If Chewy Loses Money in July - He Will Quit Trading

NEVER GIVE UP! I had 14 straight losing months, before i saw the light. Let off the gas a bit ...let the risk be so small that a loss is insignificant...that will bring clear rationale analysis to a trade. Also it wouldn't hurt to pick sectors that are in sync with the economic cycle when swing trading. Also...i don't understand why your losses are all different amounts....share sizes should be adjusted so all losses are equal....a key to proper risk / reward ratio....money management trumps all.

Best of luck:)
 
chewy -

without any further info on your methodology, it usually breaks down into one the following categories:

1. method is broken
2. method is not broken, but is being broken by the trader (i.e. late entries, early exits, etc.)
3. method is not broken, trader flawlessly trades the method, and method is experiencing an exaggerated string of losses

#3 is the rarest of the choices, so let's go with #1 or #2 (but if you know it's #3, go with that).

if your method is broken, can you repair it? is it a matter of adjusting stops? adjusting timeframes? etc. etc. is there an edge to be found / traded?

if the method is good but you're breaking it, how and why? are you hesitating on entries? holding losers beyond predetermined uncle points? holding winners after the steam runs out? chasing movements? cutting profits early? does your method suit your personality? is it too long-term? is it too short-term? too many trades? too few trades? and so forth.

have you thoroughly reviewed your trades? what were you doing when you won? when you lost? how much time did you spend in a winning trade? losing trade? do you have a plan? planned entries? planned adds? planned profit-taking? planned losses? planned exits? are you planning each trade? even if you scalp, you should still know why you are in a trade or why you are out of a trade.

i was looking at your trade data and see the following:
1. your biggest loss is almost 4.5 times your largest win
2. your average win is about 1/3 your average loss
3. your winning days accounted for less than 1/3 of your total trading days (and i gave your scratch days a win, as you were not losing money)

this means that right now, it would take about three average wins to equal one average loss, but you are averaging one win for every three losses. so, if it took 9 trades to get three wins, you would, on average, be down about $550.

i don't mention this stuff to salt the wound; i mention it because it gives you something to examine. it gives you somewhere to look for the reasons you are killing your account and your chances at success. you have a wealth of resources that can provide feedback regarding what not to do. that is priceless (well, in this case it is $5,887 :) ).

i am sure this sounds trite, but before you can start winning, you have to stop losing. you have to stop doing one thing, pause, and start doing something else. you don't just want to turn your losers into winners; you want to stop losing. then you can work on winning.

i'm not making flip suggestions or talking from years of experience on the floor. i'm still new to this game and learn everyday. however, i have come to realize something about myself that was staring me in the face all along - i am my own edge. i'm sure that notion will catch some heat, but i know it is true. i can successfully trade anything, but i have to be ready, willing, prepared, committed to do it. this is why master traders have said they could comfortably print explicit details of their system in full page ads in major newspapers. it's not the system, it's the trader. one trader could profitably trade a system with a low win-loss ratio, while another trader can go broke trading a high win-loss system. the trader, the person is the truest edge.

are you ready to profitably and successfully trade your own methodology?

anyway, clearly you have ample (and anonymous :D ) support here at ET. as Electric wrote, most members see some past, present, or future part of their own trading self in Chewy. they want Chewy to win. no one can get you to where you need or want to be, but you do have some passengers for the ride :)

take care and have a great weekend -

omni
 

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What’s your rate structure? To you have to hit volume numbers for 6/10. First I think your rate sucks if you’re trading more then 1,000,000 a month. I don’t think it’s great at 500,000 a month but not bad either. You’re quite terrible and I’m not trying to attack you but you never take profits and always cut losers fast It seems. My other guess is you never make good decisions ever which seem very hard to believe. Rates are very important if you trade enough volume and can make or break your career. I don’t know your style but if you’re out fast on a loser then you have to be willing to take a fast profit and not try to win the lotto. If you only pick trades that go the other way then do the opposite of what you think. If you want to give trades time to develop without being scared out then size down a lot.
 
Chewy, Steve is right. Come up with some way to test your entries on paper against random entries. When you can beat random then start trading real $ again. Then you will make $ month after month after month. The only thing you will miss out on in the meantime is pain.

Quote from steve46:

Hello:

I took a moment to look at your trading record. Based on distribution of consecutive wins and losses, it is clear that you have no edge. Your record is worse than would normally be attributed to random chance. I suggest you do not wait for the next month. Stop now. Find a tradeable edge before you start again. Regarding the idea of simply reversing your trades, well I don't want to be impolite, but that simply doesn't work, and thinking that way doesn't help you to correct the problem.

Sorry about your losses. On the other hand, (just as a matter of curiosity) why did you go so far down this road before noticing that something was wrong? While I can't really be of much help to you as it is, your frank response might help others to avoid taking a beating in the markets.

Thanks,
Steve
More...
 
Chewy,

It looks like your average loss has been getting larger with successive trades. Are you trading more size to try to make up your losses? I know that it's very tempting to try to get it all back with one or two good trades, but it's more than likely that you'll take a whopper loss to both your account and your confidence. When I have a string of trades that have gone against me, I find it helpful to back off on size until I get my groove back. I look at my losing trades to learn why they went against me, but try not to let them fuel my thirst to win. I also get up to take a short break after a bad trade in order to wipe the slate clean so I can approach the next trade with objectivity(and an empty bladder).

I don't think you should give up, but I would respectfully suggest that you do a thorough review of your methodology and execution and trade very lightly for a week. Best wishes for better trading this week.


Regards,
 
Talk is cheap and the world is full of advice. Here's mine:

Over-trading is counter-productive. Don't force trades, let them "come to you" No big deal IF you have NO entries all day. (hey, that's the same net effect as giving up trading).

Paper trading is all good and fine BUT is absent emotion. When real money is at stake, you get a better feeling for the moves.

Until you master your craft, I'd suggest adhering to strict position size. Such as 1%/3N . Small size. Loose stop. You won't make much, but you won't lose much AND............you should be refining your form. This in turn should boost your confidence.

Stick to just ONE methodolgy until you've mastered it. Examples would be 1. Buying the breakout of 3 to 5 consecutive down days 2. Buying the breakout of the morning's opening range. I consider that to be 20 minutes after the bell. 3. Breakout of an NR-7 (range expansion).

The best trades work almost right away. IF a trade isn't working after 3 hours, give serious consideration to scratching it. IF you take care of the losses, the gains will take care of themselves.

I personally use the Taylor Trading Technique (from a 55 year old book recommended by Linda Bradford Raschke). The intent is to buy near the low of Day 1 and Sell near the high of Day 2. As such, you only hold positions overnight IF they're showing a profit. Otherwise, scratch them.

Good luck and hang in there.
 
7-5

Gross: -180
Volume: 14000
Net: -260
Win Rate: 35%
Ave Win: 8
Ave Loss: -9

Total Disaster, lost 13X more than what I can afford to. After five days of not going to the gym, four nights of drinking, and staying up late I came in feeling tired. I knew that I can only afford to lose about -20 and still manage to break even all else equal. Such a small margin of error leaves little room for error. Traded AAPL EBAY NEM X MWD - lost huge in AAPL and big in X - made little on the rest.
I tend to cut losses under 10 cents 90% of the time. However that 10% of the time when I don't, the loss just gets too big...then I start averaging down hoping to break even...and the loss just gets bigger until I capitulate at the lows or highs...thats what happened in AAPL (-158) and X (-90) today.
 
As far as strategy, I have none right now - I've abandoned every strategy I've tried. Not that they don't work, its just that I'm not comfortable with any of them.
I've tried:

Moving Averages. I don't like em becuase they are lagging indicators.

Trailing Stops. For example a .5% move from bottem to top is a buy signal and a .5% move from top to bottem is sell signal. Entry/Exit-Reversal signals are the same. I abandoned this because too many whipsaws (and I used a smaller number than .5%).

I'm going to now try:
Scalping. Risk 5 or 10 cents to make 5 or 10 cents and try to go for a 66% win rate.
Breakouts. Trade em when momentum is there and fade em when momentum is not there.
 
Quote from chewbacca:



I'm going to now try:
Scalping. Risk 5 or 10 cents to make 5 or 10 cents and try to go for a 66% win rate.
Breakouts. Trade em when momentum is there and fade em when momentum is not there.
More...

I mean, how do you plan to scalp?
 
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