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Horrible trading. Please help!


Everyone knows how trading has been of late and it was horrible for me. I just blew out my account for the first time and it is a terrible feeling. I am trying to figure out how to get back from this and I am hoping that I can. This has really been a terrible experience from me and the least I can do is learn from it.

Any advice from you guys would be greatly appreciated as well.

Thank you.
Hi Newkid,

Sorry to hear of your loss. I really only have one potential suggestion as the other replies covered everything really well.

I'm not sure if I have understood you completely but it sounds like you became impatient which caused you to break discipline. My suggestion is to establish your "core" account in which you only take your high probability trades. Then establish a much smaller " mad money " account where you can take other types of trades.

If you feel you need the "action" then take very small trades in your "mad money " account even if the trades go against your CORE position.
It may keep you from getting bored.

I took those longs yesterday in my "mad Money" account. This account I use for higher risk, higher return stuff....like positions in front of fed announcements and other things that are at times close to "gambling".........I recently had a new equity high in that account so it gave me liberty to bring on extra risk in order to try and increase the account further...( It didn't work well this time)..but that is the nature of the account...My Williams Darlings are in a seperate account also for the same basic reasons.
I can also monitor my "standard" account much better as this higher risk stuff isn't mixed in.

It's hard losing money so you have my compassion and sympathy. I hope you come back to the markets with improved discipline and this "EXPENSIVE" lesson has pushed you to become an even better trader.

Bruce

NewKid;
I'am new also compare to others. All I would say is some traders here have talked about a 50% rule... it does work. It is not only a retrace but it is 1/2 of many different areas. I use it on 30 15 5min charts. Consider this we look for gas when the tank is @ 1/2 we say were 1/2 way there, we have a 50/50 chance, the stores say take 50% off, the ball is on the 50 yard line. We use this rule every day and traders use it in their trading. If you look even today this morning @ 4:05am est and 5:50am est the market backed off @ 1154.50 this area is a mid point (50%) area of a fibo overlay on my chart others may see this area as something else thats fine but what they see confirms this area. You may talk to the other traders who posted
this topic I'am sure they are more knowledgeable than I
by the way the short is @ 1154.50 5:55am est
Welcome to the second level of trading: Risk Management

In trading index futures:

1. always use and honor your stop loss orders
2. never risk more than 2% (5% max) of your trading account
3. stop trading for the day after 3 consecutive losses
4. learn to hedge your risk

The goal with risk management is to survive an inevitable losing streak, or in the case of yesterday, to survive that one big loss (getting caught going the wrong way in an extraordinary price move). One of the weaknesses of paper trading is the rare and random occurance of a day like yesterday that seem to come out of nowhere. It is very hard to simulate this type of 6-sigma event and how you will react in real-time with real money at risk in a live account when everything suddenly goes wrong.

Risk management is a game of asking "what if ?" Where you need to consider each of the possible adverse outcomes. Followed by considering the effect on your trading account of a series of "what if" outcomes. I call this the irrefutable math behind trading.
quote:
Originally posted by BruceM

Hi Newkid,

Sorry to hear of your loss. I really only have one potential suggestion as the other replies covered everything really well.

I'm not sure if I have understood you completely but it sounds like you became impatient which caused you to break discipline. My suggestion is to establish your "core" account in which you only take your high probability trades. Then establish a much smaller " mad money " account where you can take other types of trades.

If you feel you need the "action" then take very small trades in your "mad money " account even if the trades go against your CORE position.
It may keep you from getting bored.

I took those longs yesterday in my "mad Money" account. This account I use for higher risk, higher return stuff....like positions in front of fed announcements and other things that are at times close to "gambling".........I recently had a new equity high in that account so it gave me liberty to bring on extra risk in order to try and increase the account further...( It didn't work well this time)..but that is the nature of the account...My Williams Darlings are in a seperate account also for the same basic reasons.
I can also monitor my "standard" account much better as this higher risk stuff isn't mixed in.

It's hard losing money so you have my compassion and sympathy. I hope you come back to the markets with improved discipline and this "EXPENSIVE" lesson has pushed you to become an even better trader.

Bruce





You are right Bruce. I did get impatient and lost my discipline and threw everything out of the window. Not such a good idea. I like your suggestion of having separate accounts for different styles of trading. It makes a lot of sense. The problem with the human mind is that it cannot comprehend the simple things.

Thank you for your kind words and suggestions. I shall try and implement them and get better at the trade.
quote:
Originally posted by redsixspeed

NewKid;
I'am new also compare to others. All I would say is some traders here have talked about a 50% rule... it does work. It is not only a retrace but it is 1/2 of many different areas. I use it on 30 15 5min charts. Consider this we look for gas when the tank is @ 1/2 we say were 1/2 way there, we have a 50/50 chance, the stores say take 50% off, the ball is on the 50 yard line. We use this rule every day and traders use it in their trading. If you look even today this morning @ 4:05am est and 5:50am est the market backed off @ 1154.50 this area is a mid point (50%) area of a fibo overlay on my chart others may see this area as something else thats fine but what they see confirms this area. You may talk to the other traders who posted
this topic I'am sure they are more knowledgeable than I



So you are saying that for whatever time period you are looking at, take the high and low and figure our the 50% value and then use that 50% value as support/resistance for your trades? Is that how you use it?

Thanks for the tip.
quote:
Originally posted by pt_emini

Welcome to the second level of trading: Risk Management

In trading index futures:

1. always use and honor your stop loss orders
2. never risk more than 2% (5% max) of your trading account
3. stop trading for the day after 3 consecutive losses
4. learn to hedge your risk

The goal with risk management is to survive an inevitable losing streak, or in the case of yesterday, to survive that one big loss (getting caught going the wrong way in an extraordinary price move). One of the weaknesses of paper trading is the rare and random occurance of a day like yesterday that seem to come out of nowhere. It is very hard to simulate this type of 6-sigma event and how you will react in real-time with real money at risk in a live account when everything suddenly goes wrong.

Risk management is a game of asking "what if ?" Where you need to consider each of the possible adverse outcomes. Followed by considering the effect on your trading account of a series of "what if" outcomes. I call this the irrefutable math behind trading.



Thanks pt. You are right. Risk management is very important in trading and I was doing a horrible job at it. There have been times when I risked 100% of my equity on a trade. Using 50% was a rather occurence for me. Obviously in hind-sight I can see that it was not the brightest thing to do. Thank you for your suggestions. I shall try and enforce them more strictly now and have the discipline to follow through with them.
No. I look for 1/2 areas of s/r on different time frames. Also this area is my absolute get out area if it goes against me unless I have a s/r area close by. I learned this after my 5th reading of Steve Nison book Japanese Candlestick Charting Techniques. I noticed a pattern that Steve wasn't even teaching. You may have heard the term "reversion to the mean" There are lots of s/r areas and must be confirmed so candle patterns are a big part along with volume ect. Remember a dominate candle i.e. big volume can be s/r as BruceM remindes us. Inorder to see what is going on ProfitHound put it best "watch your charts like you were making love to them" then it will come to you. You have received alot of good advise from these great traders slow down just alittle you'll be OK. As I heard one trader say "the buffet (market) will be there tomorrow".
New: There is one thing I need to add. The market is a taxi in my view. I'am standing at the curb waiting for it to come by and pick me up. If it passes me by I wait for it to come back around the block. Sometimes I doze off waiting. I don't try to out guess it and I don't listen to CNBC.
Red,

I am still having trouble understanding your 50% reversion to the mean system. Would it be possible for you to give an example of a trade you took recently on it? i.e provide the entry, exit and stop prices that you used? That would help me understand things better. Thanks a lot.
Thank you pt_emini, this is the kind of knowledge i won't get from any books. For now i am also learning not how to make money but how not to loose money :-)


Thanks again.