Lost half this year's profits bottomfishing... lessons learned

[KCalhoun]

How are your stops executed?

Trading small positions like you do does it make sense to scale out?

Trading any size position why scale out? isn't the stop set where you are wrong and if you are wrong, why prolong the pain?

I use sell stop limit orders.

Yes re scaling any size because often there's midday or end of day reversals like today's eod runs up in inverses SDOW TZA etc.

It's more work, true, but it's one of my edges, alot of tiny trades, tight stops and re-entries with scaling. It's my biggest lesson learned in 21 years.

Back in 1999 I'd do just several 300 share trades at a time, with expensive stops. Now I give myself more chances to profit using tiny stops. My best recent day I was up 2k. Starting small then scaling

 

[themickey]

.....My best recent day I was up 2k.....

LMAO

 

[1957may10]

Rebought inverses small size during the run up into today's close SDOW SPXS SOXS TVIX etc,

Lesson learned from experience is "start small, then scale in", so I just bought 10 - 30 shares each, a few thousand dollars worth.

I have the same approach buying 25 shares step by step, see the bottom and buy more till it gets more juice. Buying when it gets down .5 -1%% iteration. Worked all these years, if mistaken (news and other crap) I’m catching way back. But you have choose swinging stocks, not etf because less momentum. F.e. GOLD barrick mining co., btw great company but stuck
with gold. Sometimes I am very conservative and missing big fish.

 

[hafez50]

Although it must be said overall scaling in winners much much harder on the short side than the long side as short trends are probably 1/3 the time frame of long trends .

 

[deaddog]

I use sell stop limit orders.

Yes re scaling any size because often there's midday or end of day reversals like today's eod runs up in inverses SDOW TZA etc.

It's more work, true, but it's one of my edges, alot of tiny trades, tight stops and re-entries with scaling. It's my biggest lesson learned in 21 years.

Back in 1999 I'd do just several 300 share trades at a time, with expensive stops. Now I give myself more chances to profit using tiny stops. My best recent day I was up 2k. Starting small then scaling

I can see the advantage of scaling in. I do that myself. I can also see scaling out at a profit although I don't do that. Scaling out at a loss is something I have trouble wrapping my head around.

Today I took a small position in SPXS after 10 am when it started to show some strength. I would have scaled in if it had of moved in my direction. Placed my stop at $10.30 that was eventually hit. I was wrong. lost less than .25% of my trading capital. I took the loss as planned and we'll see what tomorrow brings.

 

[Overnight]

...I was wrong. lost less than .25% of my trading capital. I took the loss as planned and we'll see what tomorrow brings.

That is awesome to read. Keep on keeping on.

 

[systematictrader]

I make both winning trades and stops regularly, here's lessons learned from recent stops.

Situation: back during the market selloff I was up $9000 net profit, successfully swing trading small size (20 - 100 shares at a time) inverse ETFs like SQQQ TVIX UVXY .

I then lost several thousand trying to bottomfish them this last month. Although I'm still profitable on the year, I could've done much better if I wasn't stubborn. I own my fckups.

Lessons learned:

I should've done ETF arb swing trading, like VXX/SVXY TZA/TNA and not been a stubborn permabear

Price action is all that matters, despite pandemic and unemployment and earnings misses and common sense saying market should've kept selling

Don't fight the fed

Buy what goes up at 2day highs, sell what goes down.

Don't overtrade, especially due to fomo

Sound familiar?


... I did correctly manage risk, trading small with conservative stops, but still added up.

.... I'm still bearish and am scaling back into SQQQ VXX SPXS SOXS SDOW TVIX etc, just more cautiously

Swing trading is how many days average you hold your position?

 

[systematictrader]

I spent ten years of my career trading at a couple really top tier Chicago proprietary trading firms. Stupid size. Mostly flat at the end of the day - but I sometimes traded around a biased core position because I had earned the right. I was David Ellis' biggest MF spread trader EVAH.

I always found that I was best on my game when I reacted to the market. Let me explain what I mean by that.

Scenario 1: The market is selling off, I think that the market has sold off enough and I load up on the buy side, and I sit with it taking the pain. I stopped doing this very early in my career.

Scenario 2: The market is selling off, the downward momentum stops, the market trades up two tics - and I step out and take the entire offer. In this scenario, I am reacting to the market. If the market reverses again and makes fresh lows I am going to quickly reach well into the bid side of the order book to puke.

In Scenario 1, I am telling the market what I think it should do. In Scenario 2, I am letting the market tell me what it wants to do.

I had a personal rule that I would never give away more than a Week. On two occasions in my career I gave away a Month - circumstances pretty much beyond my control in terms of liquidity gaps. If you've got on two thousand cars and there's a scared super thin market there's not much you can do.

I think what helped me was the earner/grinder mentality. I was married with three kids, the house on the North Shore, mortgage, cars, private schools, the whole enchilada. I supported the family with my trading. So I had to grind out income. After splitting it with David Ellis and getting taxed on a W-2.

The best analogy to this "react to the market" statement I can make is like an ambush predator. Think Nile Crocodile on the banks of a river. Very successful species - been around for hundreds of millions of years. Expends minimal energy for massive meals.

How would you define the “react”
Time frame wise

market dropping as
Defined by how many days, percentage ? Etc etc

at what point do you conclude your reacting? Or perhaps what the measure ? Or does it not matter ? In the sense that everyone measure is different based on their style ? And their own time frame ?

 

[systematictrader]

Agree.
Even though we know we’re wrong.
But we’re not able to make the rational decision.
And now the loss is too big to fail so it’s too late to close it.

Personally.
If I am short and the trend turn upwards then I am out.

When would you say if the trend is out? Days ? Percent move ?

 

[systematictrader]

Thank you KCalhoun for being open about your losses...today 30th of April is National Honesty Day after all.

i thought its aprils fools??
Oh wait thats apr 1st isnt it ?