Transitioning to big size

Discussion in 'Psychology' started by Riskmanager, Oct 15, 2006.

  1. Hi everyone,

    I'm starting this thread because I am interested to learn whether someone here encountered and solved a similar mental obstacle as I am currently dealing with.

    I have traded for several years so far, and am about to start something on an institutional level. This means, that the amount of money I will start to trade from 2007 on will be about 100 times the size of what I am currently working with. And here's the problem:

    I have already started to trade some bigger lots in equities, and the absolute volatility in $-terms is far more stressful to me than what I have expected.
    My goal is to reach the point, where this doesn't matter to me anymore, where I won't have any problems to cut losses short, that are the multiple of what most people I know make in several months of work.
    I want to eliminate exactly this kind of thinking - I just want to perceive the money as what it is, i.e. several electronic digits on a computer screen.
    I want to see it the way the CEO of a home building company sees his stones.

    I think I am basically looking for a reframe - an NLP exercise would be perfect in this context!

    Has anyone here encountered and solved this problem too? No theoretical answers, please.
    Feel free to PM me alternatively to posting here.

    Thanks in advance!
  2. look at it in points and decimals per position. Do not look at the actual dollar value. Try not to stress to much.
  3. Your assets may increase ~100-times but your position size doesn't have to. Focus on adhering to your loss limits and risk control. That way, you can be consistent in your system execution.
  4. I hear you on this one... Its very hard to make transitions like this. I know this sounds cheesy, but it has helped me to not trade money, but trade poker chips. For example, I trade in units so one chip equals one unit. This way I am not trading money and it helps with the emotional aspect.
  5. Joab


    Turn off your P/L so that you don't see it.

    Simple yes but effective non the less.
  6. Thanks to everyone for all the interesting contributions!

    I have contemplated a lot, and I think I have found the right solution:
    currently, I'm simply trading too big.

    I'll therefore scale back the individual positions, and instead diversify the unchanged edge across much more trades and more stocks in combination with a market neutral approach.
    I'll reduce the p/l observation of the individual trades, and instead focus on the net result.

    Since I already know that my edge works excellent in the long run, why bother with constant sprinting?