Traders many times start with the right position size for their trades. However in the course of the daily trading grind they end up changing to a larger size. Sometimes it is because they have had a measure of success and they want to increase the trade size. In this case it is ok to do increase size, if you have
made the adjustment in your plan and that you have made sure that the jump is not too large for your account.
Sometimes traders will increase the size because they become impatient with their rate of return they may be having success but they want to earn more money faster.
This is a symptom of a couple of things:
1. Impatience the trader is making money but cant wait to make more and make money faster. This is a bad reason to increase trade size.
2. This is also a symptom of Greed and when faced with this tempation it is important that you refer back to your original plan and stick with what is right.
One way to help with this is to remember that the big gains will come but you must start small first and learn to be patient. Your Time Will Come!
Also traders will raise there trade size after some trading losses. Many times the reasoning behind that is that they want to overcome their trading losses, with a few trades. This is almost always a recipe for trading disaster.
It is important for you as a trader to recognize this as one of the major pitfalls to a traders success. When this type of thinking comes into your mind, it is important to resist the temptation to increase your trade size.
A successful trader keeps his trade size relatively small for his complete account balance. Keeping your trade size small compared to your account balance will strengthen you as a trader.
Trading is supposed to be fun, I love trading. If my risk is so high that it stresses me out. That is not fun. I never get depressed over a losing trade. I enjoy what I am doing.
So keeping trade size small allows me to enjoy myself, not be stressed and have fun.
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