Hi friends, I have been trading sugar for about an year. I trade outrights and calender spreads mostly intraday. Here's my problem- For the past 3-4 months, I am trying to scale up size. What has happened in the process is - I lost my consistency. Earlier, when I used to trade with 1-2 lots, I was consistent on a weekly basis but now, after my lot limit has been increased to 8 ( from 2 to 4 to 6 to 8), I have regular losing days. Few trades in a day with higher clip size decides my day. Daily profits and turnover has increased but so did the PnL/account volatility. It's like, I have the flexibility to use whatever size I want in each trade. So, after I take a hit with a larger clip, all I can trade is to coup up the loss with smaller lots. If this large size trade goes well, the day ends well. I guess my risk reward is getting screwed in scaling up esp when its discretionary since psychology comes in to play a lot. I think this is a general issue that everybody face in the beginning of their careers. So how did you guys manage that? What should be the proper strategy to scale-up without too much volatility? P.S.- I am a new member here and this is my first post. Any thoughts or suggestions would be highly appreciated. Thanks
go back to 6 or 4 or 2 lots where you were comfortable and trade for a month or two, then scale up one level IE from 2 to 4 lots.. and trade for a month or two again till your comfortable.. As the account grows after a month or two you will be comfortable with the current size and scaling up again wont be so hard cause you have all that extra dough... Just take it slow.. It will come!
may be the problem is in over committing to low probability trades or position size management ... I was just wondering if taking all positions with same size help or it should be based on the individual setup/opportunity? ...the former can perform better in managing overall risk/reward (for the day), the later ofcourse involves a lot of subjectivity and hence looks difficult but it can surely give one great edge if mastered. hmmm .... I believe it make sense to go back and start all over again till I get my head cleared up with this ... thnks for the reply!
You are increasing size too fast, size of account has nothing to do with experience or what probability you may make a trade might be either. Going from a 2 lot to 4 lot is extremely hard to start as it is 100% increase, maybe every eight weeks increase a one lot, if your equity curve has smooth out some. Also, keep track of how many winning trades in a row your method generally has and when you reach this "mean", cut size back. I rather increase size out of normal drawdown than when making new equity highs. I know this doesn't feel good to do at the time, but seldom are the ways to make money trading. I generally don't have more than two losing long term trades in same stock, so I increase size to double on 3rd trade, but comes down to your backtesting stats.
Well everyone is different and not all traders can master trading different lot sizes based on probability. But when im darn sure what gonna happen.. I load up!!!
I guess on an instrument like sugar, if you are trading the front months or front spreads, you have no real capacity limitations, only balls and wallet ones. Even in the illiquid further outrights and spread, if your size is under 10 lots, people will never notice you. Here are a few advices in sizing up : - Even if you are supposed to trade the exact same way with size or not, I feel more comfortable with a closer mental stop when trading sizes. I won't allow a 25 lot position go against me as much as a 5 lots'. - Trade real sizes only on the best signals. Adjust your size to the quality of the setup. It's a corollary of the first advice. You can have a closer mental stop on the best setups. - Use Iceberg orders when you don't want to get noticed( when you will trade 10+ lots). I don't know how it is on ICE softs but don't forget you most likely lose FIFO priority in displaying icebergs. You only get priority for the displayed lots. - Don't trade 2, 5, 10, 25, 50 ... sizes. It's too easy to catch on. Trade 4,7, 13, 21, 37, 107...