Beginner trader here having difficulties avoiding scratches with cash account.

[ironchef]

the fact that you developed a method and process is stellar. Don't underestimate your success.

I don't know, like Mike Tyson said: Everyone has a plan until they get punched in the mouth.

I don't know if I will be the one in a hundred but the other posters here are, so, to @Dking93 I say, since you are here asking all these questions, press on, give it a try, maybe you will be another one in a hundred.

 

[TheDawn]

Sup guys im trading with a small cash account with about $1000. Obviously i have a limited number of trades i can take due to limited funds, so scratches is something i have to avoid. That being said its affecting my judgment when im in a stock. i would hold my losers longer knowing i wont be able to get back in. And my winners are small due to small position size trying not to use too much capital. Does anyone has experience in avoiding scratches? or are scratches inevitable as a day trader? thanks

Scratches is unavoidable if you are going to be a trader. Even large hedge funds with hundreds of millions of dollars of assets under management still get "scratches" and their "scratches" are even bigger to the point of causing bankruptcy. So "scratches" is a very normal part of trading; it's just a flipside of winning. If you want to become a trader, you need to accept that because trading is a zero-sum game which means you can only win at the expense of others and vice versa so there is no way that you can always win and never lose or never have "scratches". Trading without "scratches" is not trading; that's a ponzi scheme. LOL

Having said that, there are ways to avoid scratches. It's called "cutting losses early and letting winners run" which is the opposite of what you are doing. LOL What it means is you set stop-losses at a price level where you think it's a loss for sure and you don't exit the trade right away after having just made a little bit of profit; you let the winning positions stay open a bit for them to become more profitable.

How do you know? You need to study the market, do your research and design a trading strategy.

 

[ironchef]

Having said that, there are ways to avoid scratches. It's called "cutting losses early and letting winners run" which is the opposite of what you are doing. LOL What it means is you set stop-losses at a price level where you think it's a loss for sure and you don't exit the trade right away after having just made a little bit of profit; you let the winning positions stay open a bit for them to become more profitable.

The devil is in the details, sir.

 

[Jzwu2017]

It’s way easier to say that cut loss early and ride winner than to actually do it.

 

[Bodrey]

Hi Dking,

I'm new(ish) to Options trading myself. IMHO, you may want to paper trade for a while instead of risking real capital, at least until you can develop a strategy that works for you.

That said, the market in general seems very volatile right now. I mean, I've been placing paper trades (ICs) on SPY and QQQ (ETFs with low IVs that don't normally see huge price swings) using low Deltas. Yet, even some of those are breaching the long leg of the trade (the Put side) and losing "money".

Just my two cents...

 

[Fast-Simple]

...Does anyone has experience in avoiding scratches? or are scratches inevitable as a day trader? thanks

Dking93, I'd like to quote Yoda "Do or do not. There is no try."

Scratches happen when you have an idea, then a few time bars later you second-guess yourself. This is far too common among traders who have an incomplete outlook on trading, or lack vital elements to their trading system. There are only three things you need to be able to do to avoid scratches.

1. Be able to accurately delineate high probability from low probability trade setups
2. Patiently wait AND DO NOTHING through extended periods of low probability
3. Take swift and decisive action at times of high probability.

But here's the key to all of that. Determining high vs. low probability situations HAS TO BE based on the CHARACTERISTICS of high probability trades vs. the CHARACTERISTICS of low probability trades so that they can each be qualified IN REAL TIME without respect to the end result. In other words, you can't rely on the outcome, or what the price ticker is doing right now, or what you're afraid it might do shortly to know if you made a good decision or not. You have to be able to know you made a good or bad decision with only factors that you can see prior to taking action. If you can't do that, you'll be shaken out when the price moves somewhere unexpected and it will result in a scratch.

1) delineation, 2) patience, 3) swift action are the only three things this game takes. Based on your post, you won't know if you have a problem in the 2nd and 3rd one until you greatly improve your ability to delineate high vs. low probability based on PRESENT characteristics that were visible at the time you made the decision, and rely on them regardless of what new information presents itself over the short term.