Let’s say you’ve been trading for a few months now and it seems the results are quite positive. You’ve had both profitable and some losing trades, but, by applying the right risk and reward ratios (RRR), your overall outcome has been a success. This wasn’t just a case of “beginners’ luck”. So what’s the next logical step? You’ll use your trading confidence and will probably consider scaling up, to make even more money. The question is: how do you it?
There are a few methods of scaling up. Some of them are useful, while others could be harmful to your trades.
- Increase your trade positions at your usual trading times.
- Extending your trading hours
- Scaling up position sizes
By using time more efficiently, you can execute more trades and potentially more profits. If you have utilized a strict and careful trading strategy, your experience will help you know how to filter bad trades and restrict yourself only to the ones with high winning probabilities, giving you more room to add trades. However, this must be done carefully. By opening more positions you will put yourself under more pressure and might find yourself looking for trades that aren’t really there.
If you trading hours have been limited up to now, and you feel you have more time and the capability for longer trading time, you should try to increase your daily trading time little by little, expanding your trading sessions. One thing you should be wary of is that your trading systems might not work equally well in all trading sessions. Instead they might work surprisingly well in certain trading session, but under-perform in other sessions. The best strategy is to try and test your systems using demo accounts before you adjust your live trading plan.
This is the preferred method of scaling up your trading. This way you won’t need to adjust your trading times and number of trades, instead you change only position sizes. Assuming that the value of your account has been increasing, you will not be increasing the percentage of each trade you risk. Money management rules all still apply, keeping your risk in check. Here as well, you should always increase the size a little at a time so you won’t feel stressed when you open a sufficiently large trade that might lie just outside of your comfort zone.
Also Read: 5 Most Predictable Currency Pairs – Q4 2011
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