In Continuation with the previous 2 articles
Trading Lesson Learnt From my Trading Guru
Valuable Trading Lesson Learnt From my Trading Guru Part-II
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“Have the courage to trade in big quantity ”
He
meant the willingness to carry a very, very large position when you
have a high degree of conviction and the risk/reward makes sense.
This is actually the flip side of My Guru's last pearl of wisdom- when there’s nothing to do, do nothing. But when there’s something worth doing, then do it in size.
Geroge
Soros frequently talks about this, because it’s a common trait of all
great traders. In order to be a big winner, you have to be very, very
large in the positions that have the best risk/reward. Considering that
most traders make their year on two or three big trades, then you have
to pile in when you see an opportunity.
The key question is: how do you judge when to trade big quantity ?
The
answer: you have to rank your positions in terms of overall
attractiveness/conviction and then size them accordingly. Once a trade
meets all of the minimum criteria for you to put it on, then you go
further and rank it on a scale of 1-5 of overall attractiveness.
To simplify, I have the following criteria:
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