An experienced trader stepped into my office frustrated with me. He wanted to know why I questioned his position size in a $TWTR breakout trade. The exchange we had offers a lesson on getting bigger as a trader for the trading community.
First, let me say that I loved this trade position in $TWTR. And I loved that he was being aggressive. I wanted to know two things:
- if the trade didn’t work out could he control his risk
- was his position too big for him
So many traders wake up one day and exclaim:
Today I will trade big!
Traders just decide that now they will not be a wuss, trade big size, and hold for the real move. Today they are just going to start doing this. Like this is only an issue of will power or setting their mind to it. They think of a past trade that worked perfectly. If they just were huge in that play and held their profits would be immense.
Unfortunately for traders, it doesn’t work like that. Deciding today is the day is very dangerous. This is like those guys who go to the gym and decide they are just going to start lifting very heavy and then soon hurt themselves. Today cannot just be the day.
Today cannot be the day you just decide to start holding 10k share positions, when the most you have held in the past is 3k.
Today cannot be the day you just make 30k in a play, when the most you have made is 5k.
But today can be a great day filled with progress:
- Today can be the day you get incrementally bigger.
- Today can be the day you push your position sizing outside your comfort zone.
- Today can be the day you decide how much you are willing to lose on a trade, and make a trade inside those risk parameters.
And you can keep doing this day by day, week by week, month by month, incremental progress compounding on incremental progress until today can be a huge day!
“You can be better tomorrow than you are today!”
Mike Bellafiore is the Co-Founder of SMB Capital and SMBU, which provides trading education in stocks, options, forex and futures. Bella is the author of One Good Trade and The PlayBook. He welcomes your trading questions at [email protected].
no relevant positions