Letting losses ride and living in denial

If you have trouble instilling the discipline needed to keep small losses from turning into much larger losses, try doing this:

1) Start keeping a trade log.
2) Compile your trade stats, including the large loss you speak of. That loss will pull down your win/loss ratio and dramatically lower your expectancy--probably putting it below zero.
3) Do the same stats but without the large loss.
4) Feed each set of stats into a Monte Carlo simulation to see how you might continue to do with the large loss and without the large loss.
5) Observe how you are virtually guaranteed to wipe out your account if you take even one such large loss (your historical expectancy is probably below zero).

It worked for me. I'd occasionally violate my own stop losses, picking them up and moving them, etc.

After seeing how much of setback one large loss really is (from a mathematical point of view--humans are far more optimistic than the truth that the numbers reveal), you'll never have trouble minding your stops again.
 
Letting losses ride and living in denial? Ha ha haaa. I love it. Don't post it's just for fun...that bit was missed out. I'm a real sucker for these type of threads. My tip, and this advice will save you wads of wonga,...stop trading.
 
could be worse....


you could be this guy.............




http://allafrica.com/stories/200605240536.html

"A BUSINESSMAN lost $1,2 billion cash in a fire that gutted a room he had booked at Ngundu Rocky Motel, 100km south of Masvingo along the Masvingo-Beitbridge Highway at the weekend.

An electric fault is believed to have caused the fire that destroyed two rooms and property worth billions of dollars. Electricity had been intermittently switching on and off for the entire day and crackling sounds could be heard from the electricity meter box, each time the intermittent outages occurred. Workers at the motel owned by Bulawayo businessman Mr Jonathan Gapare also said that at times sparks could be seen whenever the lights were switched on. Willias Shumba, the owner of Yatko Investments, an indigenous company based in Chiredzi, escaped the blaze after he had left the room to have some food and booze when the fire started. "I have been using this lodge on my business trips for three years now, but for all this time I had never been allocated room 2. The loss of my money is a very bitter pill to swallow as it was payment for my house, which I had sold in Chiredzi. "We met at this motel with the buyer who was coming from Beitbridge because it was a central locati on for both of us. In the afternoon he came and handed me $1,2 billion in cash and we were meant to meet again to finalise the transfer of ownership during the week. "I then left the cash on the bed and went out to get some food and beer as there was nothing to eat at the lodge because there was no electricity. "I guess that is why I am still alive to talk to you now. On my return there were still no lights so I carried on drinking in my car and I fell asleep," said Mr Shumba, as he related the ordeal. The manager of the motel, who refused to divulge her name, cried loudly during the fire as she thought that Mr Shumba had been trapped in the room.

She heaved a sigh of relief when a shocked Mr Shumba dashed out of his car and headed for the blazing room screaming, "Mune mari yakawanda mumba umo" (There is a lot of money in that room). Later Mr Shumba narrated how he got to know about the fire. "I was surprised when this lady yanked the door of my car open and said thank God y ou are still alive because my room was in flames. Then it slowly dawned upon me as my drunken stupor cleared that all my money was in that room. I bolted out of my car and made straight for the fire," added the dejected businessman.
"
 
"The loss of my money is a very bitter pill to swallow as it was payment for my house, which I had sold in Chiredzi. "

Whoa.. 1.2Bln?? USD?... what the hell kind of house did he sell?

Sucks to be that guy. I feel *slightly* better now. :P
 
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