bondtrader's Blog

Futures Trading, Musings, and Random Thoughts

Tuesday, September 14, 2004


What a difference size makes, position sizing, that is. For those of you who are thinking something else, it simply means I increased or doubled up on the number of contracts I traded.

And today's results are so much better, from a financial, psychological, and trade management quality standpoint.

Here's today's results:
tradelog 200409014

10 trades, 22 ticks captured, but because of position sizing, grossed $430.00, NET $334.00 for the day.

It's easy to see why it's better from a financial standpoint.

From a psychological and trade management quality standpoint, let's see...
Percentage of win/loss = 77.78%, and expectancy went up because I was more disciplined in waiting and riding out the trends -- which came from knowing I can lock in my profits and still participate in the majority of the moves. It really gets rid of anxiety associated with finding the balance between not wanting to leave money on the table and taking your profits when the markets pull back. It just feels much better knowing that I can scale out of 1/2 of my position on the initial pullback, and let the remaining position ride out the trend.

Result: I wasn't panicky, I wasn't hesitant, I wasn't anxious. I was just trading calmly.

And that is what makes for better trading.

Joe Ross, in one of his chats mentioned that they recommend traders trade with 3 contracts. The first one to exit once the initial costs are covered, the other two to scale out of the position as the market moves in your direction.

Makes sense... It is, after all, a numbers game.


Post a Comment

<< Home