Getting beat up

[potter89]

Hey, I just started day trading after reading several books and taking a few courses on day trading. It's been about 2 weeks and I've gotten absolutley crushed. I do my best to follow everything "the book" says to do but it seems that as soon as I touch a stock, it crashes and burns.

Perhaps I shouldn't be trading stocks, maybe some other instrument? Maybe I'm expecting too much from the first month of trading? Maybe it's just the market we're in. Or maybe I'm just terrible at trading and should probably quit.

Did anyone else do poorly in the first couple weeks/months of trading?

 

[potter89]

Example, today I shorted AMR at opening bell and caught a good 20 cents, then being the idiot I am, figured since oil was going up, I was in a safe position to let it run. Of course, it shoots up 50 cents and I get stopped out, then it crashes a buck AFTER I've been taken out of the market.

Doesn't feel too good

 

[foredog]

STOPLOSS?

You've made 20c and are happy, why not move your stop to 5c below so at least you've got 75% profit if you're wrong.

Then you could've had another go after the reversal.

 

[theSheik]

you're doing just fine by all accounts potter89

markets are volatile - now is not a great entry point for a first move

but if you do, the first two rules of fight club apply now more than ever;

1) trade on the fundamentals

2) don't be contrarian

and remember, the golden rule

3) the trend is your friend

...rinse, repeat...

 

[Bolimomo]

Did anyone else do poorly in the first couple weeks/months of trading?

Try "years".

I will be the first to admit that I sucked in the first 5 years. Losing year after year. I didn't give up. The next 5 years: hit and miss. Sometimes I did well, sometimes I didn't. That's when I traded "part time". I figured that it was the biggest problem for me. No commitment. Read a book and be an expert?

After I started doing full time, I still lost at first, but gradually improved. Learned from my own mistakes. This trading game is about "don't get caught". If you don't get caught, you will be all right in the end. You know... last year alone I gained enough that equated to all my years of losses combined. Your performance will accelerate.

 

[fantastic4]

Potter 89, why don't you trade really small lots for now. Like 10 or 20 shares. Just make your goal simple for the beginning, dont' lose money. If you've a small amount of shares, and you don't care about the loss, then you can trade without emotions. It very well may be emotions giving you a hard time. Trade the small lots until you get consistent, and then increase. Also, I like to protect profits. If it's up twenty cents, why not put your stop loss up? Atleast to break even. That way you have no risk and you're playing with the houses money. In the beginning think of each trade as an experience builder, not as a way to make big bucks, because it's quite unlikely that that will happen.

 

[fantastic4]

Are you using any market internals? Those can help you determine if things will turn for the worse or better.

 

[StockHunter]

1st off, I think everyone has lost money at some point in time in their trading. I for one lost money in my beginning's. The biggest mistake you made was diving in head first, which is what alot of people do, only to end up learning the hard way. When it comes to any strategy/system you need to PAPERtrade it 1st to see if it works, then once it's proven you can trade it. To make money from a strategy without testing it 1st is to be lucky. A good timeframe is to test for a strategy for at least 2 weeks. I like to test for a month, but thats me.

Hope that helps, and keep pluging away at it!

 

[montmorencyt2w]

An alternative to papertrading could be to open an account with a firm such as IG or Finspreads, who allow you to trade with small stakes for a few weeks.

 

[StockHunter]

An alternative to papertrading could be to open an account with a firm such as IG or Finspreads, who allow you to trade with small stakes for a few weeks.

You could do that, but your risk:reward ratio would be off compared to what you would do with full sized trades. Example (both on the same stock at the same time):

With a full sized trade ($25,000) you have a risk:reward of 1.50% to 2%
With a 20% sized trade ($5,000) you have a risk:reward of 1.82% to 1.68%

You can trade with your risk:reward off, but your success rate better be good to make up for it. Example:

10 winners of 10% each (100% total) with 1 looser at 50% = gain 50%

 

[jeffsmith]

Perhaps I shouldn't be trading stocks, maybe some other instrument? Maybe I'm expecting too much from the first month of trading? Maybe it's just the market we're in. Or maybe I'm just terrible at trading and should probably quit.

Dont give up on it alerady. By now you must have very well understood that forex is only volatile and nothing else. Dont risk big amount yet. Begin only with paltry sums.

 

[Carloss]

potter89, you should sim trade until you are consistantly profitable.

 

[miracletech]

Dear Potter,

I would EXPECT anyone whose only been trading a few weeks to be getting beat up! Because trading has a steep learning curve.

My suggestion would be to SIM trade until you have been profitable for some reasonable period of time. Only then start trading cash. SIM trading successfully does not guarantee success when you move to cash, but a least it indicates you technical methods are probably sound.

Good trading,
miracletech
blog: TuffTrade- Day Trade Smart

 

[StockHunter]

....suggestion would be to SIM trade until you have been profitable for some reasonable period of time. Only then start trading cash. SIM trading successfully does not guarantee success when you move to cash, but a least it indicates you technical methods are probably sound....

agreed