Tag Archives | position size

Roll a Position: A Risk Management Tool

When trading, risk management is an essential skill. There are many ways to control risk and it is difficult (if not impossible) to compile a complete list. However, at the top of the list is one easy-to-understand concept: Position size. That means that traders should always be aware of what can go wrong with every position and be certain that your account can survive the worst-case scenario.

Roll Strategy

One very popular strategy for handling a position gone awry is the “roll”.

Rolling occurs when a trader covers the existing position and sells another position. The new position resembles the first — but the strike price of the option(s) and (sometimes) the expiration date change.

Rolling is used to avoid closing the position and taking a loss. However, it is necessary to understand that some positions cannot be saved. Thus, be prepared to exit and accept a loss whenever you cannot find a suitable roll. Translation: If you cannot roll the position into one that you truly want as part of your portfolio, then do not roll. It is always a bad idea to create a new position that does not fit within your comfort zone.

Rolling is a good technique when the trader understands how to manage risk. Too often position size increases after the roll. In general, creating a larger position is a bad choice because the money at risk also increases.

Here are a few articles that I recently published at about.com. Each discusses one aspect of rolling a position.

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Finding the ideal trade strategy

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Mark,

A follow-up question.

I guess the reason I was looking at this comparison (buying collars, buying call spreads and selling put spreads) this morning, is because I was looking at various limited risk bullish positions.

I concede that the following thoughts may not be well directed, nonetheless …

I noticed that in a typical bullish spread, the position has a break-even point that is roughly equivalent to the position’s extrinsic cost above the base strike. For example, to buy a 35/36 call spread (as of last Wed), with DBA at 34.90 would give a break-even around $35.50, which is about the same as the extrinsic cost of the position. So, to profit, the underlying has to move by more than .60 by expiration.

I also note that when one buys stock, there is no extrinsic cost and the break-even is the same as the price paid for stock. For example, if it goes up a penny by expiration, the buyer profits a penny.

Basically, the question I want to ask you is: Are there any option positions that can act like something in between these 2 examples?

For psychological comfort reason, I’m interested in a break-even trade – like buying stock – and limiting maximum loss to that of buying an OTM call spread. I’d trade-off something else in exchange for that.

One idea to accomplish this is with a collar. Instead of buying 100 shares only use 90,80,70,60,or 50 shares. I’d lose delta and compromise the upside protection, but I would meet my objectives. Plus, I could buy cheap FOTM put options as black swan insurance. Maybe this approach just makes sense for low $ stocks.

Crazy? Is there a better way to achieve objectives? Are objectives misguided?

Dave

***

Hello Dave,

The simple answer is no, there is no such animal. The reason is that you want the very low cost of an OTM option spread, but you want to buy it by paying no premium. That’s why the collar looks so attractive. You can buy puts and sell calls for little, if any cash out of pocket.

People choose to buy call options as a replacement for owning stock for two basic reasons. The first is leverage, allowing a small amount of money to be used to control stock and benefit if and when the stock moves in the right direction – before the option expires. The other, and more important reason in my mind, is to gain the benefits of reduced risk (after all, the stock may undergo a steep decline – even when you are bullish). The trader must pay for that protection (it’s the same as buying a put: long call is equivalent to long stock plus long put). You want it for no cost.

However, if you are willing to come along as we think outside the box, I believe I have a workable idea.

Thinking differently

It’s good that you are willing to trade something in return for what you seek. You want so much, that the only thing you have left to ‘trade’ is the sum you can earn.

To begin, consider selling an OTM put spread. We both recognize that it is the equivalent of a collar, but this time you are using lower strike prices than that of the ‘traditional’ collar (often both the put and call are OTM).

First, this trade can provide a profit, even if the stock declines (at expiration) down to the first OTM put strike price. So you are already better off than your first requirement that a profit be available if the stock moves higher.

Second, this trade limits losses. The problem is that the potential loss is greater than you could lose by buying an OTM call spread. However, here’s that trade-off you were willing to make:

  • Instead of selling (for example, 10-lots and collecting $1 for a 5-point spread)
  • Sell only 3 or 4
  • The maximum gain is reduced from $1,000 to $300 or $400
  • The probability of earning a profit is much higher than when buying stock
    • The stock does not have to move higher to earn money.
  • Loss is limited to $1,200 or $1,600
    • You control that maximum loss by the limiting size of the trade
    • You control that maximum loss by exercising sound risk management
    • Just as you would (I hope) sell the stock to limit losses at some point, so too do you limit losses by adjusting or closing the position, when necessary

You make that trade-off, which is reduced profits. Your losses are limited. You may earn money when the stock declines. What’s not to like for the bullish trader who is willing to accept limited profits in exchange for the specified benefits?

If you prefer, you can be more bullishly aggressive and sell a put spread that is ATM or even a point or two ITM. That reduces the chances of winning, but the maximum loss per spread is reduced and you can sell more than 3 or 4 of them.

No your objectives are not misguided – they suit the specific investor. However, not all objectives can be sought because it is not always possible to find a strategy that meets all of your requirements.

894

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Size Really Does Matter

Mark,

I use a position size calculator that I made in Excel. It tells me how many contracts I can trade, keeping always the max possible loss constant (in this case $6000 per trade).

As far as your comment about making an adjustment that increases the number of contracts from 40 to 60 is not quite clear to me. I mean, suppose that I do not have to adjust and instead, I want to add a second trade in my portfolio. If I buy an IC with the same premium as the first one (ie 0.50 for a 2-point SPY iron condor), using the size calculator, I will buy again 40 contracts. So, I will have in total 80 contracts in this case.

When you own two 40-lot iron condors, you may have established the maximum risk at $6,000 for each trade, and you may have an initial margin requirment of $8,000 ($200 margin per 2-point iron condor) for each trade, but the type of adjustment that you suggested (cover a portion of the short call spreads and sell a larger quantity of farther OTM call spreads) increases both margin and maximum risk.

This is also true when you adjust a 40-lot trade to a 60-lot trade.   Your maximum loss becomes MUCH larger.

As long as this is a paper-trading account, I recommend that you trade some 4-lots of 20-point SPX spreads instead of always choosing 40-lot SPY trades.  Learn how it feels to trade the bigger index.  Adjustments may be more difficult, but you save a lot of commission dollars.

 

 I started my paper trade portfolio with $200,000. Then I said that I will allocate 30% ($60,000) of the total portfolio for trading options (90 day iron condors). I will risk 10% of that allocation ($6000) for each trade.

If $60,000 is the amount allocated to trading iron condors, then there is no reason to have $200,000 in that account.  It requires massive discipline to not exceed that $60,000 limit when you either find an outstanding opportunity, or more likely, run into trouble and require more margin. 

Worse yet, a nice little winning streak can boost confidence and result in your trading 60-lots instead of 40-lots.  The problem is not with having a winning streak. The problem is that winning steaks tend to result in traders increasing risk and trade size by too much, and far sooner than is prudent.  When you have extra cash available, it's tempting to use it.

Keeping that $140,000 in a separate account – so that you must manually make a transfer to get your hands on that capital, is a nice safety play.  The cash is there if you truly want to use it, but it cannot be accessed without making a direct decision to do so.

When the premium is higher I trade more contracts, when the premium is lower I trade fewer contracts – but the max risk is always the same ($6000).

You may want to reconsider.  Just because the premium is $0.52 instead of $0.50, it does not mean that you must push the envelope and trade 41-lots.  This is still true when you collect an even higher premium.  You are very new at this game, and you are looking at far too many variables at one time.  Learn now.  Save refinements for when you know enough to make educated decisions.

I will make two trades each month.  Therefore I will own no more than 6 positions at any one time, w/o counting adjustments, in my total portfolio of 90 day iron condors.  I will risk max $6000 per trade or $36,000 for the whole portfolio.

Going back to your example (in your initial comment), when you buy (to close) 13 of your short call (or put) spreads and then sell 33 spreads that are farther OTM, the margin requiremnt has increased by 20 x $200, or $4,000. 

However, it's your maximum loss that is now out of kilter.  You can lose $150 each on your remaining 27-lot iron condor.  Plus, you can lose $180 x 33 ($5,940) on the new call spreads.  That places the max loss at $10,000 – not counting the loss already taken on the 13-lot. How does this adjustment maintain that $6,000 max loss requirement?  Making an adjustment does not release you from your limits.  Adjustments are made to reduce, not increase, risk.

Not only does this jeopardize the safety of your account) because it's likely that you will want to adjust more than one position at the same time – or almost at the same time, and you do not have the experience to make a judgement about whether that risk increase is justifiable (as a special situation) or whether it's so risky that you should never make this trade.  Not if you want to pretend that you are paying any attention to managing risk.

Please understand.  If you want to trade this way, if you are willing to take on the added risk you do get something in return.  You do get the increased probability of earning a profit each month.  Plenty of amateur traders trade this exact, higher risk path.  Even some professional traders may adopt this adjusment method.

However, they know when to do it and when not to do so.  They have a firm grasp on risk management and know when it's reasonable to add to risk and when it is verboten.  As a paper-trader with zero experience, you cannot expect to learn enough (in however many months you dedicate to paper trading) to have a very frim grasp on risk management when using real money.

For your safety and sanity, I suggest that this plan is not viable.  Not now.  Not without much more experience and knowing how skilled you are when it comes to making difficult trade decisions.  I'm excited for you that you have a plan, are thinking through the possibilities, are asking questions.  That's all good.  But I believe you fail to see the risk involved with the methodology suggested.

This leaves me with another $24,000 available for adjustments.

Good.  A very reasonable sum.  It should be enough, but not if you use large chunks of that extra margin every time an adjustment is made.  Be careful not to stretch the limits – because if you are thinking of going all in with that margin, it's likely that your risk is going to be far higher than your 'maximum.'

Does this make sense? Again, thank you very much for your support.

Yes.  It makes sense.  But not for you.  This is not the path to learning the importance of risk management.

Dimitris

***

This question, and part of the reply has already been published as a recent comment and answer.  However, many readers see Options for Rookies only through an RSS feed, and the comments are not avaiable through that source.

This post is important to traders who routinely adjust positions by increasing position size.

Size matters.  Size kills.  Traders who are capable of handling moderate risk can easily panic when positon size becomes too large and gigantic losses (gigantic for the specific trader) loom.  Please be careful.  Managing money and limiting risk are essential skills for every successful trader.

810



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Iron Condors: Risk Management and Position Size

Mark,

My query relates back to your post on trading iron condors for a living which I found very informative. Without going over old ground, I am interested to know how traders who do choose to trade 100s of ICs each month on a single underlying manage the risk.

I ask because I found articles such as this one and also remember your having mentioned in the past that you traded much larger size. Any thoughts on this would be great.

Joe

***

This simple sounding question opens the doorway to a wider discussion.

When trading, choosing an appropriate position size is a crucial factor in the trader's ability to practice sound money management.  However, I don't believe size matters from the perspective relating to your question.  The requirement is that each trader use size that is appropriate for his/her account size, experience, track record etc.

If you trade 10x the size, adjustments would also be 10x larger.  You can easily make minor changes to achieve the desired result.  For example a 2-lot adjustment for a 10-lot position  may not be exactly 20-lots for a 100-lot position.  If its 18 or 23-lots, that's merely the effect of rounding.

Let's assume that a trader who has been using iron condors has opened a separate brokerage account that is used exclusively for trading iron condors, and that it has $20,000 in cash.   Important note: This is the amount that our trader is willing to place at risk for this strategy.  It is not his/her entire investment portfolio.

If we trade 10-point iron condors [The call spread is 10-points wide and the put spread is 10-points wide.  The distance between the calls and puts is not relevant], the margin requirment for each is $1,000 [although some brokers require $1,000 for each of the two spreads, and this practice may become more widespread].  The maximim position size for this account is twenty of these iron condors. [Some brokers allow customers to use the cash generated from the sale of iron condors to open more iron condors, but I believe this practice is being phased out].

Go all in?

Let's assume this trader frequently goes 'all in.'  That should not result in a portfolio of 20 iron condors.  It's essential to have cash available to make adjustments.  Adjustments are vital to your ability to prosper over the long term, and many traders (your reference for example) believe that adjustments add to profitability.

With this size account, I prefer to trade 16, or no more than 17 iron condors (and 14 to 15 is a lot more conservative), leaving $3,000 to $4,000 to meet margin requirements for some types of adjustmens.  Some adjustments require extra margin and some do not. Being prohibited from making necessary trades is equivalent to being placed in the penalty box and being forced to close positions (to generate margin room) or wait through expiration.  Most of the time when an adjustment is made, the entire iron condor is not involved.  The half iron condor that is at risk is frequently adjusted while the less risky portion is left as is – at least for the moment.

Don't allow that to happen.  Maintain enough free margin to provide freedom to trade.  Those readers who use portfolio margin instead of Reg T margin ($100,000 minimum account) should always have extra room.  If you use your entire margin allotment with portfolio margin, you are trading size that is far too big for your account.

More cash = more size?

Next, consider the trader with a $200,000 account.  If this trader wants to go all in I'd recommend doing approximately the same thing, but 10 x larger.  Keep in mind that if this trader feels that $200,000 devoted to iron condors is too much, then cash could be transferred to another account.

So to me, size trading depends on more than counting the number of contracts traded. If you have the ability to fund the account, are comfortable trading 160 iron condors simultaneously, don't feel uncomfortable with the money at risk, and have a successful track record of trading iron condors, then this is appropriate size for $200,000 account holders.

Joe, I don't believe there is any true difference.  When the trader can comfortably handle the size traded, and meets the criteria mentioned above, the risk is not too difficult to handle.  The smaller trader's $2,000 risk is the bigger guy's $20,000 risk, but each should feel about the same pressure when that amount is on the line.  The only warning I would give to the larger trader is to be certain that the underlying has enough liquidity to handle his orders. 

It's not enough to say that RUT is very liquid.   I have discovered that OTM 3-4 month options have far less liquidity [I've had several instances for which I was able to buy only one-lot of 3-4 month RUT iron condors.], and would not be comfortable trying to trade 100-lots of a RUT December iron condor today – unless I were willing to trade closer to the money options or accept a less than desired credit.

Worth repeating

I would NOT advise a person with a one million dollar account who is first learning about options to place significant money at risk.  That is true for any rookie.

I'd recommend using no more than $25,000.  In fact, I'd suggest paper-trading to give the new trader some much needed practice.

Joe, once you decided that trading $X is appropriate, and as long as the underlying has the liquidity needed, and if you adhere to the guidelines above, position size should automatically be at an acceptable level. The larger trader is not at a disadvantage.

Extra note:  I have some disagreement with the advice offered in the article that you referred to above.  The major one is this statement: "Condor manage颅ment requires adding size when rolling."   Adding size is increasing risk, and is only appropriate under certain conditions.  That's a topic for another time.

800

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Trading and Poker

Doug Kass is a well-respected writer who apparently (I have not made an intensive study) has a good track record regarding the stock market.  He recently offered some comparisons between poker and investing.  Here's a sample:

"Be as Competitive as You Can Be. Go into a poker game
and into a trade with the idea of completely destroying
your opponent or scoring a major investment coup. If you
win a pot or make a successful trade, nearly always play
the next pot or make the next trade shortly thereafter —
within reason. Although the cards and trades might break
even in the long run, rushes do happen and momentum
often feeds upon itself. When you earn the right to be
aggressive, you should be aggressive. When one has a
tremendous conviction in a poker hand or trade, you have to go for
the jugular."

Let's ignore the fact that premium sellers cannot score a 'major investment coup,' but we can get to keep the premium with no worries.  That's coup enough for me.

Logic tells me this Kass' offering is not good advice.  One trade has nothing to do with another.  My logical brain tells me this is all emotional nonsense. Each trade stands on it's own.  Winning and losing streaks are merely the result of good/bad luck and good/bad judgment.  Bah humbug.

Humbug

My emotional brain sees the 'logic' of the argument.  Confidence plays an important role when trading, and if you just scored a big win, you gain confidence in your ability and your methods.  As long as the trader does not rush to make an unreasonable trade, this Doug Kass advice may be right on the money.

It's true that some strategies work best under certain market conditions and far less well under others.  The big win may  suggest that whatever it is that makes your specific strategy work well represents the current market.  If true, this is the ideal time to get right back in with another trade.  This may indeed be the beginning of a steady winning streak.  You may want to play this aggressively, but be especially careful if you are considering increasing position size.  This is not the time to get careless and take a big hit.

739


 

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ordered it from Amazon, and spent the last few days reading it and
enjoying it.  The testimonials were so positive that it was hard to
believe that your book could be that good.  But it was!  Despite the
fact that I have been reading about options for the last few years, I still learned a great
deal from your book.  This is especially true regarding Equivalent
Positions.  Your chapter was the clearest explanation that I have ever
read.  I learned a great deal – and it made sense!  Thank you for
making the effort to put out such a fine book."  DS

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Risk Management and Position Size


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***

Hi Mark,

How do you determine position size ? What can someone use to guide
them to determine lot size, contracts traded etc ?

Dave

***

Hi Dave,

Obviously, a good question and one that I never addressed.  I'll offer some guidelines and an example.  As you may suspect, this is a guide and not a method for deciding exactly how many contracts to trade.

1a) At the top of the list : The trader must be comfortable with the largest possible loss for each position.  If a position involves being naked short calls, then that 'maximum' must be estimated. 

This is just as true for premium buyers as for premium sellers.  Buyers cannot get wiped out overnight, but they do get wiped out by paying prices that are too high or holding positions too long.

1b) A more realistic reply is that the trader must be able to withstand the largest likely loss.  This is true not only for each position, but it must be true for the entire portfolio (this is the part many traders ignore).  If you have five positions and each passes the test, be certain that if all five were to move against you at the same time that you would survive.

1c) By 'survive' – I do not mean 'barely survive.'  It means that the loss from a single position can be shrugged off as the cost of doing business.  It also means that the drawdown from a total disaster (losing the maximum from all positions at once) does not eliminate your ability to continue trading.  Risk of ruin must not be ignored.

The above response does not answer your question

Here are more General Guidelines.

1) Determine how much money you want to devote to trading options.  If possible open a separate account to house that money.  If you do any covered call writing, then obviously this account must include your stock holdings.

If you keep your entire investing assets in a single account, then it is difficult to see how much margin is tied up with option positions.  When there is extra cash (or margin availability) lying around – it's tempting to use it.  Thus, a separate account (surely your broker will accommodate your request for a sub-account or a separate account) makes it much easier to track option P/L and risk.

2) If you do as suggested, then 100% of that account is devoted to options trading.

3) If you choose to accept portfolio margin (many brokers require 100k minimum for this) you have the room to trade many more contracts and much greater size.

If you choose (or must accept) Reg T margin, then you are more limited.  However, that's not a bad thing because you are ultimately safer.

In my opinion, Reg T margin is best for the vast majority.  If you have proven to yourself that you can handle larger positions, if you trust your risk management skills, then you can opt for portfolio margin – if eligible.  But please know this:  With Reg T margin, positions are limited and you cannot go into deficit. That is not true with portfolio margin.  Obviously your broker will limit risk because if your account goes into deficit, the broker is at risk that the customer will not be able to repay.

4) Never use all available Reg T margin.  Allow at least 15% for emergency needs – such as making adjustments that increase margin.  There's no room to discuss here, but not all risk-reducing trades decrease margin requirements.

5) Dave, if you have a small account, trade small.  With a $10,000 account, you don't want to trade more than three or four credit spreads, or iron condors at one time.  A loss of $2,000 would not put you out of business, but it would be a significant loss.  And it's easy to lose far more than that with a 4-lot, 10-point iron condor.

6) When you begin trading, it's not so easy to recognize an acceptable position size.  Paper trading can be very useful in this regard.  When you experience the profit and loss per spread, you can get a feel for what would be at stake when trading live.

7) Truths

  • Most
    people who begin trading are optimistic.  They do not think in terms of
    losses, but instead, concentrate only on how much money they can earn

  • It's virtually impossible to find a reasonable position size when the trader does not consider scenarios in which money is lost
  • If you accept the premise that limiting risk is essential to becoming a successful trader, then sizing trades is easier.  If neglecting risk, selecting position size is merely a guess


Assume you trade a specific strategy with limited losses.  Further assume that you have the discipline to exit the trade when your loss reaches a certain level.  This loss level does not have to be written in stone, but it's a reasonable approximation. 

If those assumptions are valid, then you can establish an appropriate position size. 

Next, decide the maximum dollar loss per trade. Assume your position goes awry and you
lose 10% above that maximum loss. 

That's it.  That tells you how many spreads you can afford to hold at one time.  Obviously of you find a trade situation that feels better than normal, you can increase size by a modest amount.  When markets are more uncomfortable for you to trade, enter with smaller size.  You can always add to a position later.

Example:

Assume: (Please recognize that approximations are made)

a) You, Dave, prefer to sell credit spreads.  Calls/puts or both (iron condors)

b) Your minimum premium requirement is to collect $1 for a 5-point spread. (20% of the maximum value)

c) Your account is valued at $100,000

d) You plan to carry at least 10 such positions at one time (that's a large number, but let's go there for now)

e) You are psychologically and financially able to accept a loss of $5,000 from any one position

f) You have the discipline to exit a trade (ignore adjustments for this discussion) when the loss is $150 per spread [This is a randomly chosen number; it is NOT a recommendation]

g) You must limit portfolio losses to $20k at all costs.  This is the bottom line for you.[Again, a random number]


Based on those assumptions, what can you trade?

If you trade a 5-lot of each, and if you only collect your minimum of $100 per spread, then you sell 50 spreads (5 x 10 positions) and collect $5,000.  If there are any iron condors in this portfolio, you collect an extra $100 for each of those (you collect on both puts and calls).  The maximum possible loss is $400 per spread, or $20,000.

And that's the worst case.  You plan to exit when losses reach $150 per spread,  If that happened to all 50-lots simultaneously, you would lose 50 x $150, or $7,500.  Allowing for a loss that's 10% above the maximum (poor execution of orders, or delay on your part), moves the loss to $8,200.

If some positions are calls and some are puts, you would not lose that much.  

Thus, it's reasonable to trade about 2.5 x as much, moving the maximum loss to that $20,000 level.  This is a very unlikely outcome and with this scenario, I'd suggest that you could afford to trade as many as 12 to 13-lots of ten different (5-point) credit spreads. 

We all know that that is too many positions to manage effectively,  but you can afford to trade a reasonable number of contracts.

If you trade only one position, you can trade the same 60-lots.  And if selling 10-point spreads at $200, then 30-lots should be okay.  Trading this much size would present no problems as far as margin is concerned. [Margin requirement is 30k, less cash collected, on 30, 10-point spreads).

Dave, this is approximate, but I don't know how to decide how much size is appropriate to trade without going through an exercise such as this.

'This above all, to thine own self be true."  That means – DO NOT move beyond your comfort zone.  Trading less size is just fine.  It's trading more than your  size limit that must be avoided.

722


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Stubbornness. A Dangerous Trait for Traders

Brett Steenbarger no longer publishes his TraderFeed blog, but the archives are available. They contain a treasure trove of sound advice for traders. His advice tends to be directed to short-term traders, but the suggestions and guidelines are sound for us as well.

Here's one example:

"A reader notices that he has been
fading strong moves, much to the detriment of his account. What can he
do to stop himself from being stubborn?"

Brett's (shortened) reply: Many times stubbornness comes from trying to
be right: investing one's ego in catching market highs or lows.


The opposite of stubbornness is accepting the inevitability of losses. If you mentally prepare for losing, you will be flexible in exiting losing
positions and moving into good ones.


Emotionally prepare yourself for losing
by viewing stop loss points as
concrete action plans. Mentally rehearse those
plans. Visualize yourself taking those losses if the stops are
hit. Make yourself familiar with a scenario and make yourself
cope with it and accept it, and it will lose much of its threat value.


View every trade as a
hypothesis, not a fixed opinion or conclusion. If you frame a trade
idea as a hypothesis, you immediately open yourself to the possibility
of the hypothesis being wrong. That helps you plan "what-if" scenarios
for how you would respond if the hypothesis is not supported.
Similarly, the what-if scenarios can help you become more aggressive in
trades that do find market support.

Developing traders should trade small enough
that inevitable losses won't hurt the account too badly. If you make
losing painful, you'll try to avoid losing…and that will keep you in
bad trades well beyond any rational stop level.


Good stuff.

This post it's filled with solid advice.  But, to me the final sentence tells the story.  Do not trade so much size that a loss may become painful.  I usually give that advice for the purpose of preventing a huge loss on a single trade.  But Dr. Brett offers additional insight by telling traders if the loss becomes too large, there is a good possibility that you will not be willing to accept that loss.  That means not exiting the trade and risking a loss large enough that your trading career may be jeopardized.

Losses are not enjoyable, but large losses are destructive.  The idea is not to enjoy losses but to recognize they they occur often.  Manage risk, manage money, trade appropriate size – and your chances of success increase dramatically. 

Avoid bad situations by imagining what can go wrong with the trade.  Then consider how much is at stake if that unpleasant situation occurs.  Can you handle that loss both emotionally and financially?  If not, the position size is too large.

I can vouch for the destructive power of stubbornness.

712

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