Small Trader Equals Sloppy Trader?

You know what everyone says.

“Trade small, don’t take too much risk”

I want to challenge that…

Firstly this is not advice, you need to make your own decisions about risk. It’s your money.

But.

Trading small can be the worst thing for you.      

Cue the gasps at the back!

Let me qualify that.

So, trading small is important when you are building confidence, trying to get to grips with your discipline, and need some skin in the game.

Demo accounts play a limited role, at some point, you need to feel the heat.

And you don’t always want to risk large amounts of capital.

Maybe you are still learning your craft. Your equity curve is heading in the wrong direction, so what sense does it make to risk more money than you are now?

None, why spend £50k getting your market tuition when you can spend £5k and get the same tuition?

You’re learning the same lessons, right?

However, there’s one thing with trading small that is often forgotten.

Trading too small can lead to sloppiness.

Huh?

Think about it for a moment.

If you’re in a trade that’s so small you don’t care about the outcome, you are going to manage that very differently to a trade you do care about.

You almost may as well use a demo.

Plus, when you make a great trade it’s going to annoy you that you made a measly £10 on the move…

Now let’s swing right over to the other side and think about trading huge size.

With too much size you’re going to care way too much about the outcome of an individual trade.

The P&L is too significant on a per-trade basis.

We want that sweet spot right?

Large enough size to care, to be focused, and to operate professionally.

But not so big that the P&L swings are influencing our decisions.

It’s a fine line, and identifying that sweet spot is not easy.

Give it some thought…

If small size is serving you right now then carry on.

But if you’re getting sloppy, maybe not caring so much about your work ethic, because ‘hey it’s only a few quid’ then it might be time to reconsider your sizing.

Like I say, no advice, your money, your rules.

Food for thought…