Does size matter?

When you ask a lot of investors, the answer  is yes.They are of the opinion,that the bigger your account,the better your chances are to have winning trades. Some seem to think,that the fact that you have a lot of money guarantees some advantage  in trading. In my opinion that is not correct. The winning percentage on your trades doesnt so much correlate with the size of your account as it does with the quality of your trading system. When you are a big hedge fund or a private bank it is much more difficult to enter and exit positions at the prices you want, because of the size of the position. So to have the same results as a smaller retail trader, their system would have to be even better to achieve the same percentage results as if they could just trade  a few hundred shares a day.


If it were the case that for example hedge funds had a huge advantage on smaller trading desks,why is it then that lots of hedge funds are proud to breakeven in the wrong market conditions or have perhaps a small outperformance in correlation to the major indexes, while a lot of good daytraders are making 5 to 10 percent a month? Of course i know that some of those funds were created to collect fees,but nevertheless most hedge fund managers are trying their best to make a profit for the investors. And that is not because the managers are stupid, but it is just really more difficult when you have such big amounts of money to invest.


The point is, when your trading performance is bad, don’t make excuses like “hedge funds know something i don’t know” or something like that. Just look at your trades,try to find out why you are not performing the way you want and change your trading system accordingly.


About Schwarzdaytrades

I am a full time day trader. I like to share my opinion about stocks and the psychology of trading.
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