Hey everyone! I just stumbled across this forum. Wish I would've found it earlier. Here's my story so far.
I am quite young, recently graduated college. I began investing a while ago, but began trading around one year ago which hasn't been particularly rosy to date.
I immediately jumped into options trading. I was familiar with the theory from college, but had no practical experience. I had what I believed to be a strategy and the infamous edge by knowing basic theory. I placed all my savings of around 15k dollars into my trading account. Some of it later turned out to be scared money.
I had began reading about technical analysis, did some rough back-testing with simple indicators (RSI, moving averages etc.) and came to the conclusion that this was foolproof; charts never lie. Indeed, chart don't lie, but they can't predict the future. Not once did it cross my mind that: If it really is this easy to make money, why isn't everyone doing it?
I began trading options on the equities and indices with complete disregard for the theory which I believed was my edge. Give me a break, I was young, arrogant, and stupid. We've all been there.
Here is the worst part: my account grew, I was actually making money. Why is this bad? You ask. It led me to believe that I was doing something right. My strategy (which there was none) was working! As money was piling up at a suspicious rate, I laughed at the funds who have consistently returned 20% a year. It should be evident by now who will get the last laugh.
Over time, as with any random walk, I began losing. But I was confident that my strategy was working, so what was my solution? Just double up! Increase bet sizes to make up for the losses. Things turned exponentially more sour. At one point, I had my entire (yes, 100%) account bet on an option. Heres the kicker: It was just a gut feeling. In hindsight, Ive noticed that I entered into trades just to have some market participation. Panic buying and selling was becoming routine, trade sizes were increasing and were regularly in excess of 50% of my account. I was chasing my losses.
As my account hit 3k, I wanted out of the game: I closed my account.
Losing 12k was one of the best things that could have happened to me. Had I kept making money/breaking even I would have kept dreaming of making a living off of day trading. The loss motivated me to throw my job search into top gear, and I have landed a good job which pays far more than I could have realistically earned with my measly 15k account.
I would be lying if I said the 12k hole in my account doesn't still disappoint me to this day, but, at the end of the day it's only money. I have a job, good health, great family and friends; no percentage gain from trading comes close.
I also noticed that a significant portion of my losing trades would have turned out winners, had I only waited a few hours/days/weeks. But with such large bets (percentage wise) I simply couldn't afford or make myself hang on to the temporary losers.
You name a trading mistake, and I will have most likely made it.
As I began writing this, I was unsure of what kind of responses I was actually looking for. I might just have wanted to get my thoughts down on paper, or maybe to share my story with others in a similar situation.
Some day I will definitely trade again, but with strategy and more importantly RISK MANAGEMENT. I repeat: I DO NOT WANT TO TRADE FOR A LIVING. I want to keep a separate account for saving/investing and one for speculation. I would just like some guidance/support.
Does anyone have any similar experiences?
Book recommendations?
Huge percentage/monetary losses?
How did you start out building a strategy?
Thanks for reading!
I am quite young, recently graduated college. I began investing a while ago, but began trading around one year ago which hasn't been particularly rosy to date.
I immediately jumped into options trading. I was familiar with the theory from college, but had no practical experience. I had what I believed to be a strategy and the infamous edge by knowing basic theory. I placed all my savings of around 15k dollars into my trading account. Some of it later turned out to be scared money.
I had began reading about technical analysis, did some rough back-testing with simple indicators (RSI, moving averages etc.) and came to the conclusion that this was foolproof; charts never lie. Indeed, chart don't lie, but they can't predict the future. Not once did it cross my mind that: If it really is this easy to make money, why isn't everyone doing it?
I began trading options on the equities and indices with complete disregard for the theory which I believed was my edge. Give me a break, I was young, arrogant, and stupid. We've all been there.
Here is the worst part: my account grew, I was actually making money. Why is this bad? You ask. It led me to believe that I was doing something right. My strategy (which there was none) was working! As money was piling up at a suspicious rate, I laughed at the funds who have consistently returned 20% a year. It should be evident by now who will get the last laugh.
Over time, as with any random walk, I began losing. But I was confident that my strategy was working, so what was my solution? Just double up! Increase bet sizes to make up for the losses. Things turned exponentially more sour. At one point, I had my entire (yes, 100%) account bet on an option. Heres the kicker: It was just a gut feeling. In hindsight, Ive noticed that I entered into trades just to have some market participation. Panic buying and selling was becoming routine, trade sizes were increasing and were regularly in excess of 50% of my account. I was chasing my losses.
As my account hit 3k, I wanted out of the game: I closed my account.
Losing 12k was one of the best things that could have happened to me. Had I kept making money/breaking even I would have kept dreaming of making a living off of day trading. The loss motivated me to throw my job search into top gear, and I have landed a good job which pays far more than I could have realistically earned with my measly 15k account.
I would be lying if I said the 12k hole in my account doesn't still disappoint me to this day, but, at the end of the day it's only money. I have a job, good health, great family and friends; no percentage gain from trading comes close.
I also noticed that a significant portion of my losing trades would have turned out winners, had I only waited a few hours/days/weeks. But with such large bets (percentage wise) I simply couldn't afford or make myself hang on to the temporary losers.
You name a trading mistake, and I will have most likely made it.
As I began writing this, I was unsure of what kind of responses I was actually looking for. I might just have wanted to get my thoughts down on paper, or maybe to share my story with others in a similar situation.
Some day I will definitely trade again, but with strategy and more importantly RISK MANAGEMENT. I repeat: I DO NOT WANT TO TRADE FOR A LIVING. I want to keep a separate account for saving/investing and one for speculation. I would just like some guidance/support.
Does anyone have any similar experiences?
Book recommendations?
Huge percentage/monetary losses?
How did you start out building a strategy?
Thanks for reading!
