Help what to do next?

I've been trading for a little over 2 weeks and have been doing ok actively trading and not using stop losses or limits as I concentrate fully and actively manage my profits and losses.

I've been mainly focusing on futures as I have an opportunity to wait for a turn around to realise profits.

I'm trading FTSE 100 and Wall ST June futures on IG Index.

I went to bed on Thursday, woke up on Friday and stock markets had fallen significantly, so my buys which were originally in a nice profit were suddenly deep in the red. If I had sold then my capital would have been wiped out completely.

So to not wipe out my capital I opened sells on the same indices for the same value so my P/L is now stagnant.

I am now in this situation:
FTSE 100 buy: -886.88
FTSE 100 sell: +205.74
Wall ST buy: -1072.50
Wall ST sell: +373.75

Total realised loss -£1374.69

I used this method a few times, which has allowed me to freeze my P/L and take profits when Market is down and take profits when the Market goes back up and it's worked well.

However I didn't account for an earthquake and possible nuclear fallout hitting the worlds 3rd largest economy.

What should I do? Markets are still falling so my profits are going up but my losses are going up to, if I take my profits now with the markets so far down then there is no chance my buys will generate a profit and if I leave the buy run then the Market could dive even further and I don't have the capital to sustain waiting it out for a rebound?

Help please - yes I am a newb - please ridicule my stupidity at the same time!

Foxwales said:

I've been trading for a little over 2 weeks and have been doing ok actively trading and not using stop losses or limits as I concentrate fully and actively manage my profits and losses!

Click to expand...

:-0

iota said:

:-0

Click to expand...

Yes I know how stupid it was, I've been sticking to a 10 point maximum loss as a rule and have been really disciplined on my short trades, but on my futures I had a 30 point maximum loss.

I didn't forsee these global issues and am now kicking myself and hitting myself with a baseball bat for not putting in stops

Foxwales said:

Yes I know how stupid it was, I've been sticking to a 10 point maximum loss as a rule and have been really disciplined on my short trades, but on my futures I had a 30 point maximum loss.

I didn't forsee these global issues and am now kicking myself and hitting myself with a baseball bat for not putting in stops

Click to expand...

Take your losses, examine what you did, learn and move on.

You have been trading for a very short time. We have all made mistakes.

In a few years/months, if you are still in the game, you will look back on this experience and smile...

Morris said:

Take your losses, examine what you did, learn and move on.

You have been trading for a very short time. We have all made mistakes.

In a few years/months, if you are still in the game, you will look back on this experience and smile...

Click to expand...

Thanks Morris, debating whether to leave my sells open in the hope of making more profit to cover the loss I will make or just get out completely until the markets find their footing, just seems so volatile at the moment.

Well I think one should hold on to winners and ditch losers.

One thing, if you keep the losing trades open, you will not be objective about the markets, and they will have a negative psychological impact. I would close the losers and place close stops on the winners, or close them too.

It's your money of course, but anyone who has traded for a while has been there.

Foxwales said:

I didn't forsee these global issues

Click to expand...

This is the problem with not using stops; fine for pros who know what they are doing but even they quake when these unexpected things happen. And always expecting it to come back when you are probably highly leveraged is dangerous. You're nu;clear ly you have no idea about the market possibilities. Anything can happen. On other forums, thanks to the earthquake, people have been saying they've had margin calls and their account has gone into meltdown.

Of course, we have some ignorant newbies calling their broker saying they will tsu;nam i going to believe they will win the court case? Doubt it.

As to the hole you're in, take the hit like a Japanese worker trying to put out a fire in a power plant.

Foxwales said:

I've been trading for a little over 2 weeks and have been doing ok actively trading and not using stop losses or limits as I concentrate fully and actively manage my profits and losses.

I've been mainly focusing on futures as I have an opportunity to wait for a turn around to realise profits.

I'm trading FTSE 100 and Wall ST June futures on IG Index.

I went to bed on Thursday, woke up on Friday and stock markets had fallen significantly, so my buys which were originally in a nice profit were suddenly deep in the red. If I had sold then my capital would have been wiped out completely.

So to not wipe out my capital I opened sells on the same indices for the same value so my P/L is now stagnant.

I am now in this situation:
FTSE 100 buy: -886.88
FTSE 100 sell: +205.74
Wall ST buy: -1072.50
Wall ST sell: +373.75

Total realised loss -£1374.69

I used this method a few times, which has allowed me to freeze my P/L and take profits when Market is down and take profits when the Market goes back up and it's worked well.

However I didn't account for an earthquake and possible nuclear fallout hitting the worlds 3rd largest economy.

What should I do? Markets are still falling so my profits are going up but my losses are going up to, if I take my profits now with the markets so far down then there is no chance my buys will generate a profit and if I leave the buy run then the Market could dive even further and I don't have the capital to sustain waiting it out for a rebound?

Help please - yes I am a newb - please ridicule my stupidity at the same time!

Click to expand...

Get out of everything and take your losses. Re-consider whether you should even be trading with real money with 2 weeks' experience, and no proof to yourself that your strategy has an edge. If you're determined to trade with real cash even while you're still trying to find your feet, open a micro account which lets you bet pence per trade instead of £'s. Either way, just cut your losses and stay away from the markets until you have a solid plan.

phone ig and tell them that you were possessed when you opened the trades, or you could try to plead insanity! didn't work for me but you never know your luck

your method just means that you get to pay the extra spread of 6 to 10p
which just digs the hole deeper.
the way i see it is that you have two options, close out now for a loss, or try to work your way out of the hole but potentially dig a bigger one.

you've made a costly mistake,(most have been there) just make sure you don't repeat it.

JRP2891 said:

Get out of everything and take your losses. Re-consider whether you should even be trading with real money with 2 weeks' experience, and no proof to yourself that your strategy has an edge. If you're determined to trade with real cash even while you're still trying to find your feet, open a micro account which lets you bet pence per trade instead of £'s. Either way, just cut your losses and stay away from the markets until you have a solid plan.

Click to expand...

Good advice.

Foxwales said:

What should I do?

Click to expand...

This is why stops are a must. Because the unexpected happens and when it does it is a vital you have a valid risk management strategy in place.

The hedging strategy you have used almost never works in the long run. And one thing is for certain: you can rely on it least when you need it most.

The advice other posters have given - most notably stopping trading - is sound but it's not going to help you get out of the financial bind you are in right now.

Best advice I can give you, in my opinion, is firstly DO NOT cut either leg due to profit considerations e.g. My Short leg is massively in profit and the market has tanked so lets cut that and hope it rebounds.

At the same time, I would NOT cut either leg at breakeven. Your breakeven point most likely means nothing to the market (depending on where you entered) and you will be almost reliant 100% on luck in that scenario.

If you put me in this position and told me I had to do my best to get out of it without taking a loss (which is already the wrong thing to do - it should be cut and you should move on), I would keep both legs open.

I'd cut my long when the FTSE futures trade 5782 and leave the short running with a tight stop. At the same time, I'd put a limit buy order on my short at 5414 in the futures and then put a tight stop on my remaining long position (maybe just beneath 5380).

You are still in the hands of fate but you've got a prayer.

You're on your own with the Dow.

Good luck.

Thanks for the advice I have been slowly reducing my positions by 0.1 when it's hitting profit and then reducing my losses by 0.1 when the market is on the up.

It's not an ideal situation, but it's reducing my overall losses.

I'm slowly off setting my losses by quick trading the volatilities of the dailies too.

Just trying to minimise the damage now

trader_dante said:

I would keep both legs open.

Click to expand...

So the rumours are true... do you kiss or is that saved for your boyfriend?

Edit: not having a personal attack, just a bit of banter having spotted that awesome euphemism.

Good advice from TD above, and I would concur with the criticism of hedging strategies: if you don't know which way the market is more likely to go next, stay out, be flat, in cash.

When you go back in and open a new position, I suggest you need to be able to see two exits through TA - the stop and the profit target. Until you can see both, stay out: better to be out rather than be undecided and hedge. The stop should also make sense with regards your account protection and many people say a limit on the loss risked of 2% of your account is the maximum acceptable, others say 5%, especially for a small account. The point is the stop should make TA sense so that it's not triggered by 'noise' and prevents you making a good profit but the losses through a whole series of stopped out trades are not so big as to prevent you carrying on trading.

You might need a trading plan and there are excellent refernces as to how to build one on T2W.

Keep at it.

How much capital in your trading account?

FTSE at IG is £2 a point minimum. Why are you trading this amount a few weeks into your trading career. You might not think so but it's a relativly large position especially for someone new to the game.

My advice is simple - trade at 10p a point MAXIMUM and forget about making money (if that happens then great). Instead, focus on learning the game and the best way to do that is to make mistakes AND build up experience/confidence.

Very hard to do that at £2 a point. However, it can be done but then chances are after one has gained the experience/confidence and made all the mistakes their account is 60% or lower than when they started out. Then you've got to make at least 100% just to get back to square one........

Lots of good points made already, no point me going over them again.
What I will add is that I personally think you should go back to demo, or start demo trading if you jumped straight into live trading.
Oanda have a time unlimited demo:
http://fxtrade.oanda.com/trade-forex/demo/

If you do follow the advice given to trade your way out of this mess, my concern would be that if you are good enough to trade your way out, you wouldn't be in this situation in the first place. Personally I think you run the risk of digging an even bigger hole. I've seen it before on other boards, I remember one poor b@st@rd who dug a £15K hole on a premature British Airways short during the strike action...
I'd think long and hard about your next move.
Can you afford to make it worse?

Effectively your funds are frozen with the market neutral hedge you have in place.If you are slowly creaming off profit from one trade whilst taking a similar loss on the losing trade, be careful not to leave an overnight imbalance between the two (i.e. overnight directional exposure).

The markets are quite likely to remain volatile for a while, that in itself does also offer another possible option of doing nothing for the time being. Learn more from demo trade and possibly attempt to trade out of the hole once markets have calmed.
I don't think that will be realistic though, there are potential storms further down the road with America bringing Quantitive easing to an end (if they still do), middle east as well as current Japanese situation. On top of that you would have the ongoing rollover charges.

My view is the safest thing would be to take the hit and go back to demo and accept it as a lesson and an expense in the learning process.

Trading 10p a point is far better than demo because money is at stake, not a lot but still cold hard cash. When youy make a mistake/error with demo you can often laugh but this is a mistake because it doesn't reinforce anything.

10p a point is such an advantage for the new trader that it cannot be said enough times.

anley said:

Trading 10p a point is far better than demo because money is at stake, not a lot but still cold hard cash. When youy make a mistake/error with demo you can often laugh but this is a mistake because it doesn't reinforce anything.

10p a point is such an advantage for the new trader that it cannot be said enough times.

Click to expand...

Once someone is ready to start live trading and is at least familiar with the basics, yeah I agree.
I get the impression the OP is starting totally from scratch which is why I suggested demo.
Also there can be an urge to suddenly increase trade size in apparently "no brainer situations" which can backfire spectacularly, seen it before.

If you rigidly stick to 10p a point, then yeah fair enough it isn't going to break the bank, so no harm.

Foxwales said:

Thanks for the advice I have been slowly reducing my positions by 0.1 when it's hitting profit and then reducing my losses by 0.1 when the market is on the up.
It's not an ideal situation, but it's reducing my overall losses.

Click to expand...

I am at loss trying to understand what you are doing. Why do not you close both positions and move on?