Day Trading & Forex Forum

dilesh23

After blowing a spread betting account yesterday i was wondering if anyone had any words of wisdom to share on risk management and discipline inparticular from people who have had similar problems and what helped them to deal with it

Ive been doing some of these psychological test and found them rather useful:
Market Psychology Money and Investing Personality Tests

Also i made a list of what i thought i did well with my £200 to make it to a £1000 and what i did unwell to make £1000- 50p so far the pros are heavily outweighed by the cons

Pros

Traded a pin well taking the profits at the 00s resistance level £1 a tik, 20 tik stop and took a profit of about £500




Cons( wait for it theres alot of them )

Increased position at the wrong time ( on the image) when a new high was made rather then waiting for a pullback :s

Left losing postions on the Dow for far too long, including over the weekend and still didnt take it off when the rate decision came out

Allowed others to influence my decisions

Cut winning trades too early, had a short on ftse at 4440 and took it off to early then kept getting burnt trying to get back in on it

The risk % was far too high the plan was to start using the 5% risk rule when i reached £1000 but that didnt go very well

And i think some of the biggest mistakes were being too greedy, impatient and having too much of an appetite for risk and the lack of discipline.

Any pointers on developing these points would be greatly appreciated

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If a man empties his purse into his head, no man can take it away from him. An investment in knowledge always pays the best interest - Benjamin Franklin

Buy what thou hast no need of and ere long thou shalt sell thy necessities - Benjamin Franklin

Diligence is the mother of good luck - Benjamin Franklin

If you would not be forgotten, as soon as you are dead and rotten, either write things worth reading, or do things worth the writing - Benjamin Franklin

ITS ALL ABOUT THE BENJAMIN'S

Hoggums

First piece of advice - open a demo account and trade that for 6 months. Don't be greedy and trade your own money until you are consistently making money.

DONT TRY AND MAKE BACK THE MONEY YOU HAVE LOST. You won't. You have probably learned far more spending that £200 than you'd ever get on a trading course.

Try a strategy where you place a limit and a stop at the start of the trade and you don't touch the trade again once opened unless it's EOD. Make sure your limit is greater than the stop. If you are good at picking entries you will make a profit.

__________________
Hoggums

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Outside of a dog, a book is a man's best friend,
inside of a dog, it's too dark to read. -- G Marx.

Rhody Trader

Ummm....You seem to have a pretty good idea of what you did wrong. The only thing I could offer as advice is "Don't do that." Really, as long as you focus on monitoring your trading and not repeating mistakes you should get to where you want to be.

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John Forman
Author - The Essentials of Trading

dilesh23

ive been using demos for a good few months now being relatively profitable, but think the week spent on the beat the broker comp has had an adverse effect of making me going for a ridiculous amount of profit in one day i think it might be time to get back on them also the plan was too kind off start with a relatively small amount and try doubling my money a succesion of times £200-£400-£800-£1600 etc etc and i think ive now realised that its alot easier said then done
i was also trying to use the 4/1 rule of limit against stop but had the completly off idea of setting my limit on the dow at a new low of around 7423 and a stop around 8900 i think it might have made more sense using the rule for less greedy amounts

cheers for the gems of wisdom so far guys and im also getting a bit of hope from these quotes

"There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!"

"The loss of the money didn't bother me. Whenever I have lost money in the stock market I have always considered that I have learned something; that if I have lost
money I have gained experience, so that the money really went for a tuition fee. A man has to have experience and he has to pay for it."

__________________


If a man empties his purse into his head, no man can take it away from him. An investment in knowledge always pays the best interest - Benjamin Franklin

Buy what thou hast no need of and ere long thou shalt sell thy necessities - Benjamin Franklin

Diligence is the mother of good luck - Benjamin Franklin

If you would not be forgotten, as soon as you are dead and rotten, either write things worth reading, or do things worth the writing - Benjamin Franklin

ITS ALL ABOUT THE BENJAMIN'S

fibonelli

Hi Dilesh23,

Here's some suggestions:
Risk no more than 1% per trade/bet
Reward should be at least 2.5% per trade/bet
Stop Loss when you enter a trade/bet
Don't move your stop loss to a worse position
Stop Loss not in obvious place and sufficiently wide to cater for the insane volatilty
1hr or above timeframe
Consider if a good idea to *scale into a profitable position
Consider if a good idea to *pyramid into a profitable position
Don't enter trade competitions - they instill gambling habits.
........and, finally
Make sure you know where the key support and resistance price zones are before you enter a position.

*these words have specific meanings.

__________________
Audere est Facere

"The trend is your friend and divergences are your best friend until the bend at the end"

Party on like it's 1930, until Mr C (Wave) gatecrashes the party.

dilesh23

Don't move your stop loss to a worse position im gonna definetly inprint that one into my mind and will definetly have to learn more about scalling in and pyramiding before i attempt doing that again cheers some excellent points, infact i think im gonna cut and paste all of them on to my rules to follow and to be read before, during and after each trade page

__________________


If a man empties his purse into his head, no man can take it away from him. An investment in knowledge always pays the best interest - Benjamin Franklin

Buy what thou hast no need of and ere long thou shalt sell thy necessities - Benjamin Franklin

Diligence is the mother of good luck - Benjamin Franklin

If you would not be forgotten, as soon as you are dead and rotten, either write things worth reading, or do things worth the writing - Benjamin Franklin

ITS ALL ABOUT THE BENJAMIN'S

Hoggums

Also - once your position is in profit by 20+ pips move your stoploss to break even. If it gets taken out you've lost nothing and you can always get back in again if you wish. It gives you a chance to re-evaluate your entry at virtually no cost.

__________________
Hoggums

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Outside of a dog, a book is a man's best friend,
inside of a dog, it's too dark to read. -- G Marx.

Masquerade

Everyone knows real is nothing like demo as you have the psychological aspect. If your problem is discipline and the greed element then demo isn't going to help. Just get back to real trading - encounter more of those situations and you'll improve your discipline.