Adrian Reid explains how growing trading accounts increase slippage and presents practical strategies to minimize its impact. Recommended approaches include trading higher-liquidity stocks, reducing trade frequency (favoring longer-term systems), diversifying by adding/scaling additional systems, and adjusting position sizing (e.g., reducing risk per trade) to lower slippage while preserving returns.
A common problem which all traders, all of you will face as your account grows, the more and more successful you become is slippage. How do you minimize it so that you can maximize your profitability? Because the bigger your account grows, the bigger your positions grow, the more slippage is going to affect your trading results. So in this FAQ video I'm going to answer exactly that question for you. So stick around, check this out. But before we go any further, make sure you hit the subscribe button and give this video a thumbs up so that you get notified of all of my future videos. Because I've got new trading content coming out all the time. I don't want you to miss a.
Thing because this problem of my account is growing and slippage and execution is becoming an issue is something that everyone.
Will eventually face whether you face on.
Day one or year 10. Eventually you'll face it.
As you grow as a trader, the ways to deal with it are increase.
Liquidity, filter so that the stocks you're getting signals in high liquidity and you can get trade bigger and bigger positions.
You can trade with less frequency as.
In longer term systems. So the slippage burden isn't as high in your portfolio.
If you're trading positions that you're holding for one or two days over and over and over again and you're getting.
A bit of slippage every single time, that's compounds to be a lot of slippage.
But if you've got a long, long.
Term trend following system that trades once.
Every few months, a bit of slippage.
Doesn'T compound as much. So you can reduce your frequency.
You can also diversify your systems.
So maybe you take one system that's got a big allocation split into. Or maybe you don't do that, maybe.
You just add another system and scale everything down.
And that's probably my favorite one to do. And that's what I did as I was growing. So like oh okay, too big, add another system.
Okay, I'm good again.
Too big.
Okay, add another system.
That works really.
Well because the extra system gives you.
Diversity and you also get to reduce your size.
And Gerald's point was really good. Think about your position sizing. We sometimes optimize our position size for growth.
Like maybe risking 1% per trade gives.
You the best compound annual return. But if that's giving you too much slippage, maybe and maybe half a percent.
Risk per trade wasn't much worse actually.
It probably had a smoother equity curve and it's half as big trades. So maybe just dropping to a smaller position size without changing anything else. But allowing more trades from the same system with a lower position size will also do a lot of what you need as well.
