Ep 147: Why Trading Small or Less Beats Trading Large
★ SUMMARY ★
In this episode I’ll show you why trading a smaller amount of shares is more beneficial for you, especially if you’re just getting started.
Why we want to trade large
People always want to trade a large amount of shares, because human beings are greedy. We want to make more money, change our lifestyle, and that’s why we usually want to trade big. We think trading is going to solve all our financial problems, and we want to get those results immediately.
Also we usually believe we are better than we truly are, so we trade large, thinking that nothing can go wrong, because we are great traders, which isn’t always true.
However, when it comes to trading, growth happens periodically, it’s a step by step process, and it takes time. It doesn’t happen overnight. That’s why trading large and expecting to get rich quick doesn’t work.
There are a lot of issues that come when you trade large. For example, emotional issues, personal management problems, etc.
Why starting small is better
Starting small and growing step by step is actually a much better approach, because this way you can learn how to manage the money that you make a lot better, meaning that you’ll be able to preserve that capital for a longer period of time.
Another reason trading small is better, is because when you trade a large amount of shares, if that stock pulls back, you are going to have a very big loss. Whereas if you trade a small amount of shares, that pullback won’t be as painful, and you can always add to that position later, when the opportunity comes.
Another benefit of trading small is that it allows you to build the experience needed to become a great trader, a little bit at a time, without risking too much.
When you’re just starting you’re not ready to trade large, because you don’t have the experience you need. And more than likely you’re going to lose all your money. So start at the beginning, learn to trade right first, and then start trading larger over time, as you become more experienced.
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TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing.
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