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How Big Should I Make My Trades



September 12, 2012 – Comments (1)

Let's be frank - the bigger the better when it comes to trading stocks: 

Big Returns = Big Money

Big Portfolio = Big Positions

Big Positions = Big Profits

Bigger Positions = Bigger Cash Returns on Small % Gains = Less need for significant winning trades

So Why don't we all just trade as big as we can? 

Because the exact opposite is true when you lose and the true reality of the above statements really becomes:

Big Returns = Don't come as easily

Big Portfolio = Increased anxiety

Big Positions = Big Losses

Bigger Positions = Bigger Cash Losses on Big % Losses = More need for significant winning trades

What do we do then!?!

Evaluate yourself. Are you afraid to hold a position overnight, even though you find yourself to be a swing-trader? 

- Then you are trading too big

Are you scalping with big positions and settling for pennies on the dollar and finding some satisfaction with it? 

- Then you have too much fear in your trading....and you're trading too big. 

Are you checking your positions every gosh-darn second of the day. Getting emotional on small blips throughout the day while trading? 

- Then you are trading too big. 

Becoming moody at night with the wife/husband/friends/kids? Checking Futures obsessively at night? 

- Then you are trading too big. 

Got a spreadsheet that says "If I make $X,XXX per month/per trade/per week I will be worth $X,XXX,XXX,XXX,XXX in two years" 

- Then you have unrealistic expectations and you are trading too big. 

What Should I Do?

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1 Comments – Post Your Own

#1) On September 12, 2012 at 1:38 PM, Lulupoopsalot (65.02) wrote:

Great topic.  In real life I personally limit myself to 20 trading positions because that is a lot to manage.  I set my trailing stops at 3-5% depending on how strongly I feel about the trade then tighten as profits permit.  Therefore, if I'm comfortable losing 5% of what I put into the stock then it meets my risk tolerance.  I get stopped out of about 12% of my trades with this method.  Technical analysis is my best friend in short term trades.  I look for oversold conditions on quality stocks and wait for bottom confirmation then strike.  This method I've found allows me to sleep at  Please check out my buys that say "oversold. technical buy that met my criteria" for an idea of how and what I trade if you're interested.  But this is a great topic.  I can't wait to see more responses. 

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