How do you recover from a 80% loss?
- Thread starter failed_trad3r
- Start date
Quote from failed_trad3r:
Let's say somebody I knew was long 5 days ago, how do I recover?
Open an Oanda account, where there is no fixed lot size, so you can learn to control your effective leverage.
Go tiny at first, and learn to control your risk: use stops that produce 2% loss of your account at the most on any individual trade.
If you learn to use leverage in a sensible way and control your risk, you can come back and rebuild your original account.
Scale down, don't stop trading, trade with whatever you have left, dont be afraid to go the other way and jump on the trend. You will be damaged mentally for even longer if you get out and the market goes your way. You can always make the money back all it takes is catching a 20% trend and leverage and you can make a fortune.
just remember
You weren't the only one!
Other lost much more, while some actually profited!
Use this as a lesson and make sure next time your the one making money!
PS: I was completely sidelined last week, what an EPIC VACATION i had!!! Sometimes its better to be lucky than good?
You weren't the only one!
Other lost much more, while some actually profited!
Use this as a lesson and make sure next time your the one making money!
PS: I was completely sidelined last week, what an EPIC VACATION i had!!! Sometimes its better to be lucky than good?
Yes. I used to aim for 2%, but with options that's near impossible without trading very small positions.
Generally I aim for a loss of about $20 per option contract (representing 40 cents of movement on the underlying stock at a .5 delta). Risk per contract fluctuates depending on volatility and such, but I try to keep it low.
I pay about $300 per option contract at the money (agian, depending on volatility and time to expiraition. More like $450 right now). So, that's about 6.6% per contract ($20/$300) that I can lose. That being the case, I generally use only 1/3 of my account on any position reducing the risk to 2.2%, and add to that commissions, slippage, and the spread. So, yes, my risk per trade is usually around 3%. Last two weeks I lost 3% twice and 6% once on a gap (total 12%). Then got with the program and caught an 24% win for a total of +7% gain after 4 trades (76% win x just under 1/3 of my account = 24% account growth). It needed 24% instead of just 19% due to negative compounding.
Anyway, does any of that surprise you? I'm wondering what prompted your question.
I used to work at a car dealership and learned that unsold cars that continue to depreciate on the lot day after day will be sent to the auctions and sold for a break even or small losses after as little as 45 or 60 days on the lot. Not every car makes money, and managing losses with this strictly defined loss management system has kept many dealerships afloat during these last few years. Trading is no different. Don't fall in love with any single opportunity or position. Just like it is the average of all 200 cars on the lot that make the dealerhip profitable and not any single car, so also it is the average of your 200 trades per month/year/decade that make you profitable and not any one trade. Strictly defined loss management will save your butt at times just like ditching a depreciating car that's no longer worth what a dealership paid for it. Trading like a business is not exciting. But as a trader you get to choose only one; either profitability or excitement.
If your loss was in the thousands then suck it up.
If it was in the billions then call Ben and Timmie and get your rightful bailout.
If it was in the billions then call Ben and Timmie and get your rightful bailout.
It depends how you lost it.
Did you lose it because you followed your trading plan ? Or did you messed it up?
Did you lose it because you followed your trading plan ? Or did you messed it up?
Quote from failed_trad3r:
Let's say somebody I knew was long 5 days ago, how do I recover?
You don't, I think that's what I heard somewhere.