Jokes aside, what mistakes did this trader make?
- Thread starter nxt7
- Start date
Sorry, noob here. Can you please explain what you mean by fade rules?
Yes. Your video reminded me of the real trades I've tracked by a guy named marketsurfer. Many traders on Elite Trader believe fading marketsurfer's trades or iow taking the exact opposite of his positions is a profitable strategy.
It's an indisputable fact many traders believe this. Marketsurfer's trading record will stick with him forever despite his hand waiving attempts to dismiss open trades which are currently $50,000 in the red, underwater and still accumulating losses.
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1) Didn't use stop/loss protection
2) Forgot to keep track of key economic reports release times
3) Looks like he was in the middle of giving instructions or lessons. Simply, he was so busy talking...he had this delay reaction on the first volatility spike downwards...resulting in him staying in the trade a little longer to get his teeth kicked in on the second volatility spike downwards because he was still in the trade.
In fact, he had about 9 seconds to react (dump the position or put in a stop/loss to minimize further damage) before that second volatility spike hit the price action. That 9 seconds is plenty of time to react (take action) but he instead decided to do what the human brain normally does in situations like that when real money is on the line...it freezes (no action) until there's some calm to allow it to think properly...something you'll learn about in behavior finance because our minds are wired to react like that (no action).
By the way, it takes the human brain 5 - 7 seconds to make a decision and then take action in a sudden event when money is on the line. Therefore, after his initial "fuck" (talking) comments...he really only had 2 - 4 seconds to take action and preferred to talk instead.
Moral of the Story - Pay attention to your trades and if you're going to be distracted because you're talking (explaining something)...put in a stop/loss protection because those key market events volatility spikes feels like like a choke hold by Miesha Tate on Holly Holms but without that stop/loss...there's no tap out for you.
Hopefully he's now learned not to be so distracted while in the middle of a trade.
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Lol... Too funny.
Errors include the following:
1) gambling
2) "let's see what happens". Clearly no defined rules and no understanding of support and resistance. That trade was clearly on a downtrend and was moving sideways to reach just above a MA.
3) He took the trade at 1000 shares trying to catch a falling knife and got his fingers amputated. If he is so upset about the loss of $1500 then he clearly is trading WAAAY above his capital risk tolerance. Everyone needs to define a risk tolerance you can trade with. A good rule of thumb is 1% of capital/trade. If he lost $1500 he should have $150k to trade in capital. He NEVER defined his risk.
4) he never defined his stop loss,... Which translates to #3 above.
5) he never had a defined target to define a reward either.
6) there are others like not setting a defined exit once the target was reached (if ever reached) letting it ride when the first part of the trade went against him (first loss is the best loss)
Errors include the following:
1) gambling
2) "let's see what happens". Clearly no defined rules and no understanding of support and resistance. That trade was clearly on a downtrend and was moving sideways to reach just above a MA.
3) He took the trade at 1000 shares trying to catch a falling knife and got his fingers amputated. If he is so upset about the loss of $1500 then he clearly is trading WAAAY above his capital risk tolerance. Everyone needs to define a risk tolerance you can trade with. A good rule of thumb is 1% of capital/trade. If he lost $1500 he should have $150k to trade in capital. He NEVER defined his risk.
4) he never defined his stop loss,... Which translates to #3 above.
5) he never had a defined target to define a reward either.
6) there are others like not setting a defined exit once the target was reached (if ever reached) letting it ride when the first part of the trade went against him (first loss is the best loss)
It's easy to be nasty and laugh at that guy but I feel for him. I'm guessing most of us, if honest, have been in SOME situation not all that dissimilar at some point.
As eganon indicated, I would say based on that video the guy was too big for one. He just didn't seem that experienced. Also he seemed to want it to move a lot his direction really fast. He was talking like he wanted it to retrace the entire day's move in the next couple of minutes. Based on how that was moving, those 2 up bars were already a decent move for a short timeframe.
It's easy in retrospect for us to be "quick" enough to say the correct time to exit was when it slammed back to support. He was surprised and upset by the move and basically underwent an immediate change in psychology into the realm of "hope." Hoping, for no good reason, that the trade was still good when probably in his gut he knew it was not.
This is difficult but EXCELLENT time to exit a trade. Once he hesitated, though, he didn't really have a chance. I would not be surprised if any stop he had would have been blown past.
In retrospect I can add that the volume bar on the dropout to support dwarfed every other bar on the day, which would be another excellent sign to exit ASAP.
In fact, even if you can't think it through that quickly, simply "something is off here, I don't know what it is but fuck this" is a good enough reason to exit.
Props to him for posting it though. I feel like a lot of these guys posting their massive wins are doing a lot of selective sharing. Takes guts to share the very unflattering ugly side.
As eganon indicated, I would say based on that video the guy was too big for one. He just didn't seem that experienced. Also he seemed to want it to move a lot his direction really fast. He was talking like he wanted it to retrace the entire day's move in the next couple of minutes. Based on how that was moving, those 2 up bars were already a decent move for a short timeframe.
It's easy in retrospect for us to be "quick" enough to say the correct time to exit was when it slammed back to support. He was surprised and upset by the move and basically underwent an immediate change in psychology into the realm of "hope." Hoping, for no good reason, that the trade was still good when probably in his gut he knew it was not.
This is difficult but EXCELLENT time to exit a trade. Once he hesitated, though, he didn't really have a chance. I would not be surprised if any stop he had would have been blown past.
In retrospect I can add that the volume bar on the dropout to support dwarfed every other bar on the day, which would be another excellent sign to exit ASAP.
In fact, even if you can't think it through that quickly, simply "something is off here, I don't know what it is but fuck this" is a good enough reason to exit.
Props to him for posting it though. I feel like a lot of these guys posting their massive wins are doing a lot of selective sharing. Takes guts to share the very unflattering ugly side.
Sad to see a fellow trader fall, some thing I've learned instead of buying at market I some times use orders to execute or below support or resistance.
In his case the trend was down so if the S breaks many trapped traders (longs) would have had to get out.
Thinking in terms of opp's where others could be wrong is another way of putting it.
BUT as wrb put it you have to know what news may be coming out and at what time.
In his case the trend was down so if the S breaks many trapped traders (longs) would have had to get out.
Thinking in terms of opp's where others could be wrong is another way of putting it.
BUT as wrb put it you have to know what news may be coming out and at what time.
Hi guys, i am new and this is my first post.
Currently learning how to trade futures product.
When seeing how that trade went really gave me the goosebumps.
Was wondering how to prevent being trap?
Is it by applying "stop/loss" really can prevent the huge loss from the second fall?
Had made some pictorial for easy understanding.
Please help me to clarify whether the end result will be "A" or "B".
Btw, should we be using "Stop Limit" or "Stop Market" function?
What is their different?
Fyi, currently i am using TT Net and it's default setting as shown.
Am i right to say that "Stop Limit" have a 2 steps function.
It can be set at 5 ticks before the value i bought.
Example A.1:
If i bought at "0.80" and put the "Stop Limit" at "0.76" and when the market suddenly drop to "0.76" it will activate my "Stop Limit" and try to sell at "0.70" or the next candle "high".
Example A.2:
BUT if instead of dropping to "0.76" from "0.80", it drop straight to "0.63", will my "Stop Limit" be cancel off or will it sell at "0.63"?
As for "Stop Market" will be 1 step function.
Example B.1:
If i bought at "0.80" and i put the "Stop Market" at "0.71" and when the market suddenly drop to "0.71" it will activate my "Stop Market" and "Sell" at "0.70".
Example B.2:
BUT instead of dropping to "0.71" from "0.80", it drop straight to "0.63", will my "Stop Market" be cancel off or will it sell at "0.63"?
Sorry for being so confuse but i am pretty confuse at times.
Please help to correct my thoughts.
Thanks~
Currently learning how to trade futures product.
When seeing how that trade went really gave me the goosebumps.
Was wondering how to prevent being trap?
Is it by applying "stop/loss" really can prevent the huge loss from the second fall?
Had made some pictorial for easy understanding.
Please help me to clarify whether the end result will be "A" or "B".
Btw, should we be using "Stop Limit" or "Stop Market" function?
What is their different?
Fyi, currently i am using TT Net and it's default setting as shown.
Am i right to say that "Stop Limit" have a 2 steps function.
It can be set at 5 ticks before the value i bought.
Example A.1:
If i bought at "0.80" and put the "Stop Limit" at "0.76" and when the market suddenly drop to "0.76" it will activate my "Stop Limit" and try to sell at "0.70" or the next candle "high".
Example A.2:
BUT if instead of dropping to "0.76" from "0.80", it drop straight to "0.63", will my "Stop Limit" be cancel off or will it sell at "0.63"?
As for "Stop Market" will be 1 step function.
Example B.1:
If i bought at "0.80" and i put the "Stop Market" at "0.71" and when the market suddenly drop to "0.71" it will activate my "Stop Market" and "Sell" at "0.70".
Example B.2:
BUT instead of dropping to "0.71" from "0.80", it drop straight to "0.63", will my "Stop Market" be cancel off or will it sell at "0.63"?
Sorry for being so confuse but i am pretty confuse at times.
Please help to correct my thoughts.
Thanks~
I think you need more bars on chart like 30 bars min cause can't see support/resistance and need volume as well.
Have you ever used "Google"? Stick in Google "different kinds of orders for trading futures"
http://daytrading.about.com/od/daytradingbasics/a/OrderTypes.htm
Stop Limit is what is worst price you are willing to take, so like Buy .76 stop .80 limit or .72 limit, when price triggers at .76, it can be filled at less than .76 or higher to .80/or other is no higher than .72
These are ok for entries but don't recommend for exits as price can just bounce over you limits and you never get filled unless price comes back to you limits.
If you bought at .80, you want sell 0.71 stop. And it will get filled when another trader has their limit orders lower, but you will get filled. Best to use for protective stops.