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Size Matters

Many would like you to believe that trading 100 shares is no different then trading 10000. All your dreams will come true as soon as your account is bigger and you can throw large size at the problem. This isn’t even close to reality. First off bad trading isn’t fixed by trading larger size. Second if you think having 3000 shares on a trade is as easy to hold as 100 then you are in for a shock.

You first need to master taking only good, A plus trades that are worth trading larger size. Then you can start to increase size systematically and begin to train yourself to deal with the emotions that come along with seeing larger red numbers on the P&L. We aren’t talking about losing trades, we are talking about just holding your stop when you feel your heart racing. It’s one thing to hold a stop with a negative 10 dollar P&L it’s another to hold when your down $1,000.

The lesson here is that like with everything in trading you must take the time and learn the skills. Increasing your share size is a skill and you must incrementally increase your position and grow as a trader

Here’s an interesting experiment. Get a heart rate monitor and test yourself while trading. Let us know if you can keep your heart rate the same as you increase position size. If we were gamblers, we would bet against you.

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