Add equity to beaten-down prop acct, or start fresh somewhere else?

[volpunter]

So let me ask you a very simple question: Why do you think resetting/moving your account or even continue trading will prevent you from ... "but I still occasionally let my emotions get the best of me. It's the whole lizard brain thing - I still let the market fake me out from time to time. " (your wording in quotes).

Most experienced traders will tell you that its hard to impossible to "fix" the errors you committed. Meaning, you would not let lose on any trades ever again would you work at a firm that provided capital to you. Some weaknesses can be improved upon but

a) you claimed you did not trade too large positions, which means you must have repeated the same mistakes over and over and over hundreds of times to lose 84% of your account.
b) I can tell you how many guys blew their accounts on this site: Hundreds, thousands, and most have even topped up their accounts multiple times. Guess what, most of them are career losers. They either do not understand what I told you above (some mistakes cannot be corrected and make or break someone to be a trader). Or they trade for the thrill and actually do not mind losing money. Or they delight in losing money. But trust me, a very small number of people on this site or in general make money trading.

My best advice for you is to turn off your machine and not trade a single position again for a long time. You should pick up books and start reading and you should start asking a lot of questions and you should start a journal and write down as much as you remember in terms of the mistakes and ways you lost money. But for your own account's sake, do not continue trading and worse yet, please do not fund another account. Because you have not improved on any of those mistakes, I am willing to bet you are at an all time low of your equity curve right now which is exactly why you came here to seek advice. But your idea to continue trading until you get a proper education and reflect on your mistakes and understand how to correct them is a very bad idea.

Sure I traded small size relative to the account size... You can trade a single lot of NFLX or TSLA and sit there like a deer in the headlights as it moves against you three or four handles. It's not necessarily the size, it's how you manage the position. I've made mistakes - that's part of learning. My goal is to survive long enough to get to the point where I don't make these mistakes anymore. I've gotten much wiser over the months but I still occasionally let my emotions get the best of me. It's the whole lizard brain thing - I still let the market fake me out from time to time. Of course I see it afterwards, but by then it's too late (hindsight vision is always 20/20).


Does that mean I should just give up just because I've had a painful 9 months and basically blew up my first account? How many of you guys have blown up your first account? - or rather I should ask, how many of you guys will admit that you've blown up your first account?


The point of the conversation is that if there was a way to "reset" the account, I'm confident that I would get it into positive territory considering the experience that I've picked up over the last nine months. That doesn't mean that I'm an expert master trader - it just means that I'm a little better then I was when I started. It's going to be very challenging to dig out of this hole but this is what I have to do.

 

[HungryMind1200]

I'm confident that I would get a new account into positive territory because although I still make mistakes, the mistakes are less common now then they were nine-ten months ago. I understand that's not a long time, but it's been a valuable experience for me. I've learned what NOT to do for the most part. Yes I'm at the low of my equity curve, but the majority of my losses took place within the first few months. I've had some gross profitable and some net profitable months since then (trading every day)... I'm not just running myself into the ground, despite the draw down.


Your arguments are valid but I don't want to sit here and sword fight with you. I will tell you that I've read dozens of books, invested thousands of hours reading and studying markets. That helps, but hard work and study doesn't guarantee a profitable trader. I've always found that the best way to learn something is to prepare yourself (study) and then get thrown out to the wolves. You will get hurt, but if you are able to adapt and learn from your mistakes, usually you will overcome your challenges. I use MS One Note to keep a very detailed journal, complete with chart screenshots, time stamps of all trades, point in time readings of the /ES and the $tick while I make my trades, and a daily recap of what worked and what didn't work for the day. I review the journal every night and I add/amend my rules based on the daily reviews.


Yes, it's very challenging to overcome bad habits and reprogram one's way of thinking... The odds are stacked against you, but I don't think it's impossible. Maybe I'm wrong, only time will tell.


I do appreciate your brutally realistic demeanor. You're not sugar coating anything, as some "false profits" would. I can't give up - not yet. I've come too far and made too much progress to let a large draw down of a small account stop me from continuing.

 

[volpunter]

I appreciate your detailed reply, it sounds pretty honest and self reflecting, a lot less apologetic than most other posts of this kind. Would you mind sharing from your journals what your 3 biggest mistakes so far are? And what you learned from them. Thanks.

I'm confident that I would get a new account into positive territory because although I still make mistakes, the mistakes are less common now then they were nine-ten months ago. I understand that's not a long time, but it's been a valuable experience for me. I've learned what NOT to do for the most part. Yes I'm at the low of my equity curve, but the majority of my losses took place within the first few months. I've had some gross profitable and some net profitable months since then (trading every day)... I'm not just running myself into the ground, despite the draw down.


Your arguments are valid but I don't want to sit here and sword fight with you. I will tell you that I've read dozens of books, invested thousands of hours reading and studying markets. That helps, but hard work and study doesn't guarantee a profitable trader. I've always found that the best way to learn something is to prepare yourself (study) and then get thrown out to the wolves. You will get hurt, but if you are able to adapt and learn from your mistakes, usually you will overcome your challenges. I use MS One Note to keep a very detailed journal, complete with chart screenshots, time stamps of all trades, point in time readings of the /ES and the $tick while I make my trades, and a daily recap of what worked and what didn't work for the day. I review the journal every night and I add/amend my rules based on the daily reviews.


Yes, it's very challenging to overcome bad habits and reprogram one's way of thinking... The odds are stacked against you, but I don't think it's impossible. Maybe I'm wrong, only time will tell.


I do appreciate your brutally realistic demeanor. You're not sugar coating anything, as some "false profits" would. I can't give up - not yet. I've come too far and made too much progress to let a large draw down of a small account stop me from continuing.

 

[EPrado]

I'm trading Equities. My PnL reports show that I've definitely improved, but I still make mistakes.


25k was a round example for the sake of easy math. In my case, I've drawn down about 11k from a 13k account. Nothing to sneeze at, but nothing to slit your wrist over either. It's an 84% drawdown but that's also a small account to cut your teeth with.


I was trading pretty small size to begin with, but I like the idea of trading smaller size for a little while. I think that I can eventually climb out of the hole, but I can't expect it to be quick or easy.


Too bad. I feel like if I could start all over again, I could probably get the account positive immediately. I have some work lined up for me.

I would take everything volpunter said to heart. He makes a ton of great points. You seem like a good guy, but taking an equity account to -84% is even worse than doing it with futures because equities are far less leveraged. Seems like you are aiming towards the high fliers (TSLA...NFLX) which is fine, but then you really have to be careful of position size.

It seems to me position sizing is probably what you need to work on the most. To me either you lost on a crazy high percentage of trades (and shouldn't be trading) or your position sizing is way off. I hope it's the second one.

 

[HungryMind1200]

No, I don't mind at all. I tend to be VERY hard on myself when I review my journal. I've toned it down a bit for this post, but I will beat myself up pretty bad when I make mistakes and don't follow my rules. Believe it or not, this draconian drill sargent type of approach towards myself has helped me correct bad habits over the years...




Here's few general entries, rules, tidbits, etc:

* You tend to get run over trading the open. DO NOT trade until 10AM. Same applies for the closing session, DO NOT trade the close unless there is an obvious trend. Exit all positions at close and DO NOT hold past 4PM.

* Stay cognizant of the underlying market sentiment. Prefer long positions when the futures are moving higher on the day, and short positions when futures are moving lower on the day. Watch the futures market VERY closely for intra-day reversals. Watch the tick to get a pulse on the market as it "inhales and exhales".

* The stress comes from not knowing what you're doing.

* Take a mental trade if you feel the need to over trade.

* Go for EASY money - trade obvious trends only. Stay away from reversals unless there is a confirmation.

* Start small and build up your positions. Don't intent to pyramid the first position - start small and size in as it goes your way.

* Trading when done well isn't fun, it's not satisfying in the moment, it's a means to an end. If I start enjoying it I get overconfident and lose money.

* In life, hope is a powerful and positive thing. In trading, hope is a virus that can infect and destroy.

* Quit trading for the day if you've reached your daily profit target.

********
Here are some specific entries:


8/21/2015
-After firing an employee (first time firing somebody), I came into the market late (2PM). I did not perform any analysis the previous night (no pre-flight game plan). The market has been selling off over the last two days due to uncertainties in China and devaluation of the Yuan. I was certain that the market was oversold, and therefore every time the $TICK hit -1000, I would short $VXX. My theory was that the market was oversold and was going to bounce.


Four serious issues here:
1. The need to be right when you are wrong: I had to be right regardless of what the market was telling me.
2. Trying to catch a falling knife: NEVER go against the current order flow/trend.
3. Sizing up to make up for losses: NEVER add more size to a losing trade - this is like a sinking ship deliberately taking on water.
4. Over trading: FOMO (fear of missing out) causes you to over trade at times. Always remember that the markets will be open tomorrow. Accept that you are not going to "get rich" today, regardless of the day's carnage. Keep you emotions in check, this should be a boring job, like factory work. Once you adrenaline starts pumping, you need to realize it immediately and understand that your judgement is cloudy. Decrease size, or close position and step away from the screens for a little while.


******

8/26/2015
ES Futures up 45 handles pre-market. I started the day expecting a large bullish correction following the massive sell-off.


Went long a large amount of UPRO in the pre-market (broke rule of not trading until 10AM & traded too much size).


Futures started melting in the pre-market.


Exact journal entry:
"FUTURES FALLING AT 9:17AM - UPRO DOWN TO 52.35 - not looking good - might be a loss. - let's see if it recovers. FUTURES +38, down from +45"


(I look back at this and CRINGE)



Five serious issues here:
1. Hope: Hope is NOT a viable strategy. If you start to "hope" then you probably did something wrong and you should exit the position immediately.
2. Need to be right: You expected a bullish correction and you HAD to be right. You deliberately held a loser because in your head you were right. The market is unpredictable and does not care what you think.
3. Violated rule of not trading before 10AM. You know you get run over at the open, why trade?
4. Over-sized - you did very well recently during the massive sell-off. This does not mean you are a good trader, this just means that you enough common sense to follow a trend. You wanted to repeat your recent success and you wanted it to come quicker (hence, added more size) - GREED - it will hurt you every time. Remember you are not going to get rich quick as a day trader.
5. (this goes with hope) - WAITED TOO LONG TO CUT THE LOSS. If a trade is not going in your favor or starts to move against you - JUST GET OUT. Don't even think about it.



On this day the market bottomed ~12PM and then rallied to close green on the day. My bullish sentiment was right, but my timing was wrong. I held too much size and there was no way that I could have held through the pain (nor should I have).

*****

 

[volpunter]

I can comment on it some more later (only if you wish) but already at first glance you violated some of your rules 3 times in this one single post alone. You do not want to trade before 10am? Then don't turn on your fuxxing box before 10am or keep your dirty fingers off the order keyboard and just read, or do not start up your order entry app. Whatever works but do something about your mistakes instead of repeating them. Each mistake can be killed with a multiple of solutions. You need to be consistent and very disciplined. Lack of discipline might be your biggest enemy here...just a hunch...

No, I don't mind at all. I tend to be VERY hard on myself when I review my journal. I've toned it down a bit for this post, but I will beat myself up pretty bad when I make mistakes and don't follow my rules. Believe it or not, this draconian drill sargent type of approach towards myself has helped me correct bad habits over the years...




Here's few general entries, rules, tidbits, etc:

* You tend to get run over trading the open. DO NOT trade until 10AM. Same applies for the closing session, DO NOT trade the close unless there is an obvious trend. Exit all positions at close and DO NOT hold past 4PM.

* Stay cognizant of the underlying market sentiment. Prefer long positions when the futures are moving higher on the day, and short positions when futures are moving lower on the day. Watch the futures market VERY closely for intra-day reversals. Watch the tick to get a pulse on the market as it "inhales and exhales".

* The stress comes from not knowing what you're doing.

* Take a mental trade if you feel the need to over trade.

* Go for EASY money - trade obvious trends only. Stay away from reversals unless there is a confirmation.

* Start small and build up your positions. Don't intent to pyramid the first position - start small and size in as it goes your way.

* Trading when done well isn't fun, it's not satisfying in the moment, it's a means to an end. If I start enjoying it I get overconfident and lose money.

* In life, hope is a powerful and positive thing. In trading, hope is a virus that can infect and destroy.

* Quit trading for the day if you've reached your daily profit target.

********
Here are some specific entries:


8/21/2015
-After firing an employee (first time firing somebody), I came into the market late (2PM). I did not perform any analysis the previous night (no pre-flight game plan). The market has been selling off over the last two days due to uncertainties in China and devaluation of the Yuan. I was certain that the market was oversold, and therefore every time the $TICK hit -1000, I would short $VXX. My theory was that the market was oversold and was going to bounce.


Four serious issues here:
1. The need to be right when you are wrong: I had to be right regardless of what the market was telling me.
2. Trying to catch a falling knife: NEVER go against the current order flow/trend.
3. Sizing up to make up for losses: NEVER add more size to a losing trade - this is like a sinking ship deliberately taking on water.
4. Over trading: FOMO (fear of missing out) causes you to over trade at times. Always remember that the markets will be open tomorrow. Accept that you are not going to "get rich" today, regardless of the day's carnage. Keep you emotions in check, this should be a boring job, like factory work. Once you adrenaline starts pumping, you need to realize it immediately and understand that your judgement is cloudy. Decrease size, or close position and step away from the screens for a little while.


******

8/26/2015
ES Futures up 45 handles pre-market. I started the day expecting a large bullish correction following the massive sell-off.


Went long a large amount of UPRO in the pre-market (broke rule of not trading until 10AM & traded too much size).


Futures started melting in the pre-market.


Exact journal entry:
"FUTURES FALLING AT 9:17AM - UPRO DOWN TO 52.35 - not looking good - might be a loss. - let's see if it recovers. FUTURES +38, down from +45"


(I look back at this and CRINGE)



Five serious issues here:
1. Hope: Hope is NOT a viable strategy. If you start to "hope" then you probably did something wrong and you should exit the position immediately.
2. Need to be right: You expected a bullish correction and you HAD to be right. You deliberately held a loser because in your head you were right. The market is unpredictable and does not care what you think.
3. Violated rule of not trading before 10AM. You know you get run over at the open, why trade?
4. Over-sized - you did very well recently during the massive sell-off. This does not mean you are a good trader, this just means that you enough common sense to follow a trend. You wanted to repeat your recent success and you wanted it to come quicker (hence, added more size) - GREED - it will hurt you every time. Remember you are not going to get rich quick as a day trader.
5. (this goes with hope) - WAITED TOO LONG TO CUT THE LOSS. If a trade is not going in your favor or starts to move against you - JUST GET OUT. Don't even think about it.



On this day the market bottomed ~12PM and then rallied to close green on the day. My bullish sentiment was right, but my timing was wrong. I held too much size and there was no way that I could have held through the pain (nor should I have).

*****

 

[HungryMind1200]

Bingo. You hit the nail on the head. I would absolutely say that overall lack of discipline is the root cause of my challenges (old and new).

While my discipline has improved over the last few months, I still fall short from time to time. These entries are from < 2 months ago, so I can't honestly tell you that I'm all better now. It's not a quick and easy transition by a long shot. I just need to keep working at it and make a sincere effort to avoid my previous mistakes... I'm rewiring my brain and my thought process.

 

[volpunter]

Instead of dearly paying for this sort of education I would strongly recommend you to learn discipline in other fields. Stop trading for a while and practice discipline in other fields. Heck, learn to be disciplined to not trade for 3 months no matter how much your little pointing finger itches. Sorry but that is the best advice I can give you.

Bingo. You hit the nail on the head. I would absolutely say that overall lack of discipline is the root cause of my challenges (old and new).

While my discipline has improved over the last few months, I still fall short from time to time. These entries are from < 2 months ago, so I can't honestly tell you that I'm all better now. It's not a quick and easy transition by a long shot. I just need to keep working at it and make a sincere effort to avoid my previous mistakes... I'm rewiring my brain and my thought process.

 

[HungryMind1200]

No apology necessary. If that is the best advice that you can give me, then that is exactly what I will do.


I saw this post yesterday and didn't respond. This was the very first thing that entered my mind as soon as I woke up this morning. Let's see how I make out.

 

[volente_00]

I can comment on it some more later (only if you wish) but already at first glance you violated some of your rules 3 times in this one single post alone. You do not want to trade before 10am? Then don't turn on your fuxxing box before 10am or keep your dirty fingers off the order keyboard and just read, or do not start up your order entry app. Whatever works but do something about your mistakes instead of repeating them. Each mistake can be killed with a multiple of solutions. You need to be consistent and very disciplined. Lack of discipline might be your biggest enemy here...just a hunch...

I agree. Now stop trading for now and buy this book



Read it over and over until you know it like the back of your hand before you give any more of your money away to the market.
Once you have mastered the content inside and have reprogrammed your mind, then start trading small size again. Until this happens you are only throwing good money after bad with your current trading plan.