Having Multiple Trades

Having multiple trades open can be a great benefit to you. There are a number of reasons why have many open trades at one time can be helpful.

1. It decreases the need to make money with any one trade. If you have multiple trades open at a given time you are not depending on one trade to make you money in the market. While only having one trade open at a time can potentially give you higher rewards it can also give you a higher risk and be more stressful if that trade ends up turning against you.

2. It eases sudden surprises. If one stock gaps in the wrong direction that can be bad news for your trading account. But if you have 4 other trades open at the same time the loss you experience may be covered up by profits from other trades.

3. Trading multiple positions allows you to cover both directions in the market at the same time. If you have a bullish trade and the market crashes you will probably end up losing money on that trade. However if you have a few bearish trades along with a few bullish trades the money you make from the bearish trades during a market crash can offset the money you would lose from bullish trades during the same period. Having many trades open at the same time can be very useful for protection.

4. It can give you less stress. If you only have one position open and it does not do what you wanted it to that can be stressful. Getting frustrated does not only give you a bad feeling but it can work against you in the stock market. If you are stressed you will make bad decisions with your trading, (or at least not the best decisions). If you have multiple positions open, then you will not feel so stressed about one trade. That trade could turn sour and you still make money because of your other positions. This allows you to make calm rational decisions and will let you sleep easier at night.

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