I went totally broke because...

tomdavis · Feb 17, 2010

Quote from Sanaz3:

Hello,

I started day-trading stocks 8 months ago with $7,000 and absolutely zero experience...

Why didn't you papertrade (simtrade) until you were sure you had a tested system? Never trade real dollars until you have a tested method. Then trade minimum size with real money until you can be consistently profitable.

It took me two years to learn to be consistently profitable. I think that's about average. If you want to make your living as a trader, plan on spending two years learning to trade. If you can do it faster that's great, but you need to be realistic about the learning curve.

Sanaz3 · Feb 17, 2010

Quote from tomdavis:

Why didn't you papertrade (simtrade) until you were sure you had a tested system?

Paper trading just don't make sense to me and I cant do it... I don't know why? I would rather use $500 real money to trade in order to learn and test my strategies.

oraclewizard77 · Feb 17, 2010

That is my point, I am trying to give you something to think about. Stops don't work overnight, reports will gap stops. So therefore if stops don't work overnight, then maybe not "day" trading stocks overnight should be a rule.

So we have created your 1st rule of successful trading setups. I have around 12 rules not including observations and a total of 23 pages including attached charts in a Word Document called trading setups. The next goal after you create your rules for trading success is to follow them. If you can't follow your rules, then how can you be profitable.

Next, you need to keep an excel file on every trade you perform. I have 1 called trade log that is now 947 rows long. It has the following columns. Date of trade. Reason I went long or short. Price of instrument traded at time of trade. win column, loss column. And finally comments about the trade after it has finished.

I then review my trade log to determine what is causing my win or losses. For example, did I break a rule, is one of my rules no longer working. Does this rule only work during a certain time during the day. Did I chase or wait to get into a trade. The reason to do this is to see if you are making the same mistakes over and over and to try to change your behavior in order to not repeat these mistakes. If you don't want to do sim that is fine, but start small. Even if you are trading stocks, you could trade just 25 shares at 1st until you are profitable and then scale up. It takes years to be a doctor or lawyer, no one especially without a mentor is going to be able to start off being profitable. Think of the money you lost as being your education. Review what I have written, and maybe next time you become a professional and not a gambler. Think of it as a job not a casino.

Quote from oraclewizard77:

If you are day trading, then why are you holding over night? Also, why no targets and stops?

I lost on some positions I held overnight, so then I decided not to hold them at all in order to have a good night sleep.

If one bought the stock for $5.00 at 3:55 PM and the next morning price is $4.50, they would have lost 10% already, so what kind of stops would have prevented this loss? I was lately trying to limit my losses to 2% max on a single long/short trade as long as the market is open. Overnight I cant control it and who knows if you don't take 10% loss, it would not turn into 12 or 15% loss?

Quote from Sanaz3:

Paper trading just don't make sense to me and I cant do it... I don't know why? I would rather use $500 real money to trade in order to learn and test my strategies.

Sanaz3 · Feb 17, 2010

Thanks oraclewizard77. Your advice makes good sense to me, specially keeping an Excel-file record of the trades. However, I incurred all those losses mainly due to hastily shorting/buying, so this is (my 1st rule) going to be my main focus in the future trades when I get back to the market again.

TraderZones · Feb 18, 2010

Quote from Sanaz3:

. Any comments on my "5 simple rules" as somebody said they are just general guidelines!!?

Yes. We get many ET newbies asking what others think about their lists, I don't recall any of them still being around.

You can make a list until the cows come home (to coin an ancient idiom). But you can only profit if:

you have superior edge(s)
you have superior money/trade/portfolio management
you learn how to trade
etc.

failed_trad3r · Feb 18, 2010

Sanaz you should start swingtrading and no more daytrading. It is more healthy and gives more profits

stock piker · Feb 18, 2010

Quote from TraderZones:

Yes. We get many ET newbies asking what others think about their lists, I don't recall any of them still being around.

You can make a list until the cows come home (to coin an ancient idiom). But you can only profit if:

you have superior edge(s)
you have superior money/trade/portfolio management
you learn how to trade
etc.

Bullshit. I am around traders who make 7 figures in a prop environment with horrible MM. They do receive looks at major secondaries at good discounts (edge), but their bread and butter is risking 20 cents to earn 5. Risk of ruin? One of them is building a 6mm home near Stamford CT and paid cash.

forsalenyc · Feb 18, 2010

Sanaz3,

Save your dime and find a new career. I thought for few minutes how I can help before I began to type. Honestly, with almost no experience other than blowing up once and with no capital, you are not playing a fair game here. You need top notch system(PC, platform, charting, connection, etc) which could easily wipe out remainder of your capital in a month just in fees. You need to have stared at price action for thousands of hours before starting to make money. and most of all , you need decent capital. look at me for example, I trade with Millions but just getting by these days. Many envy my job, but they don't know the inside story.

Sanaz3 · Feb 18, 2010

Quote from forsalenyc:

Sanaz3,

Save your dime and find a new career.... You need to have stared at price action for thousands of hours before starting to make money. and most of all , you need decent capital...

Thanks, good advice. That's what I am doing now, looking to make and save money outside the stock market and at the same time "staring" at stocks movements and developing new strategies for a future come-back to trading. I suspended my account about a month ago.

TraderZones · Feb 19, 2010

Quote from stock piker:

Bullshit. I am around traders who make 7 figures in a prop environment.

Yes, but if you take their pictures down from your wall, then you will be alone.

... with horrible MM. They do receive looks at major secondaries at good discounts (edge), but their bread and butter is risking 20 cents to earn 5.

That has nothing to with horrible MM. There is no problem having a large stoploss and small target, if your expectancy warrants it.

Risk of ruin? One of them is building a 6mm home near Stamford CT and paid cash.

Ouch. Please go away. Your ignorance is alarming. In 2008, the Investment Banks were handing out fat bonuses. By the end of 2008, Lehman and Bear were effectively gone.