Tuesday, December 22, 2009

Increasing Quantity in Trading

You must take extra care while increasing trading quantity. More often than not, novice traders, recklessly increase trading size and lose the small amounts gained in a few lucky trade. The reasons for taking cautions are mani-fold:

* - Psychological pressure of potential, bigger losses and hence not keeping enough stop loss.
* - Cost of slippage is usually higher
* - Blotter looks ugly when in drawdowns

Suggested Remedies:
Make sure you increase quantity gradually.
Measure performance by comparing with a set benchmark, even against smaller size trade results.