Share sizing is an essential aspect of trading that every trader should master to achieve success in the stock market. However, beginners often make the mistake of jumping into large share sizes without a proper understanding of the patterns or sufficient experience behind the chair. As Malcolm Gladwell said in his book, “The Tipping Point,” it takes 10,000 hours of practice to become an expert in anything. So, it is crucial to put in the effort and time to master the art of trading, including share sizing.
To begin with, start with small share sizes of five to ten shares at a time in any stock. Learn how to ride the patterns out, when to get in and out, when to take profits, and when to leave shares in. By doing this, you will learn how to trade regardless of the number of shares you have. The same patterns repeat themselves over and over, and this is something you will only learn by having small share sizes.
The process may go against your initial desire to make instant money. However, starting with a ten-dollar or twenty-dollar risk on each stock for the first six months to a year of trading will help you learn how to trade better. As you progress and master the small share sizes, gradually increase the share sizes by increments of ten, starting from one share and doubling it to two, then four, eight, sixteen, twenty, thirty, forty, and beyond.
The goal is to master the psychology of your mind, understand the patterns, manage your money, and be comfortable with share sizing. The system makes money, not you. The money will come once you have the system in place. Trust yourself, work yourself up to share sizing with size, and don’t worry about the money. It will come with time and practice.
It is essential to note that if you are nervous about share sizing, your system is not there yet, and you should be patient with yourself. Give yourself time to learn, and if you need the money from trading to pay bills, find something else to do to pay bills because the money from trading won’t come until you have put in the effort, time, and hours, and you’re comfortable with share sizing.
In conclusion, mastering share sizing is critical to your success as a trader. Start small, learn the patterns, understand how to manage your money, and be comfortable with share sizing. Be patient with yourself and work on your system to get comfortable with share sizing. Remember, the system makes money, not you.
