Deciding Lot Sizes (My Method)A crucial decsion traders must make on each and every trade they take is lot sizes. What's the ideal lot size to take? What's the metric in which a trader uses to solve this ordeal?
Here's my method:
1.) Start off with a high lot size. Say....7 normal lots.
2.) At this point, when imagining trading with this lot size you should feel a sense of anxiety, nervousness or even excitement.
3.) Bring down the lot size by 1.
4.) At 6 lots ask yourself, "Do I still feel any sense of anxiety, nervousness or excitement? If you do, bring down the lot size by 1.
5.) Repeat this process until you don't feel any "slight" sense of anxiety, nervousness or excitement.
6.) Using the above mentioned process, if you reached 3 lots, further bring down the lot size by 1.
7.) The outcome is 2 normal lot sizes.
- Using this process to find the ideal lot size eliminates a host of unwanted phycological issues that can deter how you : analyze price, decide targets/stop loss, and how you manage an open trade.
- I've read and heard various methods over the years, but after close to 20 years of trading, this is the method I currently use.
That's it!
I hope it helps!
Ken
