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Trading Sizes

3 replies, 2 voices Last updated by John Locke 1 month, 1 week ago
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    • #17354

      Dan Shaw
      Participant
      @dkshaw@gmail.com
      Points: 697
      Rank: Freshman

      Thanks John! Well said and provides a good perspective.

    • #17353

      John Locke
      Keymaster
      @john-locke
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      I’ve talked about this many times in the past.

      That’s the paradox of trading these adjustable strategies. The newer and less experienced that you are, the smaller the position size you should be trading but the smaller the position size, the more difficult it becomes to make incremental (granular) adjustments.

      The great outcome in this situation though, is that for those who figure out how to make incremental adjustments with small sizes, it opens up their creativity process and increases their skills which makes them a MUCH more dynamic trader when they start trading larger sizes.

      So, is there a disadvantage to trading smaller? Yes and no. Yes it’s more challenging, more work, and has a steeper learning curve AND no because in the long run you’ll be better off.

      As for there being a difference (in results?) if you adjust with the same granularity, then the % results will essentially be the same. If not, then you need to expect differences, although depending on the context of the market, those differences could be better or worse… and that’s where subjectivity comes in.

    • #17349

      Dan Shaw
      Participant
      @dkshaw@gmail.com
      Points: 697
      Rank: Freshman

      Hi John,

      Over time I have back traded with various different lot sizes and capital amounts to understand better how size affects trade management. What I am finding is that larger lot sizes (or those that you feature in your weekly income meetings) are “easier” to manage than trading small or the minimum available. For example, a 20 lot M3 vs a 2 or 4 lot. Having more options in the trade provides more granular adjustments it seems.

      Question: Is there any inherent disadvantage to trading small? Or is what I am experiencing more psychological and as long as you make the necessary rule adjustments, it should trade the same?

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