October 31, 2006 at 10:28 am | | Comments 1

Trading Multiple Positions

Brand new traders are best served by sticking to one trade at a time, but as a trader gains experience, there are certainly some advantages to trading multiple positions.

One of the biggest benefits of swing trading multiple positions is that it diminishes the importance of any one trade. No longer will that one trade define your success (or lack thereof) in the short term. This is a big psychological edge which can set you free mentally as you aren’t required to watch and react to every single tick on your pet stock. You can set your conditional orders and let the trade develop on its own without micromanaging it, and in the meantime you’re able to scan for new stocks you may soon want to trade.

If you’re a beginning trader, you’re probably better off taking one trade at a time so that you don’t get overwhelmed. Trading the market takes some getting used to, and that learning curve shouldn’t be rushed. Take your time and go at a pace which you’re comfortable with as you learn to improve your execution methods and develop a routine for monitoring the market.

Once you’re past the beginning stages as a trader and comfortable with your executions, I would encourage you to learn to trade multiple stocks even if you have a relatively small account. While focusing your funds in one stock will mean an opportunity to accelerate account growth, spreading your capital too thin can doom you to underperformance. Find a middle ground which will give you the best of both worlds. And when the time comes that you can’t find trades which fit your risk/reward profile, simply step aside and remember that cash is a position!

We trade multiple positions on a regular basis over at If you’d like to learn more about how we manage them, come check out the free trial and watch us for 2 weeks. We’re confident you’ll like what you see.

Jeff White
President, The Stock Bandit, Inc.

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  1. Good advice.

    Beginning traders are also well advised to start out with small positions while they gain some experience and confidence. And this is a great opportunity to learn the value of risk management.

    As they will find out, risk management is and always will be one of their primary tools for survival. It all about keeping their capital intact.

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