First Day Drawdown

[coolweb]

4 things

1. join a propshop and learn from experienced people

2. You are currently trading on complete randomness, anything you are trading on, is and will be 50/50 random.


3. IF you continue trading on randomness, it will take you 2-3 years to actually figure out you are actually trading on complete randomness!

4. Never view the markets linearly, as in a single way, always hedge or view it from 2 products in a comparison mode.


good luck

 

[Cutten]

Quote from learn&earn:

Well today was my first day as a full time trader. i quit my 40k job to trade full time because i LOVE the markets. anyway i lost about 2k today which is about 10% of my trading equity. i knew better but didnt bother with a stop loss. im a decent trader but this is a bad start. i need advice and maybe some cheering up and dont tell me to get my job back! i want to do this for a living. thanks.

That's way too much risk. If your equity is 20k, you can't afford to lose 2k in one week, let alone one day.

You need to significantly reduce your trading size e.g. by a factor of 5-10. You need to start using stops. You need a clear risk control approach or plan that keeps your losses at a manageable level.

The fact that you started trading without any risk control approach tells me that you are unlikely to make it in your current frame of mind. You've committed a real amateur/noob mistake. Odds are that you blow up and lose your whole trading stake. The good news is that this happened to many eventually successful traders, however, that's no reason to do it.

Resolve now to decide upon a maximum daily loss and stick to it. You have a lot to learn about discipline and risk control, so try to make the learning process less costly.

 

[Cutten]

Quote from learn&earn:

well i recovered about 4% AH so i didnt do as bad as I thought. I do have a plan and i have beat myself up enough today so i'm going to let it go and make sure it doesn't happen again. 1.5% daily loss and im done for the day. Also, im 21 and im not going back to my job. I will blow my account trying to make it, but that won't happen. thanks for the help guys and you will hear more from me.

Ok, but remember that how "bad" you did is not so much that you lost money, but that you made the mistake of trading too much size. Even if the stock went up 20% and you had a huge winner, you would still have made a *terrible trading error*.

The number 1 goal in your first 6 months or so is NOT to make any money. It is to survive and gain experience. Once you gain some skills, making money will come more easily. The first 6 months are where your chances of blowing up are great, and your chance of making money through anything other than by luck and excessive risk-taking are very slim. So, trade accordingly - trade minimum size (1 lots or 100 shares of a low-priced stock) and take low-risk trades with close, logical stops (e.g. below prior lows or above prior highs nearby, with momentum on your side), until you have more experience.

If your goal right now is to make a load of money, your chances of blowing up will be dozens of times higher than if your goal is to be humble and learn the ropes, focusing on staying in the game.

When a boxer turns pro, he doesn't go and fight the champ in his first fight. He doesn't even fight contenders. Instead, he works his way through has-beens, bums, and novice fighters. He gets experience versus less challenging opponents. Only after 20 or so fights, if he has shown a great record, will his manager and coach even *think* of matching him against a top fighter. Trading is no different - you need to earn your spurs and pay your dues. At the beginning you will make a lot of mistakes - by trading small, you make them when it matters least, just like a novice boxer making mistakes against opponents too slow, inexperienced, or untalented to really make him pay for those mistakes. Hopefully by the time he fights the top contenders, he's eradicated those errors and become a more well-rounded, experienced fighter capable of competing at the pro level.

 

[learn&earn]

Just a little update. I'm still trading full time and have managed to turn my 20k into about 3k. That's right full time trader with 3k in my account!:eek: i have a part time job and very few bills. I have learned a lot and im still learning. Right now im just trying to make $75 per day and not over leverage.

 

[Jaytrade]

Listen up man!

Watch out! You're now falling into the spiral of loss. You need to stop trading and clear your mind.

You are most likely OVER TRADING!
1 trade a day is usually all you need to make a TIDY profit!

Let me give you an example...
Had I not slept in, my system gave a signal to short silver futures (YI) and hold. You set STOPS at an acceptable amount of risk...

If you are stopped out-STOP! Do not trade..Figure out why it might have not works and "SOH" . . .which means to, "SIT ON HANDS"

This is one of the first lessons you learn as a trader, that trading isn't about 100 trades a day...

It's about sitting around until you see a reliable signal/pattern...

Shooting from the hip will not work. Use an indicator and follow it.

I've lost money too, we all have. But consider this, I'm only down -500$ this month total which doesn't impede my decision making skills.

Know where your "off" switch is, and HIT it as soon as you think your emotions/bad habits are acting out.

Miss a trade? Screw it. Don't trade.

Take a small loss? Who cares, better than a huge one.

Down to 3k from 20k? That's crappy, but now it's all about survival through small size and making many, many good trades. Be consistent...if you are not, learn to control your mental state...learn to be objective...weigh your odds.

This game is much like texas hold'em...
we cannot control what cards we get, just our psychology and how much we decide to bet. Bet only on good hands and fold for all mediocre cards..

Good luck. . .


By the way, if you are serious, you need to take a break and order every trading book know. Find other traders other than this site and get the basics. The basics will ensure you don't go 100% under...u may still lose, but you'll have a fighting chance, because you'll understand your mistakes a LOT better.

OH and another thing,
if you read "disciplined trader" you will find that you MAY NOT call yourself a "full time trader" until you have sufficient experience...even 6-12 months is not enough to call yourself a "trader"! You gotta know the game first!:eek: