Scaling Up Size

Every trader should start trading 1 lots but once you regularly achieve the sort of high
win rates we are aiming for obviously we want to increase our size to make more
money. First point to make here is only increase your size if you are hitting a win rate
of around 70% and above. If you increase your size with a lower win rate your P+L
can become too erratic.
It is essential to understand that as scalpers we need to be nimble traders. We are not
looking to become ‘players’ in the market; we just want to easily get in and out of the
order flow. So we don’t want to become large traders and we don’t want to trade a
size that might be difficult to get out of.
If your contract is a thin one such as Dax or Gold where routinely the bids/offers are
less than 20 or 30, I suggest not trading more than 2 lots.
If your contract offers you the chance to trade more (e.g. bids/offers of over 100) you
can certainly get to 5 lots and potentially 10 lots. Personally I wouldn’t advise more
but I do have clients who trade bigger size. Again, keep your trading size proportional
to the average liquidity of your contract. You will need to adjust this and reassess it
on a daily basis (and perhaps even intra day if liquidity drops over lunch for
example).
By increasing our trading size we bring in the problem of getting partial fills. If you
trade say, 5 lots you may get initially filled in 1,2,3,4 or 5 lots. This poses a problem
in relation to quick exits when your DOM is set up for 5 lots. Some DOMs enable us
to have 5 or so quick options to change our size; this is one alternative. Usually
though, it is best to automate the exit by using an order that immediately offers/bids
the amount you have traded at your target price (for instance 1 tick above/below).
One more important point, in keeping with our practice of wanting only quick fills, if
you receive a partial fill you should cancel the remainder. So if I place an order to
buy 5 and get hit in 2 lots, I will cancel the other 3; I want the quickest ones only.
What we are trying to eliminate are the trades where the first 2 make money and the
next 3 lots lose or scratch because they were slower fills

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