgiving seconds to change size back and forth- ie: an eternity on the HSI.

    that aside, i've gotten comfortable, so to speak, with having a few consecutive losing trades knock me back $1000-1,5000, with the outliers of $2m-3m still rattling me. much harder adjust to $3m hits with the outliers being more like $6m.

    my solution so far is to 'double down' in single contract increments (hard to do fast in booktrader, as clicks too close together don't register) and continue to (hopefully) build up the acct. size to the point that big hits like $5-6m don't alter my psyche. good thing is that i know the somewhat comfort level i have now with $1500 hits is one that i certainly did not have 6 months ago. i don't pull $ out of this acct, so, as it (hopefully, again) grows, there should be natural points where the acct size better allows for the larger hits without severe blows to my psyche.

    or so i hope...

  8. I am currently going through a similar issue.

    When I finally began to make money consistently, raising the trade size wasn't really big deal, but now, I just hit a "comfort zone" where I am making a very decent money.

    I've been sort of not wanting to change anything for the past 6 months or so, but I think it's time to raise the stake a little.

    I'm going to try to raise my trade size by 100 shares every month and see how I can handle the change.
  9. I would seriously recommend you look into using Button Trader with IB, seeing as how split-second performance is such an issue with the contract you trade.

    They are the best front-end I've ever seen for the retail trader, and I would use them if I traded with IB

  10. This is exactly the situation I was in. I got to the point where I was making decent money. I was making more than I could in other jobs and not worrying about monthly bills. I was in that comfort level for 2 years but I started to get frustrated. I feel like I should make much more than I could otherwise to outweigh the risks, opportunity costs, etc of trading. I tried sizing up slowly. I'd raise my tier size 100 shares but I end up adjusting down it everytime because I rarely use the set tier anyways. I couldn't break out of the 600-1000 share trades and I was only catching 400 or so on the really good trades because I rarely buy the whole amount at once.

    In my frustration with myself I decided to go the other way. In stocks that were thick enough, I forced myself to buy 2000 shares and then sell 500 as soon as I was up 10 cents or more (I usually try to make .50 or more in my trades---it sometimes works out). So then I had closed out some profit and I felt better because I didn't have the lot I was really uncomforatble with but the 1500 was still well more than before. It worked for me because now I feel like if I have less than 1k in anything I'm a piker and can handle 4k positions. Luckily my strategy was easily scalable to these levels. This probably isn't for everyone.

    FYI--At first this worked great. I was still thinking in my old numbers so my winners went up fast while my losers stayed the same because I was still scared of losing the same amount. I took a few more losses but overall was better off. However, after a month, I lost that fear and my losers became massive for me. Not career ending but a couple days might wipe out a week or 2 of winners. I lost some sleep and eventually taylored my trading a little more, cut out a couple kinds of trades. I also learned that the new size doesn't work for me in the afternoon so if I trade in the afternoon, I have to leave for at least an hour because I can't dial it down immediately as the day progresses.

    This is just my story and another way to approach sizing up. Its probably a little unorthodox but I had to shock my head instead of slowly growing. Good luck to all of you working on this.
    #10     Feb 3, 2008