April is over and with the arrival of the spring sunshine, is it time for a bit of sun to shine on our P/L’s?
Looks like it, with April wrapped up, our numbers look better and better in most parts. Sometimes it seems that improvement is slow, but our analysis shows it to be true. Not only is our trading improving, there are signs of consistency starting to show within our trainee class. We got there by trading more size and adding more markets to our trading schedule. Read more about it below.
Like I mentioned in the previous post of “Trading Futures in Croatia” series, time has come to push forward and add more size. Adding more size is the natural next step to take and one sure way to boost our daily performance to a higher level.
There is a quote in Market Wizards that says “Nobody made fortunes by trading one and two lots.” It works just the same for us trading on simulation. Richard Dennis, one of the traders in Market Wizards believes that one of the worst mistakes a trader can make is to miss a major profit opportunity. According to his own estimate, 95 percent of his profits have come from only 5 percent of his trades.
The goal is to maximize gains on high probability trades by trading more size, but at the same time we definitely feel a little bit more heat. If a trade goes bad with more size, of course, it will mean a bigger loser too. But first there is a rule or a strict guideline to follow before we can enter a trade with 2 lots – we have to be positive on the day before we load up the boat with our little 2 lots. It’s definitely a bigger rush trading more size, but it also feels more like proper trading, waiting for the right opportunity to size up.
My first trade with 2 lots was a winner that brought me almost 70% of my daily target. It’s clear what’s exciting about trading with more size, more P&L when it goes right! One of the trainees in my class came close to hitting his monthly target. Trading increased size has definitely helped him get there. Big winners make everyone happy and moves us a step closer to the live markets.
I asked the trainees and experienced traders to share some advice and how increasing size has gone for them and here is what they said:
1. Some of them don't feel the difference while others really struggle to balance the risk reward.
2. Be more selective of when to step up size.
3. I always trade bigger size when I am green on the day and smaller size when I am negative.
4. Losers suck on big size but you gotta cut big size losers even faster than normal sized trades.
5. Forget about your first losers on bigger size. Just get those initial losers out of the way and move forward.
6. I like to add to winners, test with a 1 lot and if it goes with me, add at the next best spot.
7. And our favorite, Go Big or Go Home!
I would like to round up today's post with another Market Wizards quote (if you didn't get it by now, we love those books here at Positive) from Michael Steinhardt:
“One trait I have noticed among a number of the great traders is their willingness and ability to take on a particularly large position when they perceive a major trading opportunity. The nerve and skill required to step on the accelerator at the right time is certainly one of the elements that separates good traders from exceptional traders.”
Next post I will talk about adding more markets to our trading schedule and how it affects our habits and daily performance. Will having more markets help us do better, or it could be a distraction from the markets we have been trading so far? Read more about it in the next blog post.