There comes a time in every trader’s career, when it’s time to size up their positions. It’s simply the next level of trading for those serious enough to become the very best they can be.
We’re all in this business to make money; period, full stop. A securities trader isn’t building anything, isn’t creating anything, isn’t providing a service, isn’t selling a product, isn’t doing anything other than making money for himself/herself and their families; which is very admirable.
That said, money is the sole driving factor.
With this reality in mind, making as much as you possibly can is your job as a securities trader. So, there will come a time when you’ll want to make more and the only way to do this as a trader, is to size up your positions; but it’s not that simple.
With additional size, comes additional risk – which naturally also includes additional emotions.
This is where the word ‘responsibly’ comes into play. There’s a right way and a wrong way to size up your positions.
To begin with, you must have a solid foundation of trading success in a particular set-up to even think about sizing up; only then, should you consider sizing up. Along with the success, comes confidence. Success isn’t just a higher PnL, it’s also the success in the level of confidence/conviction in yourself and the set-up(s), you trade.
If your PnL has increased simply by luck, then sizing up will quickly erase any gains that luck streak may have brought you. We always say, early success before actually understanding what you’re doing in this business, could do more harm than good in the long-run. We’re not saying you must struggle for a period of time in order to eventually succeed as a trader; on the contrary. We’re saying that if you buy/sell securities without understanding what you’ve done or doing and more importantly, why things happened the way they did, the confidence it could bring sits on an unstable foundation. That’s straight gambling and professional traders aren’t gamblers, we’re risk managers.
Confidence and strong conviction MUST accompany the PnL increase in order to size up responsibly.
Only you will truly know when it’s time to size up. Key is to understand that there’s no race, no one is forcing your hand to get bigger. That said, in order to improve and become the very best trader you can possibly be, then you’ll need to come face-to-face with the decision of sizing up in your positions.
When you reach that point in your trading career when it’s time for the next level, just remember what it took to get you to this level. Patience. Increase your size in increments; feel it out. If you like the ‘temperature’, build the confidence and do it again. Rinse and repeat.
Crawl before you walk and walk before you run.
Members, we’ll be going deeper into this concept on our VLOG.