You've brought up THE critical point... It's psychological! It transcends "risk management". As a futures trader, when I have an open position yielding $50 PER TICK, for me or against me, I get anxious... premature exits, and cutting loss too quickly. I'm not referring to volatility or velocity, merely the psychological effects of the PER TICK VALUE of an open trade. If I "wanted", my account size could support an even larger position.
As I've stated to the OP before... he is not doing himself any favors by not at least incrementally increasing size, within the account value parameters he has defined. What better opportunity to deal with the critical psychology then with micro contracts. Adding 1 contract in volatile periods would be very useful...
Meanwhile, the OP refers to trading more than a single MICRO as "a feat".
You beat me to exactly what I was going to say!
I have been saying all along that the whole purpose of this experiment was to let the account size dictate the number of contracts traded and this is how he was going to grow 2% every day. He has so far traded positively every day of this crazy volatility, but since it was only with 1 contract, he his failing at what he set out to do.
With his account at almost 4k, he should be trading 4 or 6 contracts, but I'm not exactly sure of this rule. The volatility does require increasing stops and targets, and therefore lowering contract size I think (ie. instead of trading 4 contracts with a stop of 5 points, you trade 2 contracts with a stop of 10 points), but there was no reason to drop all the way to one, other than psychological.
If he was trading more contracts, his PnL clearly would have been double, or more. In a way, this shows that the psychological element is already affecting him, and this is exactly the kind of trouble most people run into. In this high volatility environment, I understand why he is scared, but since he still finished with a profit trading 1 contract, he would have finished with twice as much, or 4 times as much, if he was trading 2 or 4.
I of course don't blame him one bit, but I'm not sure how he will get out of this psychological barrier that he has now hit. All along I didn't like how he was already "self" adjusting his number of contracts traded, as if he has the power to forecast which trades would work and which wouldn't. It would of course be a wonderful skill to know that on a losing trade you only trade one, but on a winning trade you trade 6, but this isn't how it works.
Given the last chart he posted though, showing how 3 of the trades went heavily against him before recovering, I understand why trading multiple contracts would have been psychologically damaging, but this unfortunately shows that scaling up like this is very difficult, and his trades are hiding some ugly factors in that some of them go against him heavily, and when trading very large size, it will be difficult to hold. Its easier to hold these trades with one contract, but if he is taking on too much risk for even trades that end up being winners, then the goal of scaling up is dead in the water.
