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People often advice new traders to start small and then try to scale up later. My question is, if you trade small size for some time, will you get so used to small risk limits that it becomes very difficult to trade larger size?How many actually succesfully start trading from 1 lot to 20 lot clips in instrument say CL? I think the longer you stay a 1 lotter , the more difficult for you to upsize
Can you help answer these questions from other members on NexusFi?
there might be something to that. From a psychological perspective though, I think that people will tend to take risk or trade a size that is commensurate with their specific needs. That said, once someone is comfortable trading bumping it up or down should not be that difficult.
I know for me this is not a big issue. On the trading floor I was typically 100 up, but traded larger than that when I needed to or when it was an opportunity. While I could still trade that size I would never even consider it. I do not need the risk or the stress associated with it. I do not need the profits either. Now I generally trade three lots. Sometimes larger but I cant remember the last time I had more than ten contracts.
Perhaps look at trade size as an element of over all risk management and trade what is situationally appropriate to meet your needs?
I've never traded CL but found with other instruments (particularly spot currency), whether or not one can make the transition aside, popular wisdom appears to be right--it's smarter to start small. Personally never had a problem increasing lot size when the time came but did discover as @wildman says the game changes when lot size does--may be mostly a psychological reaction to wider swings in P&L--so for me at least the caveat is we ought to be prepared to start over again on paper until we get used to how the game changes. Perhaps it's the "starting over" that's hard to accept for some.
When I was making the transition to more contracts (on the ES), it was imperative that I was ok with losing the money if I were to lose (for each additional contract) and then I would only watch how many ticks I was up or down (while trading and at the end of the day) and didn't pay attention to the dollar amount until I was comfortable trading more contracts. Watching the ticks instead of the dollar movement up or down seemed to help a lot for me in transitioning up to trading more contracts. I don't mind anymore going from larger contracts to smaller depending on the time of day and market.
on a number of levels with that. Ticks as a currency helps sequester the emotional swings of making and losing big dollars. Plus I think it gives a universal approach to evaluation. Beyond that communicating in ticks is, imo, more humble and probably lends itself well to folks with higher integrity.
In my opinion, if the set up is sound ,you will make a profit.
The key to trading is to minimize risk. I personally, always start with one contract. If it is a loss I will increase the allocation on the next trade (not increase on current trade) until I have achieved my goal.
I always have a point where I will cry "uncle". Doesn't happen to often thank goodness!
Build your account to the point to where you are trading without leverage from the minimum and you will be "sailing".
It will take time and discipline ,but you know you are always trading in your comfort zone and the results will be good, because you are in complete control.
When I went from 1 lot to 3 lot, the first trade was a huge looser and it did scare me a lot so that I went back to trading 1 lot for a while.
The first trade will matter a lot for your psyhology. But later on, you can do smaller steps, like going from 9 lot to 10 lot. The gap is small compared to going from 1 lot to 2.
The first 5 are huge steps, but from 5 to 6 is not any more.
