Quote from armaniman:
1) During the 1980's I supported myself by betting on thoroughbred horse races (at the NYRA tracks ---- Aqueduct, Belmont and Saratoga). One of the most interesting things about the racetrack environment is that you get to meet some fascinating characters. A man who became one of my closest cronies was a brilliant handicapper, but he suffered from one tremendous problem: he couldn't control himself at the betting windows. If he got ahead during the first few races (which happened often enough because of his great skill at picking horses), Bobby would throw caution to the wind, and start betting his entire bankroll on each individual race, trying for a giant killing. Of course, virtually every day, Bobby ended up losing everything, including his original stake, and was reduced to begging me to loan him the cash to play the last few races on the card. While he was certainly talented and perceptive enough to earn a decent living betting the horses, Bobby's total lack of discipline and self-control consigned him to the ranks of the big losers in the game.
2) The closer I grew to Bobby, the more I realized what an intense self-destructive streak he had. Looking back and substituting the racetrack for trading, Bobby is a perfect example of Ed Seykoya's dictum that people basically get what they want to get out of trading. Bobby wanted to lose for various semi-conscious and subconscious reasons, and despite his brilliance, he conducted himself in such a way as to all but insure that that would be the eventual outcome. So I would ask you, DNA, to look inside yourself with all the honesty and clarity you can muster, and explore what reasons and fears you might have that prevent you from operating in your own best self-interest. Do you really want to win at this game, or are there submerged issues you're not facing up to that are negatively affecting your trading? Because if you were deliberately trying to lose, drastically increasing your size out of the blue is as close to a surefire way to achieve that as there is.
3) Bobby would always justify his actions by saying that once he got ahead he was *playing* with *their money* or *the house's (the track's) money*. Of course, that is the attitude of either a rank amateur and/or someone destined to be a big loser. A professional trader and a winner knows, deep in his bones, that his profits are HIS and HIS ALONE, the fruits of his labor, and that it is his right and his responsibility to protect, husband, maintain and extend them. Bobby's mentality represents the classic gambler's pathology of giving it all back simply for the sake of heightened action and thrills. It's your right to do that if that's your bag, but then you can't turn around and actually complain that you are losing money in the process!
4) By way of analogy: The gambler's all-or-nothing mentality is like a major-league hitter who tries for a home run at every at bat. The result, of course, is an occasional long ball, a great many strike outs, and eventual demotion to the minor leagues! The best batters simply strive to make every at-bat the most productive one they can ------ if Pedro Martinez throws them wicked curves on the corners, they do they best they can, by striving to making contact and trying to scratch out a few singles, rather than accepting an all-but-certain strikeout. And yet if the occasion should arise and Pitcher X hangs a slider or grooves a fastball, they're ready to pounce and hit it out of the park. A good batter takes whatever he can from a pitcher, nothing more and nothing less, and by near perfect analogy, a good trader garners just what the market makes available to him ---- nothing more and nothing less. Sometimes it's a homer, other times a single, still other times a strikeout. But it's the market and only the market that determines how well you can possibly do on any trade, and once you respect the market itself as the ultimate and indeed the only arbiter of such matters, that it completely supercedes your own ego or desires (let alone the happenstance of the current condition of your bankroll or the course of this particular trading day!), then the path to consistent profits lies open to you.
5) Because you tend to be successful trading early in the day, I'm assuming you have a method, a system, a set-up (or series of them), or an approach that gives you a significant edge. If so, then it is imperative that you come to understand that your one and only task as a trader is to exercise that edge, over and over and over, whenever it appears and only when it appears. If a trade is a good trade by whatever means your method determines is a good trade, then it is a good trade and must be taken. Period. Whether you are up or down for the day, for the year, or for all eternity is absolutely irrelevant. If it's not a good trade (again as determined by your system) then it's not to be taken. Period. Whether you are up or down for the day, or for whatever period is absolutely irrelevant. You have a percentage edge and it is for you to exercise that edge and just that edge every legitimate chance you get. To paraphrase a best-selling book, take good trades, and the profits will come. Take bad trades, and the losses will come. Turn off that P/L indicator, banish all thoughts of how far ahead/behind your are and simply devote every ounce of your energy to watching for the good set-ups and then executing them with as much precision, accuracy and consistency as you can. The profits will then take care of themselves.
6) Understand that the trading day ---- regular trading hours --- is just an arbitrary division due to the fact that traders have to have time to rest and recuperate. In reality, trading is an probabilistic occupation that takes place over a long stretch of time ---- often running into years ---- and how well you do or don't do on any tiny segment of that period is virtually meaningless. To use a batting analogy again, it's grossly unreasonable to expect a .350 hitter to get a hit or two in each and every ball game. Sometimes he goes 0 for 5, other times 4 for 4. But on balance, the good hitter has more than his share of successes. Judge your trading performance over an extended series of plays (such as a baseball season) and not by how you do over each and every miniscule and arbitrary stretch of time.
7) Finally, as other posters have noted, you are almost certainly putting enormous stress on yourself by drastically increasing your size smack dab in the middle of trading. Suddenly every tick looms dramatically large, the whole process is intensified several fold, and you're almost certain to start trading in a very different and likely much poorer manner than that to which you are accustomed. Rather than yo-yo around with absurdly different and psychologically debilitating position sizings, you should slowly and incrementally increase your size as your capital grows to maintain an maximum equivalent percentage risk per trade. If you now risk, for instance, a maximum of $100/trade and then you suddenly up that to $500/trade you're setting yourself up for an almost sure fall. Eventually you're going to take a huge loss or, worse still, a series of losses. Instead, risk say $120/trade. The psychological difference is all but non-existent, yet you rightfully increase your potential reward in due and modest proportion to your increasing capital reserves.
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