Avoid the Temptation to Increase Forex Trade Size

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.

Thanks for reading and if you have any comments or suggestions please don’t hesitate to contact me. If you like this video please RT this post by pressing the Retweet button at the top left
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Casey Stubbs is the founder of Winners Edge Trading, which is one of the most widely read forex sites on the web. Winners Edge Trading has trained thousands of people to trade the Forex markets.

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  • Mike

    It sounds simple and logical but yes it is not easy 🙁 The problem really lies on the trader himself and the market changes that render the strategies ineffective. It would be impressive if one can test this $250 investment out.

  • Helder

    Hi Casey.

    Impatience… the mumber one game killer for any trader. In order for anyone to become a successful trader, one needs and must understand that it takes time. You have a bigger chance to become a milionaire playing the lotto than trading. You dont believe me, try it out for yourself.

    Position size is one of the most crucial and powerful techniques a trader can possess, if handled carefully. It doesn’t matter if you have 3 or 10 great strategies for trading every kind of market. If one doesn’t know how to stratigically “play around” with it’s positions size than you have a lot of work to do.

    As any experience trader can tell you, the smallest of changes in one’s strategy will imply a complete revision of that same strategy.
    Imagine you have established a strategy in which your risk/profit and win/loss ratios will allow 5 losing trades to be covered up by 1 winning trade. After taking 7 straight losses, you decide to increase your position size. Maybe you will get lucky, maybe not. But that is not the most important aspect. The most important aspect is that you have literally “murdered” all the work you had so far done through analysing and back testing.

    That last trade will only have one result, self doubt, and that is the last thing you want in your mind when trading.

    Happy trading everyone!

  • Helder

    Hi Stephen,
    Have you actually tried this idea out and did it worked?

  • TQ

    that true if you love what you do the money will come…not when you stress.

  • Jannett Duff

    Remember traders, the fact that you have had $100 winning days on your $500 account is strictly a result of using too much risk.

  • Krisokenta

    Hi Casey.
    You just hit the nail on the head as to my own trading fault. I have good trading strategy and knows what to do, but the NUMBER ONE problem I have is over trading by increasing my trade size. Now I have repented and will do a better job henceforth.
    I received inspiration from the idea posted below by Kenyon Stephen. I will use the Idea to compound my income. Thank you.

  • Stephen Kenyon

    It took me a long time to understand that I was only going to gain a certain percentage of my account for each winning trade. Remember traders, the fact that you have had $100 winning days on your $500 account is strictly a result of using too much risk. The good news is that making a steady 5% per week starting with a $250 account and of course letting it compound will turn that $250 into a $1,000,000 account or income generator in 3.25 years. Imagine that, $250. becomes a $1,000,000 in 169 weeks.

    If I can help anyone understand risk a little better feel free to email me

    [email protected]

  • Increase the trade size put extra stress over the trader, so true and so useful article. Thanks Casey for sharing it with us.