True, every trader wants to achieve that. But it is not at all easy. So any plans of how will you go about it?
How to Handle Loss
- Thread starter remogul92
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True, every trader wants to achieve that. But it is not at all easy. So any plans of how will you go about it?
My trading is fully automated and the prime objective for me is to flawlessly execute my strategies. I can change or tweak my strategies, but while they are running they must be allowed to take every trade. Remaining disciplined to your approach has to be the number one goal (assuming you have a trade-able edge), because without that you will have no confidence in yourself. Eventually, the satisfaction of following your plan will out weigh the loss of any particular trades.
You registered in 2013 but only had 3 posts?
Losses are always tough to handle, whether you are in trading, professional sport, sales or a surgeon that lost his patient. It is hard for us beginners and seasoned professionals alike.
Streak of losses? I trade options full time since 2013, had a great run until this year. Self doubt is unavoidable but I learned to let go of losses, keep reminding myself to let probability and statistics (win/loss ratio and expectancy) carry the day so I can live to trade another day.
Trading rules? I practiced fractional Kelly and that reduced the stress level and risk of ruin.
Good luck.
How do you avoid losing streak? Probability often plays tricks on me.
I stay locally concave, globally convex. Credit to Nassim Taleb.
1- I was an arbitrage trader. I don't even conceive of the concept of trying to outsmart the market. I went after its participants. Options provided the perfect arena. Multiple mathematical components that can be arbed, soft-arbed, spread (semantics be damned... call it what you want), and in that arena, the difference in its participants levels of understanding allowed for tremendous advantages (with options, most people can't even conceive of how far they are away from getting it). I didn't and still don't believe this is true with any linear product (correction: some linear products like equities can be deconstructed, and those components traded against one another... but that's a heavy convo, and only applicable to extremely well capitalized firms). The difference between the greatest trader and absolute moron is arguably non-existent, and although I have worked with people who do seem to have an almost omniscient sense of direction, I consider them such outliers as to ignore including them in the application of any thought that I believe is best kept focused on general populations.
2- My position was always designed where if I was wrong, I bled slowly, and usually made that amount back making-markets which mitigated the amount of losing days, when my position was a loser. Those positions were also designed so if things went my way, it happened quickly and often for happy-happy-joy-joy amounts.
3- The doozy losses occurred only later in my career, when a large component of my responsibility included monetizing assets that contained optionality, but were not fully hedgeable, often due to their size and length of term.
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Thank you.
Thought provoking statement. I got to think really hard on this.
N.T., one of my all time favorite authors. I learned convexity and fat tails from reading his books.
Thanks. I didn't know the right sample size so I picked a number that was suggested to me. If you couldn't tell I'm a noob and I'm trying to start off by learning good habits. Thanks.
Thanks. This is exactly what I needed to hear. I knew this forum would be a good place to start picking up good habits. I knew more experienced traders had to deal with how they'd handle losses psychologically and I just wanted to see how others did it. I appreciate it.