Total Newbie (self taught/punished) Tries to make it big. (No joke!)

Risk/Money Management

First I suggest you read “Trading For a Living” – by Dr. Elder. He has a clearly written chapter on risk management.

Basically, the only certainty in the market is uncertainty. You may make money or you may lose. The goal of risk management is to minimize the potential for loss, and correspondingly maximize the potential for gain.
One of the principals is that you should never risk more that 1-2% of your capital on any one trade. This will help you survive long enough to get good at trading. Another principal is that the potential reward should always be greater than the risk assumed.

It will help if you read that book mentioned above. You can also contact RAMATOUR on ET, he’s worked with thousands of new traders.

Good Luck.
 
Okay everyone will get a kick out of my cluster-fudge today...

I was up quite a bit in the morning ($320 or so) but then I decided to play around with microtrading again.. and now I can officially say that I WILL NOT DO THAT AGAIN!!! Well, not until I actually do some research/learning... too painfull, and I dont have any idea of when my strike/exit price should be, which is obvious by examining the following....

===============================
Daily gains : ($90)
Total gains : $656 ... 2.636%
Open Positions: Long 1600 QQQ @ 30.72
==================================

Buy To Cover 1600 QQQ Limit at 30, GTC Canceled
Buy To Cover 1600 QQQ Limit at 30.60, GTC Canceled
Buy To Cover 1600 QQQ Limit at 30.70, GTC Canceled
Buy To Cover 1600 QQQ Limit at 30.75, GTC Filled 1600 at 30.75 2003-07-03 10:38:09
Buy 1600 QQQ Market Filled 1600 at 30.58 2003-07-03 10:40:15
Sell 1600 QQQ Limit at 30.68, GTC Filled 1600 at 30.68 2003-07-03 10:42:17
Sell Short 1600 QQQ Limit at 30.85, DAY Canceled
Sell Short 1600 QQQ Limit at 30.75, DAY Filled 1600 at 30.75 2003-07-03 10:50:46
Buy To Cover 1600 QQQ Limit at 30.70, GTC Canceled
Buy To Cover 1600 QQQ Limit at 30.80, GTC Filled 1600 at 30.80 2003-07-03 10:54:18
Sell Short 1600 QQQ Limit at 30.80, DAY Canceled
Sell Short 1600 QQQ Limit at 30.78, DAY Filled 1600 at 30.78 2003-07-03 11:10:24
Buy To Cover 1600 QQQ Limit at 30.75, GTC Canceled
Buy To Cover 1600 QQQ Limit at 30.73, GTC Canceled
Buy To Cover 1600 QQQ Limit at 30.76, GTC Canceled
Buy To Cover 1600 QQQ Limit at 30.73, GTC Canceled
Buy To Cover 1600 QQQ Limit at 30.78, GTC Filled 1600 at 30.78 2003-07-03 11:30:04
Sell Short 1600 QQQ Limit at 30.82, DAY Canceled
Sell Short 1600 QQQ Limit at 30.81, DAY Filled 1600 at 30.81 2003-07-03 11:44:57
Buy To Cover 1600 QQQ Limit at 30.78, GTC Canceled
Buy To Cover 1600 QQQ Limit at 30.79, GTC Canceled
Buy To Cover 1600 QQQ Limit at 30.86, GTC Filled 1600 at 30.86 2003-07-03 11:58:18
Sell Short 1600 QQQ Limit at 30.88, DAY Canceled
Buy 1600 QQQ Limit at 30.82, DAY Filled 1600 at 30.82 2003-07-03 12:04:28
Sell 1600 QQQ Limit at 30.84, GTC Canceled
Sell 1600 QQQ Limit at 30.83, GTC Canceled
Sell 1600 QQQ Limit at 30.83, GTC Canceled
Sell 1600 QQQ Limit at 30.81, GTC Canceled
Sell 1600 QQQ Limit at 30.78, GTC Canceled
Sell 1600 QQQ Limit at 30.75, GTC Canceled
Sell 1600 QQQ Limit at 30.74, GTC Filled 1600 at 30.74 2003-07-03 12:32:45
Buy 1600 QQQ Limit at 30.71, DAY Filled 1600 at 30.71 2003-07-03 12:35:08
Sell 1600 QQQ Limit at 30.73, GTC Canceled
Sell 1600 QQQ Limit at 30.72, GTC Canceled
Sell 1600 QQQ Limit at 30.73, GTC Filled 1600 at 30.73 2003-07-03 12:39:02
Buy 1600 QQQ Limit at 30.71, DAY Canceled
Buy 1600 QQQ Limit at 30.72, DAY Filled 1600 at 30.72 2003-07-03 12:45:07
Sell 1600 QQQ Limit at 30.74, GTC Filled 1600 at 30.74 2003-07-03 12:47:12
Buy 1600 QQQ Limit at 30.72, DAY Filled 1600 at 30.72 2003-07-03 12:56:29
Sell 1600 QQQ Limit at 30.76, GTC Canceled
Sell 1600 QQQ Market, ON CLOSE Canceled
Sell 1600 QQQ Limit at 31, GTC Open

=======================================

As you can see I squandered my gains today... time to go back to paper trades.......

LESSONS LEARNED:
1) It seems that FreeTrade is very sluggish on filling Limit orders... I saw a number of buy/sells at my target price come and go before mine got executed... very strange, maybe due to such low volume today?

2) NO MORE MICROTRADING FOR ME!!! at least until I get some guns to back me up... THE INSANITY WILL STOP!

3) I got owned on my last "Micro" trade.. bought at 30.72 then the price tanked in the last 10 minutes... I was going to try to MOC out but then saw how much ownage I'd have to take and decided to just wait it out till monday....

4) Since I'm west-coast, I usually am not up in time for market open.. I really liked what I saw today.. volitility rocks as that's where I made my $320 gains... I'll try to do some intraday swing trading instead of micro... I'll try that out monday assuming I dont loose everything over the 4th :)

Happy USA-kick-britt-ass day!!!
 
Quote from taumeson:


===============================
Daily gains : ($90)
Total gains : $656 ... 2.636%
Open Positions: Long 1600 QQQ @ 30.72
==================================
More...

Sorry Correction... my Daily gains are $90 not ($90)

Tho if I were to sell at MOC I would have been punished by realizing another ($350) or so
 
This thread is awesome, as it actually shows some fumblin', stumblin', rumblin' his way to riches...

I hope to see you actually mature into a successful trader.
 
I won't tell you all the stuff about Money Management, Risk Management, proper broker with proper execution or learneing the hell whats going on around you ..... but at least wake up before the market opens and see the price at the open (especially when you have open positions overnight) .... Stop The Insanity!!!
 
Quote from TMTrader:

I won't tell you all the stuff about Money Management, Risk Management, proper broker with proper execution or learneing the hell whats going on around you ..... but at least wake up before the market opens and see the price at the open (especially when you have open positions overnight) .... Stop The Insanity!!!
More...

Yeah.. I actually did do that Thurs (07/03).. woke up at open of pre-market to make sure I wasnt going to loose my shirt... though I sold too late.. only made about $.10/share when i could have made $.25/share.. easy come easy go for me... till i get some guns with my butter. :p

Btw, what do you think I should do... if I were to have an overnight position then I end up getting smoked?

Take for instance my current (Long QQQ @ 30.72) ... I think if the market tanks come monday I'm still just going to hold onto it until QQQ gets back up to the 30.70 range... otherwise I'll be selling as soon as it hits 31 again.

Well, you dont have to answer, as I dont know how much a great answer is actually going to help someone of my novicity (is that a word?) just currious :) :)
 
Quote from taumeson:

Take for instance my current (Long QQQ @ 30.72) ... I think if the market tanks come monday I'm still just going to hold onto it until QQQ gets back up to the 30.70 range... otherwise I'll be selling as soon as it hits 31 again.
More...
What happens if it takes two months to get back to that range? Or longer? You should sell it if the market goes down. You can always buy it again on the way up when it comes back.
 
Quote from greenleaf:


What happens if it takes two months to get back to that range? Or longer? You should sell it if the market goes down. You can always buy it again on the way up when it comes back.
More...

True... i need to make sure I eat my losses, just doing so at the right time.

Since my travel plans over this holiday were canceled I think I'll pick up a 'good book' on this subject and... GET M'SELF LURNED AN EDUCATIN!
 
if i have learned anything by this thread, it is to keep swing trading as i did and still do.

i often thought about daytrading and sometimes did. but even as a 'daytrading-newbie' in past i have never had such horrible trading days i found listed here in this thread.

so i feel confirmed:

looking for potential setups, entry them and take care for a good money-management ( which is what i call the real holy grail) .
and this includes also taking care of position size.

and i follow the known rule: keep it simple...

anyway..best luck to taumeson...you will find your way


lippi
 
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