I understand you, but even if you have a plan how do you avoid drawdowns. I work with stoplosses, the most important thing to me is not losing money. And I am not losing money, I am just reducing profits. Sometimes you can't predict everything, sometimes it works out. Sometimes it doesn't. I have a plan and know how I should handle it. Maybe my question was wrong. It's just emotionally frustrating drawdowns. How do you shut down these emotions. It's more psychological my question.
how to handle drawdowns?
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I understand you, but even if you have a plan how do you avoid drawdowns. I work with stoplosses, the most important thing to me is not losing money. And I am not losing money, I am just reducing profits. Sometimes you can't predict everything, sometimes it works out. Sometimes it doesn't. I have a plan and know how I should handle it. Maybe my question was wrong. It's just emotionally frustrating drawdowns. How do you shut down these emotions. It's more psychological my question.
You can "shut down...emotions" by a pre-frontal lobotomy but I don't recommend it. Emotions are part of the human condition. You have to recognize and acknowledge them as they arise and learn to control them and not let them control you. It's a vital part of the art of trading.
I hear ya, yes when it starts looking bad it's easy to second guess your original idea and start wondering if maybe you missed something. That is why the time spent flat and designing is so important, because when it starts happening to you your mind can no longer be trusted to make changes to long range plans. The planning should be very exciting. The actual trading should be kind of boring. I always have the old plan trading live, and the new improved plan trading in the paper account. Learned my lesson and never have them actually both open at the same time because I get confused which account I am in, that's how normal it has all become for me.
Learn how to use puts. They will not only save your bacon, they can make you a lot of money.
Investing Style then got to ride them out, kinda.
If say AAPL trend is up, so you go long, but it drops further trend still up, then average down eventually it'll get back on trend, when the trend changes then you need a sensible place to exit and maybe flip to short.
Also, watch the over all trend in the Market and the sector, don't trade against either.
Although if market is Up, I'd still put 1/3rd of my money in shorts in downtrend sectors against the uptrend market. That way a bad market move, the shorts will out perform the losses.
Been 15years++++ since I played Stocks this way, worked GREAT!!
If say AAPL trend is up, so you go long, but it drops further trend still up, then average down eventually it'll get back on trend, when the trend changes then you need a sensible place to exit and maybe flip to short.
Also, watch the over all trend in the Market and the sector, don't trade against either.
Although if market is Up, I'd still put 1/3rd of my money in shorts in downtrend sectors against the uptrend market. That way a bad market move, the shorts will out perform the losses.
Been 15years++++ since I played Stocks this way, worked GREAT!!
Learn how to use puts. They will not only save your bacon, they can make you a lot of money.
Yes, but the problem is when they are expensive what they mostly are. When you can get them very cheap I would certainly do that. But mostly it's not worth it I think because you have to gain too much if you doesn't need your insurance. So maybe moving stoploss much higher is an alternative. Or buying a put may work if you already have a nice gain with 30%+.
Any thoughts?
The most important thing is your discipline , to follow your plan ,All I can say is you will find many hints what to look for , in my pschology threads , in the psychology section .There is a lot to learn.There are hundreds of webinars on youtube by top pschologists , listening will help.Mindfullness links are free in my pschology threads or just type mindfullness youtube meditation , it will help,
We all do impulse trades and often get sucked into non edge trades.
Good luck
Buy otm calls and let them expire , results will be far better than , a human's trade management ,When we see a profit , we excited and take small profits .There is an article on the internet "most traders are idiots" read it.
You would rather take a small profit and trade loss aversion , avoid losses by taking certain profits , and cutting higher profits.
Think how you will for drawdowns in your trading plan , emotionally with stress management.
Puts are great for locking in profits
, and if using for protection, delta neutral puts over stop loss. The latter leaves you at the mercy of some MM, and once it's sold, the money is gone. It's like putting in a market order. As I got screwed a couple of times
, I learned my lesson.IMHO
The bottom line is that if you have a true trading edge in that you know your long term win/loss percentage and you know your profit ratio (average profit divided by your average loss) then you never concern yourself with drawdowns as you know you will experience random results that do result in drawdowns.