Traders: What Not to Do

[ironchef]

I am keeping my powder dry to either short S&P or go long bonds in 2018. S&P is very overvalued now, but with volatility so low, I expect even higher prices by early 2018. However by summer or fall 2018, I think we will get a big equity correction and that should crush bond yields lower. A Trump appointed Fed chair will be quick to be dovish. Also, sustainable secular global GDP growth is weaker than what most traders and economists think. Without QE and asset price inflation, the global economy can get ugly quickly.

Thanks.

 

[Spectre2007]

Just trade the periphery of ATR's with long term moving averages affirming the direction. Buy low (low end of ATR) and sell high (high end of ATR).

1) takes out subjective impressions of macro adjustments.
2) uses statistics of dispersion around the mean band of trading.
3) keeps your entries in the direction of the long term trend.

Volatility fans are expanding ATR's or dispersion around the mean. This is what kills most. Its the blowhorn pattern. Where ranges keep expanding on the weekly charts, both top ATR and bottom ATR stops taken out. If you can wait for most to be taken out and take the otherside of their exits or counter party to their exits. It creates a good entry.

Gold is doing just that, killing both sides who are trying to play a breakout on longer term timeframe.

 

[Grantx]

There is a good long term opportunity developing, but it will only come to fruition once the price action and higher volatility confirms the topping phase of this US equity bull market

Thanks for sharing your thoughts. So many good points to talk about but Ill go with the quote above for now.
I think it would be a damn fine trait to learn to sit patiently and wait for the market story to unfold and reveal itself. Patience and a practiced technical approach that you are comfortable and confident with goes a long way to becoming a disciplined trader. How?

1. One needs to first train their mind to see fractal sequences (certain patterns and the various probable combinations of those patterns).
2. One needs to be completely removed from the trading environment and work on calming the mind down. You cannot practice patience looking at charts

 

[MarketOwl]

Humans didn't evolve to take losses lightly or accept defeat. Trading is humbling, and all it takes is one mistake at the wrong time and it's game over.

Survival is half the battle in this game. If you can survive long enough to learn, then you can refine your skills to develop a profitable trading strategy. You cannot be a deer in the headlights when suddenly facing a big loss. Those are the moments that determine whether you keep playing or are carried out on your shield.

There have been hairy moments where I used too much leverage and my position got larger as I was losing (the risky aspect of shorting small cap pump and dump stocks), and I had to reduce most of the position at horrible prices and accept a 70% loss or risk losing 100% and be completely finished. I took the 70% loss to be able to fight another day, even though I knew the pump and dump stock would probably go back down within days, or even a few hours. I don't do that anymore because I've moved on to other markets. I've changed my focus to bigger markets where I can scale up, and put on size without having any problems with liquidity. Lower edge, but more scaleble.

 

[misterkel]

Nice post.
I would add - Not understanding proper risk management and position sizing.

 

[GotherL]

It wasn't because I didn't have an understanding of the market or good pattern recognition skills. I was just constantly betting too big. And although that led to rapid growth in account size during the good times, I would inevitability trade a stock that would act like an outlier and end up losing anywhere from 50% to 90%. Remember, if you lose 90% of your money, you need to make 900% to get back to even. 900%!

Sounded like your actual leak at that time had less to do with your position sizing but your failure to cut your losses short. I trade on a simulator and use up to 100% margin on 1 or 2 stocks and have been doing fine so far. If your daytrading (which I believe was the case.) you're watching the stock like a hawk. There is no way you can lose 50%-90% on a single trade unless you held onto and watched it bleed in the opposite direction. I did over 1000 trades on the most volatile stocks and my biggest loss was only 18% using 60x normal speed. So I know you cannot lose that much on a single trade even with that position sizing unless your internet disconnected or you were holding onto a bag too long.

 

[smallStops]

Sounded like your actual leak at that time had less to do with your position sizing but your failure to cut your losses short. I trade on a simulator and use up to 100% margin on 1 or 2 stocks and have been doing fine so far. If your daytrading (which I believe was the case.) you're watching the stock like a hawk. There is no way you can lose 50%-90% on a single trade unless you held onto and watched it bleed in the opposite direction. I did over 1000 trades on the most volatile stocks and my biggest loss was only 18% using 60x normal speed. So I know you cannot lose that much on a single trade even with that position sizing unless your internet disconnected or you were holding onto a bag too long.

basically, or internet disconnected or psychology.

 

[themickey]

Sounded like your actual leak at that time had less to do with your position sizing but your failure to cut your losses short. I trade on a simulator and use up to 100% margin on 1 or 2 stocks and have been doing fine so far. If your daytrading (which I believe was the case.) you're watching the stock like a hawk. There is no way you can lose 50%-90% on a single trade unless you held onto and watched it bleed in the opposite direction. I did over 1000 trades on the most volatile stocks and my biggest loss was only 18% using 60x normal speed. So I know you cannot lose that much on a single trade even with that position sizing unless your internet disconnected or you were holding onto a bag too long.

For those trading speccy's or pharmaceuticals, the bottom can slip out quicker than a dingo can grab a slippery chook's knackers.

 

[GotherL]

For those trading speccy's or pharmaceuticals, the bottom can slip out quicker than a dingo can grab a slippery chook's knackers.

They can move fast but to go down 50-90% in less time it takes anyone to hit the sell button? Maybe right after the opening bell or extended hours on big news. Fair enough! Although, I highly doubt that was the case...

 

[ironchef]

They can move fast but to go down 50-90% in less time it takes anyone to hit the sell button? Maybe right after the opening bell or extended hours on big news. Fair enough! Although, I highly doubt that was the case...

If you trade options, they can.