an amateur trading mistake

W

Warrior4g

was having a conversation about some of the bad habits traders have and decided to post one that really stood out.
when a trader loses lets say 800 on a given day,he will go into the next trading day with one thing in mind:try and get that 800 back as soon as possible. that will just create a disaster. first off,try not to take a big hit but if you do,tomorrow is a brand new day so forget about the previous day or else you will wind up spending the next month trying to get even. if i take a hit and the next day i can only make 200,i leave it like that and don't attempt to push the envelope.if the set ups are'nt there,they're not going to magically appear just because ypu have to make back 800 bucks.
 
if you trade the same as the way you lost 800 you will keep losing 800.

if a trader loses three times in a row, the trader has a 'problem' with his 'system' or his emotional stamina or is being screwed by the market makers occassionally.

if you are being screwed, just cut your loss, the market maker expects you to stop out and take your money.



Quote from enforcer99:

was having a conversation about some of the bad habits traders have and decided to post one that really stood out.
when a trader loses lets say 800 on a given day,he will go into the next trading day with one thing in mind:try and get that 800 back as soon as possible. that will just create a disaster. first off,try not to take a big hit but if you do,tomorrow is a brand new day so forget about the previous day or else you will wind up spending the next month trying to get even. if i take a hit and the next day i can only make 200,i leave it like that and don't attempt to push the envelope.if the set ups are'nt there,they're not going to magically appear just because ypu have to make back 800 bucks.
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What if 800 bucks is chicken feed and his positions were really nasty and he sohuld have lost 18k but only ended up losing 800 thru savvy trading?

The real issue is do you trade your PnL or do you trade your system or levels or whatever triggers your trades, which should not be based on PnL.

I think you know the answer to that one
 
the best way is continue trading with the same size and the volatility, otherwise you can not fill the hole with traditional wisdom "cut size smaller, slow down". for example, if you normally traded 1000shares, and lost $800 becuase of slippage (MM know your stop loss and took it) or your bad judgement, forget about trading 100shares, you must trade 1000shares next trade, the problem will be easily fixed with one or two strikes. normally I will increase my size to 1500share level to shorten the holding time and quickly fix the hole. if you reduced size significantly, it will drag you down mentally even you made a very profitable trade (point gain or percent gain), but can not fix the loss, you mentally will suffer, the longer the loss is not fixed, the more frustraded you will be. it is human nature if you lost something, you will remeber it (to most guys, even the loss is cut, but it is still in their memery), but if you gain something, you may easily forget about it and move on, that is why when you starts to gain, it seems the money is here waitinf for you to collect. Consistentcy is the key.

stop trading a while or take a rest, maybe a good way to get ride of the fight back idea.
 
its almost "revenge trading". a trader can become irrational and become fixated on a loss. does'nt matter if its 800 or 8,000, the same thing still happens as a trader wants his money back as soon as possible.
i actually have a list of rules hanging in front of my computer that i will never deviate from. revenge trading is one of them. holding a losing trade overnight is another one. i always said an investment is basically a daytrade that went bad.
 
Quote from vectors101:

if you trade the same as the way you lost 800 you will keep losing 800.

if a trader loses three times in a row, the trader has a 'problem' with his 'system' or his emotional stamina or is being screwed by the market makers occassionally.

if you are being screwed, just cut your loss, the market maker expects you to stop out and take your money.
More...

This is just plain ignorance. There are probably hundreds of systems, methods and trading ideas that will have 3 or more losses in a row.

I take the point to be - to trade the system or method and not be overly concerned with the PnL and to avoid revenge trading, wich will usally end up as you have predicted.

Make 'em pretty, Chris
 
Quote from trader_david:

for example, if you normally traded 1000shares, and lost $800 becuase of slippage (MM know your stop loss and took it) or your bad judgement,
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How does the MM know your stop loss? I was under the impression the stop orders were "invisible" to the MM.
 
Quote from mde2004:

MM love to run stops and that will cause trader's to throw heavy objects at walls.
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So, you are saying the MM can "see" your stop order?
 
Denial and dreaming doesn't belong in the trading


Quote from enforcer99:

its almost "revenge trading". a trader can become irrational and become fixated on a loss. does'nt matter if its 800 or 8,000, the same thing still happens as a trader wants his money back as soon as possible.
i actually have a list of rules hanging in front of my computer that i will never deviate from. revenge trading is one of them. holding a losing trade overnight is another one. i always said an investment is basically a daytrade that went bad.
More...
 
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