Need to eliminate the big losses

[legionx]

Without reading all the posts, I am thinking you do not have a set ratio when it comes to PnL.

For instance a 4:1 ratio etc. If you are trigger happy like me and revenge trading like me, just

try one trade per day and see if that works. Also trading in probabilities are top notch, read

that book of "Trading in the zone" if you have not yet. Good Luck.

Remember if you are a 4:1 ratio like myself, you only need to win twice for the

week provided that your stop and PT are the same every time. .

 

[SteveM]

Thanks everyone for the feedback - you all make important points. Right now, I am not going to switch timeframes when trading, but rather just focus on the discipline aspect of trading and the problems that has caused me. I will re-evaluate my entire plan at some point a few months down the road if I find that my problems with profitability go beyond discipline/money management, etc.

To that end, I have come up with some rules to follow. I am going to judge myself going forward based on how closely I adhere to the following:

1) Enter and honor stops on every trade.
2) Lose no more than $175 on a single trade.
3) Stop trading completely and come back tomorrow if I lose $350 during the day.
4) No social media/FinTwit during market hours - complete focus on markets.
5) No impulse/revenge trading.
5) End the day flat - no carrying day trades overnight.
6) Keep detailed trading journal every day.

 

[Quiet1]

Self-commandments like this are a way of ensuring you enter into a cycle of self-loathing. Like dieting, or abstaining from alcohol and falling off the wagon.

Just accept the emotional sting of losing - it's fine it hurts, embrace the hurt! Allow yourself enough time to get back to an even keel and then continue as before.

 

[Quiet1]

In other words, accept you are going to f*ck it up again. It will happen. When you see it happening, really embrace that pain and cut your loss. Over time with luck you will catch yourself earlier and earlier in the process.

Own your emotions. Don't fight them.

 

[SteveM]

Day 1:

-$225

1) Enter and honor stops on every trade? YES
2) Lose no more than $175 on a single trade Enter and honor stops on every trade? YES
3) Stop trading completely and come back tomorrow if I lose $350 during the day? YES
4) No social media/FinTwit during market hours - complete focus on markets? YES
5) No impulse/revenge trading? YES
5) End the day flat - no carrying day trades overnight? YES
6) Keep detailed trading journal every day? YES

Score: 6/6

-----------------------------

Traded the DAX this morning during the European session. Took a long position looking for a bull reversal, but got stopped out. This was a bit frustrating, because after getting stopped out, the price was back to my entry level within 20 minutes. And these are the psychological pitfalls that have always gotten me in the past ("see, if you just traded without a stop everything would have worked out just fine, as the price came right back to your entry level.") But of course, it is that exact type of thinking that keeps me without a stop right before price decides to spend the rest of the day moving 150 points against me. With the benefit of hindsight, I was a bit eager on this long entry. I should have waited for a 2nd leg down.

Later in the day, I took a short looking for a test of the LoD and a gap closure to the Friday breakout point. Should have shorted below the bar 3 bars earlier, instead of the actual breakout bar I shorted. So in this sense I was late. Also, my premise for the trade appears wrong in retrospect. I was expecting the gap down to 248 to close, but we already tested down and bounced off of 250 (so in a sense, the gap was already closed).

The losing always stinks - especially when you lose on the long side, only to follow it up by losing on the short side - but I stuck to my new rules, which meant I was "in control" all day today, despite the losses. This is what I most concerned with going forward.

 

[Turveyd]

The issue of take a loss then watching it come back to profit after, or exiting flipping sides then that loses aswell really is a mind killer isnt it

Then the time when you wait for it to come back and tramples you for huge losses.

US closed, even Dax is lifeless

 

[tomorton]

Thanks everyone for the feedback - you all make important points. Right now, I am not going to switch timeframes when trading, but rather just focus on the discipline aspect of trading and the problems that has caused me. I will re-evaluate my entire plan at some point a few months down the road if I find that my problems with profitability go beyond discipline/money management, etc.

To that end, I have come up with some rules to follow. I am going to judge myself going forward based on how closely I adhere to the following:

1) Enter and honor stops on every trade.
2) Lose no more than $175 on a single trade.
3) Stop trading completely and come back tomorrow if I lose $350 during the day.
4) No social media/FinTwit during market hours - complete focus on markets.
5) No impulse/revenge trading.
5) End the day flat - no carrying day trades overnight.
6) Keep detailed trading journal every day.

Well done Steve, discipline will save you.

I broadly agree with your points but would lie awake at night with No.3. Let's suppose you follow a single objective entry rule within your strategy, and this has a 70% success rate. If you get emotional or bend the rules that will of course alter the success rate but let's assume you never do that anymore. So the losses are statistically unavoidable: you guaranteed you would get 3 losers out of every 10 trades when you adopted the strategy. The only way to alter the 70% figure is to reduce your sample size. Ceasing trading for the day is a way to do this and might lead you to fall down a mine-shaft.

 

[jeffalvinson]

Lost -$3700 on Friday trying to short the DAX and then the /ES.

But the truth of the matter is, I still don't have the right psychological framework to do this consistently. Yes, I make money on most trades, but even these occasional impulse/revenge/over-sized trades just kill my results....I do the right thing for 2-3 weeks, and boom, 1 bad decision takes all those profits away.

It took me 9 years to be consistently profitable. I am now in year 21.
In those first 9 years, I went through every single thing you wrote in your post.

It sounds like you have the same problems that I had, discipline and psychology.
Here's what I figured out to overcome the battle within:
Step 1: Before you enter any trade, you must know
(A) a favorable "Buy Limit."
(B) a "Sell Limit" (Profit)
(C) and the "Stop,"


Step 2: You Profit to Stop Ratio should be no less than R/R: 1.0 (profit) / 1.0 (loss).
(A) "But," to have a R/R of 1/1, you personal W/L ratio must be a minimum of 65%.
(B) If your W/L is less than 65%, then your Profit to Stop Ratio must increase
to R/R: 1.5 (profit) / 1.00 (stop), or even R/R: 2 (profit) / 1 (Stop).
"Whatever Ratio creates a decent profit with your personal long term W/L ratio."

Step 3: Now here's the last but Most Important item:
(A) "From the second the trade is entered, you most eliminate yourself from the trade."
(Your worst enemy is yourself.")
(B) At this point in your trading life, you don't have the proper psychology and discipline to sit there and watch these trades! You need to eliminate yourself from the trade.
Here is how:
(C) If your followed Step 1 & 2 above, then on your next trade you already know your
Buy Limit, Sell Limit, & Stop.
(D) Before the market opens, setup a semi-automated Bracket Order. A Bracket order has
all 3 components of a trade (Buy Limit, Sell Limit, & Stop) combined into a single semi-automated execution.
You type in your Buy Limit, Sell Limit, & Stop, click "Transmit" and walk away.
Everything is done for you.
Don't watch the trade! Turn off the trade station and go do something else.

 

[oraclewizard77]

You could do this in 2 ways.

1) Have 2 contracts, 1 goes to 1st target, then let a 2nd go to a farther target.

2) If you believe in the trade, have a bigger profit target than your stop.

when you figure out how to only have big winners and no big losers, you let me know.

i can wait

 

[SteveM]

Day 2:

-$110

1) Enter and honor stops on every trade? YES
2) Lose no more than $175 on a single trade? YES
3) Stop trading completely and come back tomorrow if I lose $350 during the day? YES
4) No social media/FinTwit during market hours - complete focus on markets? NO
5) No impulse/revenge trading? KINDA
5) End the day flat - no carrying day trades overnight? YES
6) Keep detailed trading journal every day? YES

Score: 4.5/6

-----------------------------

Bit frustrating today. Traded the DAX this morning during the European session, and boy what a wild opening it was.

Each one of those swings up and down on the open were at least 50 points tall. Four 50 point swings in the first two hours in the DAX is highly unusual. Fortunately, I caught one of the swings, and actually made 2X my risk which was great. Unfortunately, later in the day I gave the profits from my successful trade back through 2 poorly managed trades.

On trade 2 of the day, I entered, then exited when price ran back against me and took a small loss. Then one price reversed by in the direction I initially was expecting it to, I got back into the trade. This 3rd trade would have worked out fine if I held for a 1X measured move, but instead I held for 2X and wound up getting stopped out at 11262.

What I did well today:

Honored stops, did not lose more than my rules say I am allowed to lose. Caught 1 good trade in the morning.

What I did poorly today:

Over-managed 2nd trade. Should have just entered all orders and walked away from screen until target or stop was reached. Also, target should have been for 1X not 2X since the market was selling off and I was attempting to fade - I've found 1X targets are more achievable than 2X when attempting to fade anything.

Not the outcome I want, but happy that I am honoring my word and sticking to my stop-loss guideline.