Background:
I have traded on and off for four years. This October makes it literally the 4th year. I am a losing trader. Was always in the phase of break even in 3.5 years but this past 0.5 years I made explosive gains followed a significant loss in capital putting me in the red. I have never recovered financially from this loss.
Trading Style:
The way I trade is based on price. My theory is self taught although bits and pieces may have been taken by different information I have taken. I trade naked charts except for price levels, this means no trend lines or volume. I just trade price, the only variable I assumed to be significant. I will step you through my daily process.
I trade only SPY options. Meaning I buy calls/puts.
Premarket:
- I go from Daily -> 1 Hour -> 5m looking for areas of importance. Essentially making a price ladder of certain spots to trade.
- Already in the back of my head because I have been consistently trading I am aware of the phase of the markets. I learned to trade the V of the spy drops. Essentially on the way down and on the way up but intraday(From writing this I can see sometimes I made bad trades now that I look back by trading periods that are not within the V).
Market:
- When market opens price should be between two important levels. If not in the case of a gapup, I fail to understand where to trade.
- Let us assume the market is in the phase of dropping. Signs of this are attempts to go higher failing multiple times. Someone wants out, and this in effect causes others who ware wanted to sell to test the limits of the other sellers. They will essentially wait if price can go higher, if someone is selling at a certain price and I also need to sell, I do not know his size, therefore I wait to see how much he is willing to sell. If he keeps selling and starts dropping the price, which he does not want because it will lose him profits. This shows he knows someone else is willing to sell, or that from my perspective someone else not just the guy is selling. Meaning there are 3 sellers in total. Me, the guy I was testing, and a third. The more people who want to sell the more dramatic the drops will be, essentially leading to a inflection point where selling besets selling. This is the way I trade. I will get in on a range betting on breaking out or breaking down and trying to get the best price to ride the wave. In so getting the best price I also reduce my risk of losses if price breaks against my bet.
But I fail to do so. I do not follow my plan. Reducing risk is well but overtrading leads to losses, and losses lead to more losses for me. Maybe it is the environment, maybe it is that I need to prove myself. I don't know but I always seem to destroy my gains and some more. I increase my size, I hope instead of selling for a small loss.
All these actions seem to point to me wanting to be right. I know to be a trader one has to be willing to accept his losses. I think, I have all my hopes riding on trading. I am still in university and I am not doing well mentally. I trade for my ego not for profits, and I think that is what is killing me. I feel frustrated because in a lot of my trades I make good calls on tops and bottoms and it feels great. I just can't seem to stay disciplined. My environment has changed, I have also changed in doing so. Maybe I just need a break. I started trading 1k in my college apartments, over the past 4 weeks I made $270 on trading on only a size of 1 options contract. Then I made a mistake. I was up $60 on one contract, and I never sold. I watched the gains disappear and I lost and extra $30. This began the journey of me losing my capital throughout the next few days. Eventually leading to me being down 300 from my initial 1k.
I would appreciate any advice. I do want to be a trader and I know it is possible, I have no doubts. But I feel like I have been in this cycle for way to long. Maybe it is my system it might have never had a positive expected value I don't know how to test this. The fact is I know I make mistakes and I can't keep myself from doing so. I try to prevent it, but I am human. I have thought of ways to prevent this. I take breaks after exiting 1 trade. I read my plan before the market open. I always make mistakes.
I just can't seem to grasp onto this dream.
Best,
rarefarefroghorn
P.S. I currently do not trade. I am focusing on school.
