(Yeah me too, but it takes a good plan and concerted effort.)
One of the biggest challenges for traders is increasing size. But how do you go from trading ones and twos to trading 50’s and 100’s to thousands? I wanted to share with you some of the tips and plans I’ve learned over the years to help you go from a consistent and controlled trader to big swinging dick.
Move your size up and down with PnL.
One of the best ways is to set yourself targets on a daily, weekly, and monthly basis. If I hit X PnL on the day/week/month, I will increase to Y size as my minimum trade. Once you are there, change the size. Likewise, if your trading goes to pot, you should have a downside where you go back to your previous size. But if all goes well and I’m sure it will after a while, you’ll need to pick some PnL targets and do the same again. Repeat this process, upping size and reducing size as your consistency and control dictates.
Go all in.
My favourite, and the one I use the most is to smash into a trade that I love, one that has low risk but huge upside. Trading is great in that you can increase or decrease your size based on the opportunity in front of you. So you see something you love—smash it! These trades don’t typically happen that often, but when you see it, go all in. Example: I normally trade 5 lots per mouse click in one of my markets, so I trade 5-10 lots most of the time, but last week I saw a trade I thought was low risk and high reward, so I went at it with 35 lots. Bang. Or rather, bang bang bang bang bang bang bang! 7 clicks.
Warren Buffet or Peter Lynch (of Merrill Lynch) says your biggest trades should come good the fastest. So when you go all in, the trade ishould go your way in a hurry. If it doesn’t ditch it fast.
Go big but take it off for a quick scratch.
Trying to go big but you are terrified, no problem, on your first few big trades, get the size on then take it right off down to a level you are more able to stomach. Do that a few times until you aren’t scared as much. After a while you’ll be bored with that size, able to think rationally while you have the size on, and be ready to ratchet it up to the next size level.
Change your initial entry size.
When I increase size I change the left and right clicks on my mouse so that with each trade I make I don’t even think about the size. I just click. If you are trading one’s and two’s, change your mouse to two’s and four’s. If you are trading 20’s and 40’s, change to 25’s and 50’s.
Increase your minimum click by 1 lot every day.
Every day that you are positive in your strategy, increase your minimum size by a 1 lot. Do that for 5 days and you will be trading 6 more lots. Do that for 20 days and you will be trading 20 more lots. Do it for 2 months and you could be trading 60 lots. This is a slight variation on the “Move tick size up and down with PnL. I did this once with a trader I work with and he was trading 50-100 lots after a few months after starting on 5-10 lots. He went back to 5-10’s though for a while when his edge eroded. Smart move. Stay flexible.
Just do it.
In the end you must take the plunge. So you are trading one and two lots and you want to go to five lots. Well just do it. Just increase the clip size and take the leap of faith that your current consistency will continue. This only works in markets where your size doesn’t impact the market and in strategies where you are consistent. Don’t think that trading bigger size will take your mediocre trading to the next level. Increasing size is only for consistent, in control traders. So if your PnL is up and down like crazy, increasing size isn’t gonna be good for you. But if it’s time to do it, put it on. You can increase to any size you want provided you have the money management to take the hits and keep going. It’s a tough way to increase and has it’s risk, but ultimately you just have to take the plunge and just do it.
Make a plan
Whatever your approach, some of the above, all of the above, one of the above, or something else that works for you, make sure you put together a plan and stick to it. Moving up size from newbie to big balls trader takes effort and practice. You will take some hits as you go up, it won’t be straight line progress, but ultimately you will get there. So get your plan together, kick it in to gear, and start strappin’ on the size.
What other ways do you increase size? Share your thoughts below.