The bigger the size, the more profit you get, right?
In most cases this is not the case. Money creates emotions. The larger the transaction, the harder it is to control and manage emotions.
Emotions are in your transaction no matter what. It’s not about eliminating emotions, it’s about managing them.
If any of these signs sound familiar, you should start reducing the size of your trading positions.
You are always focused on your PNL
You chase PNL, it runs. This is one of the most common errors new traders make. They pay attention to how much the trade is going up or down. This is a typical sign of a transaction that is too large. This results in terrible trading because it makes decisions based on PNL rather than market trends.
Pro Tip: Hide unrealized PNLs in your transactions. This helps keep you focused on what’s important: charts.
Can’t leave the computer
Transactions should not connect you from your computer to your phone. You should be able to leave comfortably for a minute or two without rushing. If you feel scared to leave your positions unmonitored, your trade is too big.
You make a profit too quickly
That is my mortgage. That is my car payment. It’s a week’s worth of food.
Assigning value to unrealized profits in the market means you profit when you shouldn’t. This is effective in reducing greed, but in the long run, early profit gains can have disastrous consequences for your long-term PNL. Learn to find that “sweet spot” in your position sizing:
Make a profit based on price behavior, not what the unrealized profit is.
You stop prematurely
Have you ever stopped by because you were scared? You just see the inventory reverse and go to the moon.
If you’re jumping into or out of position, it’s because you’re afraid of the money at risk. Reduce your size to get rid of this fear. Predefine risk before every transaction. Is it really okay to lose $ 200? If that makes you nervous, reduce that number.
Loss lets you adjust your consumption habits
Risk only what you can afford to lose. Transaction losses do not change the type of fuel you get at a gas station. Or the type of food you buy.
You can be a successful trader only if you trade what you can afford to lose. Never trade with the money you need to survive. You will not be able to objectively look at the market and execute our transactions.
Anything can happen in a transaction. Even a strategy with an 80% win rate will lose 20% on a particular transaction. By trading with the money you can afford to lose, you can settle down and look at the market objectively.
You are afraid to suffer losses
We have seen it happen many times. Traders freeze and the losses are so great that they can’t stand to make it happen. Ultimately, traders are liquidated and perceive huge losses, usually by coercion from the broker.
This is the opposite of what can go wrong if you stop prematurely. It’s too late to stop by. This is tied to a deal with the money you can afford to lose: You shouldn’t be as emotional as you freeze when you’re risking a deal.
Are you struggling to manage your trading positions properly? The 60-day live trading boot camp has multiple classes dedicated to this important topic.
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6 signs you are trading too many sizes
https://bullsonwallstreet.com/trading-too-much-size/?utm_source=rss&utm_medium=rss&utm_campaign=trading-too-much-size 6 signs you are trading too many sizes