If you doing consistently well, increase size, if you doing consistently like crap, decrease size. Common sense really.
Of course I agree with this post (hard not to!) with one proviso. Most small traders are at least somewhat under capitalized. Rather than continue along that dangerous path (let's save the conversation about whether they should be trading at for another time -- THEY ARE TRADING!) use your profits to become capitalized properly at your current size and then continue to accumulate capital until you are properly capitalized for your increased size. Then, AFTER YOU CAN AFFORD THE INCREASE, make the adjustment which is, in all liklihood, one additional contract.
Strongly agree because many traders I've met here at ET and other forums...they're under capitalized an should NOT be thinking about increasing their position size just because they've been consistently profitable. They should remain at the same position size until they grow their account until they're properly capitalized. Then they can began to think about increasing position size.
Kelly sizing. Everything else is bullshit. See my threads on the subject. http://www.elitetrader.com/vb/search.php?s=
================== Great answer; i enjoyed it also[Not that a smoothly increasing equity trend means much for several months, it does not.] If you have learned the difference between; a] uptrend b] downtrend c]sideways ==slop chop trend, then you may or may not want to increase it by a contract. Actualy , one of the better/wise things to do , in changing size; is a 1 or 2 losses in a row, cut back size or stop..... the trend has probably changed.As Rich Dennis told Jack Schwager''when getting beat up;;get your head out of the mixer''.LOL Hope this helps, it helped me. If your system is low probability, many turtles traded that way profitably, ignore my last paragraph.