Why You Should Increase Your Trading Positions

By Jamison Raymundo


Beginner traders who have already shown consistently profitable
performance in trading should begin to consider increasing the
position size or amount risked per trade. Bear in mind though that
this increases the risk you take, which means that you might be
exposed to larger losses and more emotional risks. With that, you
could have a harder time concentrating on your actual trade as you
could be overwhelmed by the larger amount at risk.

On the other hand though, taking on more risk by trading bigger
positions has more upside potential. If you risked 2% on a trade that
you normally risk 0.5% on, you could have the chance to score four
times as much as the profits you would've made. If you are already
making consistent profits and comfortable with the risk that forex
trading entails, then you should consider trading larger positions
already in order to maximize your winning potential. Here are some
factors you should look at.

First is profitability. If your account is in the green, then that's
one of the go signals to trading larger positions. If you're in the
red, you run the risk of digging a deeper hole by increasing your risk
or position size so you might have to work on catching profits first
before leveling up. In this case, stick to your usual risk sizes until
you are positive, before considering increasing your risk.

Next is planning a gradual increase. Jumping from a normal risk of
0.5% to a 5% risk per trade can be overwhelming since you'd actually
be risking ten times as much as you used to. Looking at this in
nominal terms could be even more shocking so consider upping your risk
in increments of 1% or 0.5% so that it's not too sudden.

The last tip is to focus on risk as a percentage of your account
instead of the monetary risk involved. Aside from assuring that you
are more focused on the trade details, this also helps you move on to
larger account sizes without much psychological adjustments.
Constantly thinking of risk as a percentage of your account can help
you trade the same on a $1,000 capital to a larger $100,000 capital
without being overwhelmed.




About the Author:

Want to find out more about forex strategies, then visit Jamison
Raymundo's site on how to choose the best forex strategies for your
needs.


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