Recovering from a bad trade

B

birddog

I just dropped $3,000 on a bad trade - should have cut my loss sooner.

Just gave back two weeks of profits and am back to the same equity as last monday - talk about frustrating (or dissapointment at not taking the loss right away).

The urge to make the money back was incredible so I just turned off my computer and took the rest of the day off.

I am going to go back to making it in increments of $500 per day - got to build confidence back.

For the new traders out there - this is what not to do:

Get into a trade on the open and then watch the open reverse and find yourself down 1k in 1 minute.

Freeze say oh sh*t and then buy some more, watch it go down so your loss is now 3k.

Finally wake up and get the hell out of the trade.

Spend two days stewing over the trade and how you can be so stupid.

But on a better note, I am out of the trade and feel better - and will make it back in around 2 weeks. I must be getting better because two years ago I would have bought more, held it overnight and then blown out the account.

Interested in hearing how profitable traders recover from a bad trade. Confidence is important in this game and having steady winners day after day makes you feel confident. Having a big loser makes you feel scared and hesitant. That is why it is good to "start fresh" with a new trade on another day and go back to making $500 a day.

Interesting, on another thread someone spoke about making 1% a day which sounded reasonable and was around where I am at usually. It helps though if you don't then drop 3% on one trade since that will knock out a lot of previous winners.
 
I've lost money before on bad investments. I will say this much about it -- when you lose a good chunk of your money, your brain is really good at adapting to the conditions so you never make that mistake again.

Fool me once, shame on you.

Fool me twice, shame on me.

3 months from now, you'll be back on top of things. You might even have a stellar week next week, who knows.

Just don't take the loss personally. You are still the stock market pro -- you just got bitch slapped pretty bad by the market this week. Take it in stride and don't let it ever bitch slap you like that again as long as you can help it.

Make sure you write it down somewhere and detail what happened. Go to Office Depot and buy a little journal and title it, "Shit that I will never ever do again while trading," and make your first entry in it.

Again, you are the stock market masta' -- you just bought a good learning experience that might save you 30k instead of 3k next time.

Keep your head up and don't go back into trading with a "revenge" attitude. Just try and flow with the market and follow your system and keep your emotions out of it.

A loss says nothing about your abilities to trade -- a loss like that is just an expensive crash course that the market gives the best traders from time to time.

Remember -- you are the stock market masta -- now go in next week with your head up and be cool and focus. Maybe you might want to avoid the morning session for a week, since that's what bit you hard on the ass.

You will do fine and you'll make up that money in no time flat.
 
year or two ago, i was waiting to go long on MYGN above 52.14 and ride it to 60 or so. i used to trade MYGN and HGSI kinda in tandem. MYGN comes up right to about 52.14 and dips - so i think, why not short it next time and flip long if it breaks out! so i did short it on the next test of Resistance and it went down again. so im short 2,000 shares and things settle down. i had been really dialed-in and was taking alot of money out of the market. i was so friggin' cocky :cool: !!!!!!! so, i decide to take a quick shower (just quick - like in the drive-through) - didn't even put in a buy-cover stop (and at that time i always placed physical stops right after entering a position) or just cover the position and take a small profit. i come out of the shower and im down like 2 pts/$4 grand. shocking! :mad: okey, now im upside-down; short when i wanted to be long and my original strategy is working - its going up and i wanted to be long - but im down $$$$, im short and MYGN looks like a stud rocketship!

i should have bailed on the next retrace, covered and flipped long with a stop below 52 or so(remember i really wanted to be long anyway). but, i wanted "my" money ... so i hung on all day - so friggin pissed at myself and watching it eat up 2 "G's" a point - i couldn't trade anything else or do anything - except watch in a rage as MYGN climbed northward. LOL! :D i was too stupid to even cut my position in 1/2 at the end of the day. next day - you guessed it - MYGN up again. i finally bailed like $57 or $58: down like $10k or $12K when i shoulda been up by the same amount. a $20K to $25K difference.

what did i learn: friggin' trade dirty!!!!!

i also learned that managing a crappy position is alot worse than taking a loss. the market is not going to close permanently after i take my loss - the market will be there tomorrow. i have learned that losing is part of winning. i still have difficulty flipping when i get out and reversing course, when i realize i am wrong. i also realize that i can be wrong 10x as much if i am right and STILL make money.

and i don't put myself in a position to take $20K showers/hosings! i stop the bleeding.
 
I am committed to not doing that again

and grinding out a nice living ...

this week I made back 70 % of my losses from prior 2 weeks

I sure feel better this week

Its just so tiring to trade round the clock

I do take breaks ...

:)
 
"Recovering from a bad trade
I just dropped $3,000 on a bad trade - should have cut my loss sooner.

Just gave back two weeks of profits and am back to the same equity as last monday - talk about frustrating (or dissapointment at not taking the loss right away).

The urge to make the money back was incredible so I just turned off my computer and took the rest of the day off.

I am going to go back to making it in increments of $500 per day - got to build confidence back. "

if you get into a situation that a bad trade shatters your confidence i think the best thing to do is reduce size until you get comfortable again.
 
Thanks for all the input,

You know I was reading somewhere about "phantom of the pits" and how one of his rules was to increase size only on a winner. I am going to try initiate the trade a little smaller and get bigger as it moves profitable.

That way i'll be out for a penny or two on small size up for 10-20 cents on size.
 
Originally posted by birddog
Thanks for all the input,

You know I was reading somewhere about "phantom of the pits" and how one of his rules was to increase size only on a winner. I am going to try initiate the trade a little smaller and get bigger as it moves profitable.

That way i'll be out for a penny or two on small size up for 10-20 cents on size.
More...

IMO, doing that is just as bad as trying to average down unless you are going into the addition as a separate and distinct trade.

Just simply adding on to a winner because it is a winner will probably start eating into those winners bigtime. When you add-on, the market only needs to pullback 1/2 way to your original entry and you will be at break-even. That's a hard thing to handle mentally as you watch it happen. Next thing you know, you be back to your original entry point - and instead of having your profit or at least breaking even - you are now down.
 
man, i love hearing "i held a loser" stories...un-freakin-believable what some people will do...

birddog, here's your lesson - DON'T DO IT AGAIN. doesn't get any simpler than that.. (two weeks? TWO WEEKS OF PROFITS??? on one trade??...what in the fuck where you thinking???? answer: you weren't!)

vhehn, you still haven't worked out the "Quote" button in the bottom right corner yet???????????

Quah, i wouldn't be so quick to dismiss adding to winners if i were you...it may be "hard" mentally...doesn't mean it's wrong..
 
scale in and fade out - incremental increases to a winning position do not have to be the same as the original stake. scale in additions at 1/3rds or 1/4ths or whatever depending upon the set-up. also, stop losses on additions may be tighter than a trailing stop on the original entry. scaling into a winner, particularly on a LT position trade is an excellent strategy.

also, for lazy guys like me, if i have one winner and company/stock i know, i don't have to scrounge around for others! :p
 
You must log in or register to reply here.
Back
Top