I am having trouble sticking to my strategy /plan. Someone told me paper trading will help. Currently I use a position size of $3k. Do you think reducing my position size would help to take emotion out of the equation so I can learn to trust my strategy and stick to it? Or is paper trading a better option to get over this hurdle? I am a discretionary trader that trades stocks. Would love to hear from other experienced discretionary traders. Was paper trading useful or is it better to use small position size instead? Thanks!
I would reduce my size. Paper Trading has value to learn software, not to practice trading. Without fear and greed, it is not a good test. One of the issues with very small size and small trading accounts is that you can't size your trades to your confidence level. (Play bigger when you expect the odds are more in your favor)
Like everything...it usually works both ways, Paper trading has benefits, and reducing your trade sizes...also has benefits, in helping you to gain or regain confidence, Trading is incredibly complex and hugely gray, -- it's hard to teach or make someone become fruitfully profitable...relatively consistently...for the longer haul average, Trading is kind of like War or a fight or sport...it's kind of delusional thinking to expect to remain on top forever, Variables and conditions in a given environment are constantly changing and percolating before your eyes and mind, You'll never be able to reduce/eliminate emotions...you're Human. It's only natural...before, and once, you place a trade...a million emotions and thoughts are constantly running through your head, Try to be a collectively well-rounded, open, person in life. All the great traders, in my opinion, have a somewhat wide philosophical view of things in life...they are not simply one dimensional, and only know trading, like a weird cyborg personality. Good trading, ET extraterrestrials Fill up my cup, Mazel Tov
I always thought no for newer traders. But I tend to believe that it is a good tool to refine process when making changes. You need to be able to trade sim with the same mentality, it's definitely hard to do that without having developed a mindset of risking real capital.
If simulator trading (use your broker's demo) and reducing your position size doesn't help...you'll know it quickly when you go back to real money trading. That's when the psychological games begin to play because you'll know its "just you" that's causing the problems. You'll then have to resolve the real issues that has nothing to do with trading. Good luck.
you shouldn't be trading sizes that make you sweat through a position- risk only what you're comfortable risking, and add as it goes your way. Or bet it all on red.
3k is irrelevant, since we don't know your account size, nor do we know what size you are comfortable trading. You tell us. Do you think you'll follow your rules if you decrease your size? Or, do you lack confidence, so you feel you need to refine what you are doing? Or both?
My account size is 50k. I am more comfortable trading 1k to be honest. It all depends on how much of a loss I can stomach. Losing 3% on a trade with a position size of 1k is $30 which is something I can accept. But losing 3% on a trade with a position size of 3k is $90 approx close to $100 and that is just too much to lose on a trade!
Any system I have developed I papertrade it to get new rules down before automating it. Trading though is more individual needs. Size of account shouldn't be taken into account, just the rules and following them.
I am also a stock trader. I trade 5 dollar stocks as well as 200 dollar stocks. But I have a fixed dollar loss on each trade. A five dollar stock may be going crazy, so I need to risk 40 cents, as opposed to a consolidating 200 dollar stock where I need to risk a dollar. Maybe you need to abandon the fixed position size, and move to a fixed risk per trade.