Small Account to Large Account

3 Ways to Increase Trade Size

Starting on Small Accounts

If you are trading with a small account you are probably doing one of two things:

You are in growth and learning mode.

You are learning to trade and quite sensibly only trading with small size. There’s no point in trading big size while you’re learning. You can choose your tuition fee, so why not make it small?

Perhaps you’re still losing money and maybe you don’t have the consistency yet. And that’s fine, it’s a journey, and it takes time, trading with a small clip size is exactly the right thing to do.

Profitable but started with a small bankroll. 

Perhaps you are a successful, but under-capitalised trader. 
You have some consistency, maybe you’ve been profitable for a while, maybe you’re looking to grow your accountBut you can’t perform miracles!

Even at a really really good rate of return, growth can be slow when you’re starting from a small account balance.

Getting a Bigger Account

But what if you want to swing for the fences?

What if you’re prepared to take on some more risk for the chance of a big boost? You can choose to either grind it out and continue to grow your account slowly over time.

Make a bit of money – grow it – make a bit of money – grow it.

Play the long game. Or you can make the decision to really swing to the fences, and say

“Hey I’m gonna try and 10x this account now”

(It’s worth noting here that if you do decide to do this, if you’re gonna ramp things up, you have to accept the risk that comes with it. There’s no free lunch. If you make the commercial decision to trade bigger, you need to accept the other side of that decision.)

Anyway, if you want to grow fast you need to trade more size. So how could you do it?

#1 Blanket increase in risk per trade

One method is to increase your trade size across all trades. That would mean risking more than the textbook 2% per trade. You might decide to dial it up to 10%…

Again, I don’t want to sound like a compliance officer here, but equally, I want to reiterate the pros and cons of doing this.

Know that if you choose to risk 10% per trade, it doesn’t take a maths genius to realise 10 losers in a row is not a good outcome… But what you’re shooting for is a run of ten winners, right?

At a 3:1 RvR that’s going to massively boost your equity curve.

#2 Strategic increase in size

Another method is to be more strategic with your position sizing

Through research and planning you decide which trades are your best and most successful to date. 
A pattern, setup, or market condition. Where have you performed your best? Then you push more chips onto the table when those conditions are met.

Now of course the downside of dynamic position sizing is that you can have a great run of profitable trades that gets wiped out by one larger size trade.

Pros and cons traders, pros and cons…

#3 Adding to trades

This is Tom Hougaard’s (One of my more popular pod episodes) speciality.

He’s not the first of course, I believe most good traders deploy this tactic to some extent. But Tom does advocate aggressively adding to a position.

This does a few things:

  1. You are in your biggest position size on the biggest moves.

If the market is ripping hard and you are long 5 times the size because of adds, you are going to be in a very good position.

  1. You become vulnerable to pullbacks due to the ever-increasing average entry price.

But get it right and you can really start to squeeze a lot from your winning trades.

So that’s three ways you can get aggressive with your trading.

No silver bullet, but if you want to grow your account quicker and are prepared to accept the higher risks that come with more size then those are a good place to start…