Best ways a daytrader can increase his size if he is already consistently profitable?

[Daal]

That's possible for some but not for others but I only say that due to what I've learned so far in Behavior Finance. The human mind is just wired the wrong way when it comes to making financial decisions or trade decisions. Yet, for yourself, if you have stats that shows that you will have superior results if you increase your position size when you don't feel comfortable...that's something worthwhile exploring.

The question is now a little more deeper. How do you convince yourself to increase your position size while the other part of your brain is not confident about the situation when your trade analysis is complete and you're ready to take a position ?

If you already know that answer...slowly increase your size via the invert of the same process I mentioned...the more you don't feel comfortable...slowly increase your position size.

I'm the opposite in how my brain is wired, I only increase my risk (more contracts) when I feel confident in my analysis of the global markets and the trade itself. In fact, the more I'm not comfortable...I'm less likely to trade.

P.S. The term "crowding" is something I'm not use to seeing discussed in psychology talks. It is a first for me. In contrast, I see it used by those in their discussions with me that are involved with hedge funds or quantitative strategy talks.

Well, you are a futures trader. There is more liquidity there. In the small cap stocks that I get involved with, any kind of crowded play tends to blow up a lot faster. Even in the more liquid stocks you tend to see that.

Take a look at RYLP this week. The play got crowded on the long side quite quickly and a result you saw a reversal friday. People felt confident because of the huge price targets and loaded up, as a result you had a shakeout. Doesn't mean that they won't be eventually right but if they sell because they can't take the pain, then it was a mistake to have loaded up

 

[Handle123]

Trading futures, the worst is going from a one lot to a two lot as you have doubled your size, it is mind numbing for me way back when. But in stocks, it was much easier, Let's say you trade 100 shares, what amount would be trivial for you? 20, 10, 5? You add that trivial amount for one week, the brain doesn't register it as much of what is being added on, so next week you add again but add one more, and do so every week.

You need to know what your "mean" is for losing days and winning days in a row, when you expect a possible losing day based on stats, cut back volume, so when the lose comes in, your added amount is not ripping you the greatest lose for the week, then after, you resume at volume you were highest at and keep increasing, you have to be smart enough to be able to fool the brain, before you know it, few years later you are trading much bigger amount and yet brain doesn't see the size as it is calm in the manner you sneak it in.

 

[Turveyd]

I trade spot, so i trade close to magin call, limiting my loss, i profit lot size increases and vice versa.

Stops me averaging down excessively to.

 

[wrbtrader]

Once you start trading for a living, as a sole source of income to pay all expenses/cost of living, and with no savings to fall back on, those abstract percentages will become very concrete due to the nature of reality for non-wealthy people.

Last Monday I lost an entire month's worth of money I hoped to withdraw from the account to pay for groceries and utilities for next month, in just two bad trades. Then Tuesday morning I went to the bathroom, where I heard sounds from my trading program and rushed back into the room, in a few minutes I had lost money I planned on using for next month's car payment and auto insurance.

I'm in a gambler's dilemma, with May's money allocated for bills lost, I must risk June's expense money to try to earn back May's lost expense money, so I can continue trading for a living. If I lose June's money trying to get back May's money I'll always pull from July's money..but soon I'll end up broke due to the chaotic nature of the markets, commissions, and other expenses.

I have concluded that no one should try "trading for a living" unless they have money to pay for their living expenses for months-years in advance.

Now just imagine had you listen to the advice that I and others gave you soon after you've arrived at this forum.

Do not trade, you're not suitable for trading.

Had you listen to that advice, you most likely wouldn't be in your current situation. Instead, you would have been forced to be employed somewhere so that you can pay your bills even if its a job you hate.

Another valuable advice that was ignored by you...keep your job until you've proven you're a consistently profitable trader. There's nothing to be ashamed in saying you have a job and that trading is just secondary. Also, I do remember someone telling you not to trade with money you can not afford to lose and to save up enough money to pay your expenses for at least 1 - 2 years worth of income.

Actually, its never too late for you to listen to the above advice that has been given you...get a job, pay your bills, re-load your trading account to bring some equilibrium back in your life and to minimize the current psychological pressure you have.

 

[Turveyd]

I have concluded that no one should try "trading for a living" unless they have money to pay for their living expenses for months-years in advance.

As soon as I feel ready and start hitting $4000 USD per month, which is twice my current income, then I'll be closing shop and just trade, lifes to short to waste working and worrying, time to doooo ittttt!!

If you losing that much on just 2 trades and having to break into money for bills then your doing something wrong, slow ish and steady wins the race, I fear your trying to hard, or just really really bad chance ??

 

[i am nobody]

I have a fixed leverage that I use no matter the size I trade.
Because the leverage is stabile, the risk and reward ratio’s and the recovery time stay the same.
So there is no extra pressure as the difficulty to overcome a drawdowns is always the same regardless of the size traded.

 

[trickshot]

Once you start trading for a living, as a sole source of income to pay all expenses/cost of living, and with no savings to fall back on, those abstract percentages will become very concrete due to the nature of reality for non-wealthy people.

Last Monday I lost an entire month's worth of money I hoped to withdraw from the account to pay for groceries and utilities for next month, in just two bad trades. Then Tuesday morning I went to the bathroom, where I heard sounds from my trading program and rushed back into the room, in a few minutes I had lost money I planned on using for next month's car payment and auto insurance.

I'm in a gambler's dilemma, with May's money allocated for bills lost, I must risk June's expense money to try to earn back May's lost expense money, so I can continue trading for a living. If I lose June's money trying to get back May's money I'll always pull from July's money..but soon I'll end up broke due to the chaotic nature of the markets, commissions, and other expenses.

I have concluded that no one should try "trading for a living" unless they have money to pay for their living expenses for months-years in advance.

You are undercapitalised if you need to withdraw money from your account to meet month-to-month expenses.

But you probably already know that by now.

 

[Turveyd]

You are undercapitalised if you need to withdraw money from your account to meet month-to-month expenses.

But you probably already know that by now.

Think he's having to use, saving put away to save the account to try to make enough to live off.

Think of it as a job, you work each month to pay the next months bills, at first unless you start off rich, this is a risk your going to have to take.

 

[autotradingalgos]

One good method is to know the historical drawdowns of your system/portfolio and increase your size when you hit a certain drawdown percentage. In my case there have been 24 x 4 % drawdowns for my portfolio of systems since 2004 - and 86 % of those formed the deepest point in that drawdown. If I have to increase size then that is when I do it. Good trading to all.

 

[Xela]

One good method is to know the historical drawdowns of your system/portfolio and increase your size when you hit a certain drawdown percentage.

I'm a "semi-scalper", mostly, so my drawdowns happen to be minimal, but if I had a drawdown of 4%, I'd instinctively be wanting to decrease my position-size, not to increase it. Otherwise you're "chasing", aren't you? Increasing your stakes during a losing run is an eventual way to the poor-house. In my opinion.