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This is a discussion on TDs Journal within the Trading Journals forums, part of the Reception category; Originally Posted by trader_dante . . . I got a little bit over confident and the market found me out. ...

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Old Oct 2, 2008, 9:46am   #97
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Quote:
Originally Posted by trader_dante View Post
. . . I got a little bit over confident and the market found me out.

The combination of a big risk, a "spanish stop" and the desire to "come back" was good for a severe beating from the market.

But a healthy dose of humilty is good for all of us, right?
Hi Tom,
Yes, indeed it is - and I second the comments from others - 10/10 for coming clean and admitting you're fallible and make mistakes like us mere mortals! Although it's horrible for you (I speak as one who knows), I think it's a good thing that this has happened from the point of view of all those members who follow your threads - especially newbies. You make trading look not only simple but easy at times, which is the only downside to your success. When newbies see that even you **** up then, hopefully, they will realise that although this business is essentially simple, it's far from easy. The only thing that's very easy about it is to get it very wrong, very quickly, and usually after a period of solid and consistent gains. Undoubtedly, you will learn and benefit from the experience, let's hope others can too.
Enjoy your time out!

Tim.
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Old Oct 2, 2008, 10:01am   #98
 
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trader_dante started this thread Yes, I hope others can learn from this mistake.

There are several very key points to make from this:

1. Traders are usually most vulnerable after a winning streak. I have read this before in many trading books and experienced it firsthand. Overconfidence can lead to a trader dropping their guard. If you drop your guard the market has a way of finding you out.

2. Keep your risk to a minimum and be consistent. The more you win, the easier you feel it is to make money. It is only rational to want to risk more the better you are doing. This is extremely dangerous. If you are on the wrong side of a move it can all be over very quickly.

3. If you are wrong, get out. There is nothing wrong with a large stop if it is based on a sound technical reason. There is everything wrong with a large stop that is placed because you DON'T want to be stopped out. (we call it the "spanish stop round here ) If the market is trending or the moves are violent, the market can find your stop. No matter how far it has to go.

4. The unexpected CAN and WILL happen from time to time. Don't count on something to happen.

5. If you suffer a destabilising loss, stop trading immediately.
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Last edited by trader_dante; Oct 2, 2008 at 10:25am.
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Old Oct 2, 2008, 10:15am   #99
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You'll make it all back mate.

That's trading isn't it, wasn't it Livermore who said sthg along the lines of man not necessarily making the same mistake twice if he is lucky and good, but then there are always several tens of thousands of brothers and cousins of this mistake just waiting right around the corner.

;-)

The best thing is honesty, claiming personal responsibility for everything good and bad that happens to one, and not blaming the markets or the weather or ones partner yada-yada, no, I messed up - and who doesn't from time to time -, but no probs, I'll get right back on up and continue on my path to success !
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Old Oct 2, 2008, 10:58am   #100
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Originally Posted by trader_dante View Post
Yes, I hope others can learn from this mistake.

There are several very key points to make from this:

1. Traders are usually most vulnerable after a winning streak. I have read this before in many trading books and experienced it firsthand. Overconfidence can lead to a trader dropping their guard. If you drop your guard the market has a way of finding you out.

2. Keep your risk to a minimum and be consistent. The more you win, the easier you feel it is to make money. It is only rational to want to risk more the better you are doing. This is extremely dangerous. If you are on the wrong side of a move it can all be over very quickly.

3. If you are wrong, get out. There is nothing wrong with a large stop if it is based on a sound technical reason. There is everything wrong with a large stop that is placed because you DON'T want to be stopped out. (we call it the "spanish stop round here ) If the market is trending or the moves are violent, the market can find your stop. No matter how far it has to go.

4. The unexpected CAN and WILL happen from time to time. Don't count on something to happen.

5. If you suffer a destabilising loss, stop trading immediately.
Repd you for point 3 TD.

Always put the stop where the stop needs to go, based on support and resistance. If implied vols have doubled and this approach leads to twice the stop, that's to be expected isn't it?

Far better IMO to then reject a potential trade on a risk/reward basis than slip in to "the myth of the tight stop".

Joey
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Old Oct 2, 2008, 10:59am   #101
 
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treat it as a pullback on the equity curve,chin up.
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Old Oct 2, 2008, 11:43am   #102
 
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What can ya do, Tom? Rep'd for making money, rep'd for losing it Maybe you should attempt indifference?
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Old Oct 5, 2008, 3:31pm   #103
 
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Hi TD,

I wouldnt feel too bad:

1) Youve made about 400 % profit!
2) Donated some cash to charity!
3) You probably had a good time and felt great doing it!
4) Yeeeeeehaaaa!

There isnt really much in the way of 'badness' in there !!!!!!!!!!

On the losing; one man (you) of 6 billion on the planet, lost some money he made - so the world hasnt changed much, then. Have a good break
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Old Oct 5, 2008, 5:39pm   #104
 
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Originally Posted by trendie View Post
cant believe TD is a mere mortal, just like the rest of us!

dont worry, TD. believe it or not, the fact you make mistakes and take losses, and are still in the game, should be far more reassuring to newbies and experienced traders than the ones who swagger onto T2W saying how they are so clever that they never have losses.

I can relate to taking a knock to the confidence. but you just have to keep playing, dont you?
Not sure I agree with you there trendie.

I was a bit shocked when I found TD was long on the DOW.

In fact I got so shaken when I read TD's mail about his losing trade I coudn't trade for a full day

A bit of an over-emotional attachment after reading his threads for so long I guess!

But I'll get over it soon.
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