most small day traders don't make money. if we had them trade smaller size would they be better traders? is size the death to a small trader? people don't become traders to make 45k a year but you don't pay SS and no gas to work either makes it like 55k. i don't think that's a real number for most to live on but 55k a year is an average salary.
smaller size makes you a better trader?
- Thread starter brokerboy
- Start date
Psychological reasons are why traders fail though. Psychological factors are part of the reason there is support and resistance in markets. Psychology, in my opinion, is not irrelevant and I believe 90% of traders would do better if they traded using less capital. The problem with many people is they do not follow their rules... this is for the most part, because they trade using way too much size.
Edit: this explains why people do better papertrading than when using real money.
Yep...Psychology is the most important thing that separates better from the best.
Think about this... "you are trading better because you are trading small" If you believe this...how would you grow.. you will be PSYCHOLOGICALLY challenged to get better. \
I believe, "One day" there is this SWITCH that just flips - psychologically and then the real game start. Until then its all irrelevant.
If psychology is not an issue for the trader, then size makes a difference if increasing size affects the market or stock traded. If adding too much size affects your edge, that could be a problem.
To answer the OP: smaller size is just outright easier to trade. Size vis-a-vis liquidity (and/or lack thereof) plays a huge factor, especially on shorter time frames -- never underestimate the impact (im)proper position size will have on your trading results.
Psychological issues pertaining to size are a completely separate issue.
Quote from jokepie:
....I am sure folks with that kind of capital are already past the psychological issues and are not here on ET.
Do you realize how easily one can overstep one's edge with just a simple increase in position size? People still greatly overestimate liquidity in certain markets and time-frames.
