undercapitalization or just a loser?

Undercapitalization or just a loser?
=> Do we have any other answers to choose from?

Undoubtably, undercapitalization is not the problem. Your account size is not too small to be trading a single lot of the DAX futures. The fact that you are seeking feedback and help to reduce your losses would seem to suggest that you are not a loser.

The key, is to minimize losses while you are in the learning stage. I would suggest you either cut back on your trade frequency, or move to simulated trading for a few weeks.

You mentioned that your equity curve was in a steady decline. Check to see how this works out on a per contract basis... Are you losses basically due to commissions (unlikely), or are you losing on your trade entries/exits, and commissions are increasing your losses even more?

Assuming that your losses are mainly due to your entries/exits, then it would appear that your strategy is either having a very bad period, or is just plain bad. Refine your trading strategy based on what you are seeing work in the markets, and what you are seeing doesn't work. Also, develop some discipline in your trading... trading rules or guidelines that you absolutely refuse to deviate from during market hours. When the market is close, you can consider refining your rules, but while the market is open, you must follow your strategy... period.

Best of luck,
-Eric
 
Quote from flow_77:

The biggest problem is, that I loose constantly - often I see my mistakes but... will just repeat them again (especially impulsive trading or this hypnotized rabbit behaviour).
I think I got better and learned - but my account says the opposite.
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If you make a mistake and keep doing it you should stop trading until you have enough discipline to correct your mistakes.


Okay, enough weeping...

1) Is this drawdown normal for a newbie? Or am I just another animal for slaughter? ;-)
2) How do you know that one`s a good trader and what does it take (profit, timeframe, ...)?

I really would appreciate your answers - I think there are some professionals round here who really know how the job has to be done.

best regards,

flow
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1). At this point you are just another animal for slaughter.
The DAX has been averaging 84 pts day/range this year. At 25 eur
per-point this is 2100 Eur/day (about 3 3/4 times more volatile than ES). Your 250 Eur losses seem normal for that much volatility. That would be about 1% of your original account. That's reasonable. The DAX tends to trend much more than the US markets. I hope you're trading with the trend. Obviously if you're losing and you know why, you need to change. Can you correct yourself? If not, you would be wise to stop trading now.

2). My rule of thumb for a small account like yours is 50% profit/per quarter. A decent profitable trader does that in the Emini and I would expect no less for the DAX. The first step is to stop losing money (improve discipline). You may need to use a systemized approach if you keep having trouble with this (some people never develop enough discipline to trade without a system).

One exercise I learned years ago was before putting on a trade I'd say "this trade is going to lose because..." and look for signs the trade wouldn't work out. If you can't find any reason why it won't work, only then put on the trade. In the beginning this will take 5-10 min. You might miss a great entry point but it'll help you avoid the obvious losers while you're improving.

Keep your chin up. We've all lost some money early on. Learn and improve and it won't have been money lost...just invested in your education.
 
Dax is too big for you. Switch to Eurostoxx, Bund or ES. Overtrading can be also the problem. If you make 10 trades/day, after 3 months your commission costs can add up to 2,400 eur. (with IB's 4 eur /rt). And if you add slippage costs, let's say only 0.5 dax point per trade, 600 trades * 12.5 eur = 7,500 eur...
Be careful. Don't overtrade and trade something smaller. Good luck!
 
Quote from flow_77:

the problem is - I am good at paper trading, but I have difficulties to duplicate it "in the real world".
This I really would like to know: When you are getting more experienced - do you learn how to transfer paper trading abilities into real-world trading or is it "a gift nobody can learn"?
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It's really easy to paper trade with no $$$ on the line. If the trades are profitable then you feel great. If there are a few bad trades it's easy to forget about them at the end of the day since there was no adverse financial consequence. But ... when you're trading real $$$ then your insides get churning a lot more, especially if you're a newer trader. And at the end of the day if you had some losing trades, or took home some losers then you have to deal with the fact that you lost some money ... which is a lot more emotional than having losers when papertrading. Years ago when I started trading the office I traded from let new traders trade 200 shares for the first couple weeks. That allowed for the transition from paper trading, or using a simulator, to trading real money. And given the small lot sizes it allowed a newer trader to not lose a lot of $$$ early on (assuming they had the discipline to not hang on overnight to major losers).
 
Flow 77 ,

You're saying that your papertrading is fine but the problem becomes when real money is involved.

That usually happens to all of us and there's the point where Trading Rules must come in to play an important role.

One of my rules is if I've 3 loser trades in a row in the same section, I stop trade and go paper (trading).

Another one is if I've 2 losing days in a row, I don't trade the third day. Even more, I stay away from the markets that day.

It is very important to break that negative emotion that involves your judgment in those situations, otherwise you'll be overtrading to get the profits back and suddenly you're spinning in a downward spiral losing more and increasing your psychological pressure to the limit.

You could also try to trade an instrument with a smaller tick (e.i. YM = $5) so you would have more room for mistakes without hurting your capital to much.

Don't label yourself as a loser but as a market student instead.

Good Luck.
 
Quote from DT-waw:

Dax is too big for you. Switch to Eurostoxx, Bund or ES. Overtrading can be also the problem. If you make 10 trades/day, after 3 months your commission costs can add up to 2,400 eur. (with IB's 4 eur /rt). And if you add slippage costs, let's say only 0.5 dax point per trade, 600 trades * 12.5 eur = 7,500 eur...
Be careful. Don't overtrade and trade something smaller. Good luck!
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I agree.. DAX is tempting because it makes some really nice moves but it's not so easy in real time, I believe it's very dangerous to be starting out on the DAX. You've really got to have a good trading plan and be willing to accept some volatility before it moves in your direction. If you're sweating every pullback I'd think the dax would make you pull your hair out.
 
I agree with the others. You should trade Dax last , after you make money in softer indexes. The Dax will leave you penniless if you are inept. As Simtrader says the Dax moves like a freight train going downhill and if you're on the wrong side... beware.
 
Quote from dpanic:



I agree.. DAX is tempting because it makes some really nice moves but it's not so easy in real time, I believe it's very dangerous to be starting out on the DAX. You've really got to have a good trading plan and be willing to accept some volatility before it moves in your direction. If you're sweating every pullback I'd think the dax would make you pull your hair out.
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That's why i am getting bald. I have to change my trading style
instead of changing my Shampoo:D
 
hey, that is really cool that there are so many people helping me ...and I thought the market would be "unfriendly" ;-)

@EricP
At the moment I trade 3-4 rt per day - at the beginning I did an average of 20-30 roundturns per day... do you think I have to cut this down any more?
You are right - my trade entries/exits really are.... improvable :-)
I will sit down, review all my trades I did and try to extract a better strategy.

@acrary
Hard words... thank you. The only question is how to learn discipline without being trading. My goal was to make every day 10 points - if I got you right, that should be possible.
I can correct myself - I just have to survive long enough :-)
Your exercise is great! I will try it on my next trades.


@DT-waw
if my fees were 0,-/rt I would exactly be flat. Trading something smaller is a good idea - but then the transaction costs will be 3x as high for a smaller volume (DAX trading). I thought, that if I have to lose, it should be my fault, not the bank`s gain. Do you think I should do it neverthless?

@DHOHHI
yes... for me it is a lot of money.

@hawker
Today I tried to catch up... should not have done it. Every time I lose I try to catch up.
I do not allow me to lose - and that is the problem, I think because it causes just more losses. I did not get the difference between fighting and pampering my ego. How did you solve this problem?

@dpanic and taodr
I have pulled my hair out ;-)
How much volatility/draw down do you think is normal?
Perhaps I am a bit naive, but I was told futures are the fairest instruments and the DAX ist the "cheapest" available.

You both and acrary said the DAX tends to trend very much - then it should be possible to get this trend. If I cannot do it, it`s just bad work, no excuses.
When do you know that you are wrong on a trade?

@NanaTrader
[sign for a bald smiley]
 
If you still want to trade the DAX, but to reduce your risk and trade real, you can trade the Future on DAX EX (EXSF).

DAX EX EXSF Futures ISIN DE0007200164

Contract Size
100 shares of the respective fund.

Minimum Price Change
Futures prices have price gradations of EUR 0.01, as appropriate, equivalent to a tick-value of EUR 0.01.


For details of the specifications the link
http://www.eurexchange.com/products/EXSF.html
 
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