Huge Losses

[yeayo]

If you can't afford to loss all your risk capital then you can't afford to trade. Don't encourage this guy with any hope that he may be profitable - cause then you're an 'enabler' of his trading addiction.

Quote from Ripley:

Where's the pun (lol)

I knew what I was doing wrong, and I didn't think I would do it again. But, just when I thought it wasn't going to happen, it happened in a different way.

It happened because I never have to take a -$50 loss on the first few trades, and also because it just went up against me with so much force that it made me wonder if this this is the time it is going to come back down just as fast. Tough game..

 

[Urkel]

I think I'll get in this thread to add my 2 cents.......

Quote from FuturesTrader71:

As I said, the market depth provided plenty of hints on the retracement being real. I don't know what news service he is using but I can bet that he would have gotten that too late. Trading on news is not for everyone. That was my only point. Better to react to the markets.

100% agree, espcially if he just started trading, on borrowed money.

 

[LaSalle]

From your .pdf:

"Because I really do need to get ahead for the day, and build myself a cushion like I always do, I decided because the price just exploded up to my stop that I decided to move the stop yet again. B/c I didn't want to take a -$50 loss to start off the day."

Here by not honoring your stop not only did you fail to achieve your goal of getting ahead early but you also left yourself in a hole that you could not recover from (on a daily basis).

You honor the stop and you are -50 or 1/4 you max daily drawdown. You have the entire day remaining and 3/4 of your powder still intact.

You need to know why you are taking position where you do. What is it that you are seeing or what is it that your system is indicating that positions you at breakout points?

Quote from Ripley:

I always find myself on the opposite end of a huge move. What gives? I don't know.

Maybe it is because I only move my stops, and don't mess with my profit targets.

I think it is because I am doing something wrong when trying to follow trends. And this following excerpt is just what I am doing wrong. I am trying to follow prices when they look abnormal without realizing that they are that for a reason.

I think Mr. Eckhardt said it best: There is what I refer to as "the call of the countertrend." There's a constellation of cognitive and emotional factors that makes people autmatically countertrend in their approach. People want to buy cheap and sell dear; this by itself makes them countertrend. But the notion of cheapness or dearness must be anchored to something. People tend to view the prices they're used to as normal and prices removed from these levels as aberrant. This perspective leads people to trade counter to an emerging trend on the assumption that prices will eventually return to "normal." Therein lies the path to disaster.

Here is one of my typical trades. And thats the first trade I had after the weekend and a lot of soul searching etc and that trade took a lot out of me.

 

[Urkel]

Quote from Ripley:

I just want to say that I don't have a lack of discipline or anything like that. I am also not afraid to take a -$50 loss. I do have a good trading plan, although it is quite hard to stick to it at all times.

I have traded on a simulator. But today was a special situation, which ended up being a big loss.

Can someone critique this trade based on how they would've handled it. Thanks.

Use your rotate feature on the PDF viewer to view the attachement.

Ripley - NEVER ADD TO A LOSER GET OUT WHEN YOU HIT YOUR STOP LOSS THERE WILL ALWAYS BE MORE OPPORTUNITY. No matter what you gurus of the market say adding to a loser is the quickest way to blowout in this business. You are no longer managing a trade you are wishing that it comes back not trading wishing and peeing your pants as it continues to go against you.

 

[Ripley]

Quote from LaSalle:



You need to know why you are taking position where you do. What is it that you are seeing or what is it that your system is indicating that positions you at breakout points?

SMAs were down. And there was this small pull back to the top, and thinking that the prices were headed down to establish the lows of the usual daily range, I jumped the gun and shorted it.

Even then, my supposed system should allow me to get in anywhere, anytime and be alright if I could stick to my own rules.

 

[Urkel]

Quote from Ripley:

I know I am not the only one who has to fight this tendency to let the losers get too big.

Can someone tell me how they overcome this. Did you trade on the simulator till you quit taking large losses? Because I traded on the simulator and I was cutting my losses short, but now I am finding it to be very tough.

Also, I think I have an edge, and my charts that are displayed are not my usual set up.

Thus, how did you overcome our natural tendency to let the losers run? and how long did it take you?

God,

I havent finished reading this thread yet, but reading this is like reading a horror novel anxious to get to the end to find out in the main character(Ripley) dies(Goes Bankrupt).

About losses Ripley, like everyone before me stop trading now. If you continue to(for some reason I think he probably will continue):eek: develop some rules for entry and exits for example, i will buy it at 1 and sell it a 3 or get stopped out at -2.

Now back to the novel

 

[Urkel]

Quote from icarus618:

LOL some people are getting bent out of shape over a guy learning with a $1,000 account. Oh no! he's gonna blow a thousand dollars!!! LOL

A thousand doesn't pay for a good night on the town depending on the city.

C'mon let's give the guy some credit. He's 25. I only wish I had his opportunity when I was 25. When I started full-time I put up $50,000, the minimum required, and had to pay for a $3,000 "training" course to trade at an office. This was before broadband became widely available, of course. A thousand dollars? Damn, I didn't realize YM margin was that low LOL.

Dont you realize what road he is heading down? It not the fact that he may lose the $1000 + interest(neither of which he can afford). Once he loses the $1000 he will be in the "I need to make it back" mentality and sell his mom's house and dog to fund his trading account.

 

[Urkel]

Quote from Ripley:

I am right where I want to be: I know of a few multimillionaires who started trading with inherited wealth. In each case, they lost it all because they didn't feel the pain when they were losing. In those formative first few years of trading, they felt they could afford to lose. You're much better off going into the market on a shoestring, feeling that you can't afford to lose. I'd rather bet on somebody starting out with a few thousand dollars than on somebody who came in with millions. (Mr. Eckhardt). The good thing about all of this is, I don't have to feel that I cannot lose this money, I just can't lose it.

I want to short this stament with a 1000 lot at the market.

I am fighting my human tendencies: The evidently instinctive human tendencies spell doom for the trader-take your profits, but play with your losses. This attitude is also culturally reinforced, as exemplified by the advice: Seize opportunities, but hold your ground in adversity. Better advice to the trader would be: Watch idly while profit-taking opportunies arise, but in adversity run like a jackrabbit. (Mr. Eckhardt). My goal for Monday is to run away like a jackrabbit from adversity.

Listen son, you got it wrong its LET YOUR PROFITS RUN AND CUT YOUR LOSSES SHORT.

Total Account Value: $1,100 (right around where I started off with. And I traded it through when I was down to $700 with it. Thus, I have no reason to be afraid.)

ROFLMAO. ROFLMAO. BTW With that you have less of a negative EV if you go to the Casino and out all of that on black rather trade anymore.

My entries are horrible.

No *&#@.

I must be patient with it and try to take better trades Monday.

And the novel continues................
This is what I did Friday:

 

[ssylwester]

sorry to hear of your tough time trading. you should stop. but if you don't, your $1k and the time u take to post provide a great stephenking-like entertainment. at least at age 25, you have lots of time to learn. good luck

 

[svrart]

Hello Ripley,

Thanks for a very entertaining thread.



My take:
The psychology or deeper consciousness has to be rewired to be successful in the market. This takes a lot of time and practice. As you grow, most "rules" will feel more natural. eg. When you are profitable or in a good trade you will feel calm and let the position run. On the other hand, as soon as it goes against you, you will feel very agitated and cut your loses quickly. You will do this not because there is a rule but because you feel within yourself that it is the natural or perhaps the only thing to do.

Good news bad news:
Good news - Your learning curve is very sharp because you are up against the wall. You are also learning inexpensively because your account is small. Most traders have "paid tuition" in the tens of thousands of dollars.

Bad news - Its a much longer and harder road than you think.

Good luck.