Firewalker,
like abogdan says we've all been there. It's a horrible feeling, and the only thing to make you feel better is having some good days again. Then there's the issue of long term losses which will offset your possibilities to regain your losses. Stopping doesn't really help, especially if you then review the day and see all the great chances you didn't participate in. But when you've had that 'everything sucks' feeling for a prolonged time, you are sometimes glad you didn't try to enter in any more trades still, because you feel you'd probably just lose more anyway.
I found that I had to change my strategies to turn this streak of 'bad luck'. I was getting desperate as losses accumulated, and making it a lot harder to come on top again. Heavy gearing and heavy volume with frequent trades all over the place, made for a happy brokerage with a lot of fees earned for them.
Then I remembered the early days, when I could do 20+ points on the ES 3 days in a row. It was totally crazy trading, because it was simulated, but realtime. When I started out live trading, I was much more careful and got paralyzed by fear and anxiety when some of the heavier losses manifested themselves.
I really longed for those golden days (on paper, mind you) and also the early live trading days with moderate to good gains (5-10 pts on the ES). I realized I had to change how I was trading, because I was getting to get too involved into all of the technical indicators, and lost my gut feeling around all the doubts that was churning my brains. What I needed was confirmation that I was doing the right thing, so that I could be more calm, and do take some action when a trade was going sour.
I am mainly doing tape-reading, and therefore the old 'instincts' are very important that they are relaxed, and that I don't lose my concentration. Also becuase I do a lot of trades some days, I need to react in split seconds (normal reaction time is around +1 second, because your brain might take a decision, but there is some 'transportation time' to reach your fingers).
I also used to work developing software, and therefore I used my skills to make filters to help me focus on the important information like block trades etc. All this to give me confirmation, and stop me from chickening out, when I'm really right, and not fall into the desperate situation of wanting a new trade immediately to 'make things right' when I should stay away for a little.
I love to trade so much, that I always want to have that feeling of being in a trade, and that is something I still have to try to control. However, with the help of the correct confirmation indicators, and less of all the technical indicators, I am now focusing on what was working for me earlier and what works for me again. Some days will still 'suck', but in general I can stop incurring heavy losses by using some common sense mentioned elsewhere here on the forum; like: "when in doubt - reduce your position - increase it when you get real confirmation."
Also, for the ES, I use the real indices like SPX, BKX, SOX, COMP, INDU, NQ, YM, E7, YN, YG, YH (as well as stochastics %K(21), %D(14), ADX, -DI, +DI) to confirm that the direction I am taking is the correct one. I also only took positions 3 times - the rest were done at limits of the moment - and 2 on market price. I also have several counter-trades lined up on every trade, to take me out of a wrong direction or to stop at some point if I get too concerned. Knowing that I have these measures ready and prepared gives me more confidence that I'll be able to prevent losses.
Remember, stocks and indices are really hard to predict, and noone knows what prices/levels will be in some weeks time. Also, frequently all the analysts are wrong, what matter is what happens on the battlefield - you gotta go with the flow. If you are betting 'against all the others', you gotta have some pretty good nerves and reconfirmation all the time. Anyway, if the market is going in the opposite direction, that is a sign that you are not going with the flow. Are you using 1-min charts, then take a look at the 5-min charts - as an example. Get confirmation all the time.
Are you in doubt which direction the market will take after stopping out on a bad trade - just wait. Sometimes the market needs to find confirmation itself for what direction 'everyone else wants'. It normally unwinds after a little time when things look over-complicated. It almost always plays out into something familiar. During transition periods when the market is stalling - look for indicators, additional news and whatever can keep you afoot of the pack with regards to confirmation.
Use stop-limits - but don't set them so tight that any joker can take them out. Set it well over/under the last swing high/low, but also such that you can have some time to assess if the counter move is fake or not. Always assess the action in the opposite direction - don't block out the traffic in the other lanes mentally ... ;-)
Sometimes a big player will upset the market - if everyone else doesn't follow up - see it as an opportunity if you're not already in a trade. But always assess the damage - e.g. was the trading range moved ? Are we changing type of trading from range into trending ? Are there more nervousness ? What are other indices, or sector indicators levels - and are they gaining or losing on the moves related to your equity instrument ?
Today I moved from ES04H (March) to ES04M (June) and here is how I did, using these exact rules of thumb for myself:
[PRE]
+6.00 s 1116.75 - 1110.75
-0.75 s 1110.75 - 1108.50
+0.50 l 1108.50 - 1109.00
+1.50 s 1108.75 - 1107.25
+0.50 s 1106.75 - 1106.25
+3.75 l 1106.25 - 1110.00 *
+4.50 s 1109.75 - 1105.50
+1.50 l 1105.25 - 1106.75
-1.50 s 1107.00 - 1108.50
+1.50 s 1106.75 - 1105.25
+1.50 s 1103.75 - 1102.25
---------------------------------
= 19 pts w/max gearing all the way - i.e adding to the position continually during the trade when my account allows for adding short/long - makes for great profits when I have confirmation
=========
(* here I missed out on 3 swings because I was busy doing other things - but not overly worried - and checking the development every few minutes)
I started trading 3 AM ET, and still have a short positions 18:30 PM ET.
[/PRE]
Finally, one of the most important things is having e.g. Bloomberg TV on, giving you trader confirmation and some sentiment information. The predictions on the shows are not better than anywhere else, but you get continous confirmation. And do read up on information and news ahead of the trading, if there are pre-market trades - then watch these to get a good feel before you start trading live. You can always add to your position if you can't commit wholly because you are worried. It's better with no losses, than no profits - so you can definitely afford to sit out on some trades.
Hope this helps some.
