Advice needed for someone wanting to up their position size

[gvngavin4]

Hi there.

I just joined and my main question is around position size.

Studying my previous trades I have realised that my system does work (I basically track price and volume and analyse the relationship between those 2 while using that as an indicator against new news such as dividends and world events) however I am playing too small.

I am intending to increase my trading account soon and dont want to be playing with small amounts - its ok I do limit my position size relative to my account size so I know in advance my max. loss.

Its purely a mental thing as if I am say for example putting on a trade that is in equal size to my monthly wage then it starts to feel a bit risky however I know that if I dont up my position size I wont make it big.

Any advice for me anyone? 🙂

Gavin

 

[N Rothschild]

risk about 1-5% per trade deepening on how aggressive you want to be. i risk 1%

 

[gvngavin4]

Thanks Genics. I have position sizing rules but I tend to underplay those to "play it safe".
I guess I just need to have trust in my capital sizing rules and my system and play for the long term.
Appreciated.
Gavin

 

[timsk]

Hi Gavin,
Welcome to T2W.
The general rule of thumb is to only risk a set percentage of your account. This varies from about 0.5% to 5% depending on the trading style and size of account. In theory, if you think of P&L in percentage terms and points / pips won or lost, then the psychological stress of dealing with increasingly large sums (assuming your account is growing) is kept to a minimum. In your case, if you're risking a month's salary on each trade, then you'll need to have an account with circa £100k so that you're not risking more than 2% (assuming an annual salary of just £24k).
HTH.
Tim.

 

[Glenn]

Accepting the above, in addition-
- Your pos size should vary with recent or implied volatility. Higher volty = smaller size and vice versa.
- Whenever you trade against a trend you should halve your 'normal' position size because of the increased risk.
Glenn

 

[TheBramble]

Start at one tenth of your anticipated full position size.

Work up one tenth at a time staying comfortable with your performance until you're at full size. There's nobody watching you or evaluating you against peers so you can take as long as you want.

Alternatively (or additionally), work on your timing - so you get into profit more quickly or more of your trades which will further increase confidence/reduce anxiety - and/or drop down a TF or two and reduce your time exposure. The latter will require smaller stops therefore bigger position size and you'll be taking fewer pips/points per trade, buit more trades, which sounds like it might suit your trading style better.

Case of suck it and see really.

hth

 

[Vaco]

Gavin,

Feels like the prob is more about what the money means to you rather then your trading rules or ability,

If you are thinking about what the loss of a single trade means to you then the account is too big for you.

Better to keep the account smaller, build it up then its money you made in the markets you are risking rather then a months wages.

 

[gvngavin4]

Really appreciate the insights. I think all the replys made me think about my style and what was holding me back!
Thanks again. This forum is great.
Gavin