Depression - beginner trading hangover

[pkfryer]

I started trading four years ago with normal shares then switched to after a year CFDs. Made some really spectacular profits with my first few trades nearly doubling my account size. Then I made a string of terrible trades, holding on for too long and lost thousands and thousands. Got margin calls and paid them with my credit card and then lost that.

I then went back to my books and read, re-read, studied the charts. Steadily saving up to start again. After I had a decent size for an account. I started off carefully, made a few profits and a few losses and couldn't get any gains at all! I then started feeling frustrated. My wins were small because my trade sizes were small. So I started being wreckless and trading bigger contracts (for my account size) on trades I thought were a dead cert! I noticed I would concentrate on one share whilst another exploded whilst my trade stayed stagnent. So I started trading on 6 or 7 stock at once. I didn't use any particular method but chart pattern and gut feeling. All what I had learned went out the window as soon as I started to trade and the emotions kicked in.

I hadn't used stop losses because they kept on getting hit by whiplashes before and suddenly 7 big trades turned against me and destroyed half my account in a matter of hours! Then I was in a state! I started trying to panickly trade harder to get back my losses only to make terrible decisions.

After all that time of reading and studying I hadn't learned anything at all! I had made the same mistakes even with my bad experiences before and a year of stewing it over and trying to learn where I went wrong. So I stopped trading all together after having lost another ten thousand pounds with only a few thousand left over! Altogether losing 20 thousand pounds on trading.

I suddenly realised there was something seriously wrong with what i was doing so went back and read, bought a few more books. Re-assessed my mind and behaviour. I didn't want to blow what was left of my account. I needed to do it right this time. I studied trading systems, technical indicators, psychology... I'm even keeping a trading diary. Have gone through historic data testing the indicators a tick at a time refining my decision making ability.

Now coming back into trading I'm making better decisions. Working hard doing my homework, studying the signals, indicators and chart patterns. Doing everything differently than before. I've noticed that there is a sobber feeling about it now, it's no longer thrilling or exciting, but challenging and enjoyable like chess. But with all this work and effort and all the bad experiences, I just can't seem to do more than break even!

I'm still not making consistent profit. I'm feeling depressed and disheartened but I dont want to give up trading as I genuinely enjoy it. If I had known what I know now I probably would have given trading a miss and bought a new car instead. But now its become like a mission and I can't leave it unmastered! The thought doesn't even cross my mind.

Has anybody else had similar feelings and felt down because they have worked so hard and have nothing to show for it? Has anybody else had such a nasty learning curve? Am I thick for not just giving up?

 

[wheezergeezer]

Pkfryer, maybe now's the time to switch back to plain old share's, I know very little about cfd's , but I do know that with plain old shares if the market goe's against you there is always the possibility of riding it out over the next few weeks,or months,It seems to me that your trading has taken a down turn since you started cfd, I read somewhere on these boards a few months ago that 95% of speed bets lose money
I can't say if that applies to cfd, I just don't know, take time out a think hard about whats changed so much..

Good Luck

 

[schoe]

I think that a lot of people have lost money before starting to get profitable it is a difficult road to drive before getting to the point of making regular returns.
You don't say what time frame you are trading what strategy are you now using and are you using stops and letting your profits run. If you are daytrading it is very tough to make money using cfd's due to the spreads and costs, direct access is better but you may have to trade larger size on the eminis the Dow starts at $5 per pip the S@P $12.50 per pip. Have you been on any courses? It sounds as if you are suffering from your past experiences and have phsychological issues just because you have lost this amount of money doesn't matter to the market and doesn't mean you are transformed into a winning trader. The only thing that you can do is carry on learning and above all improve your discipline and cut your losses don't try and be greedy and go for big gains but learn to be consistent first then gradually increase your stake size in line with your account size limiting any losses to max 2% per trade. The worst thing that happened to you was the winning trades you made when you started this is a common problem and makes you reckless thinking its easy.
Mr Charts who posts on here could help if you daytrade he specialises in US Stocks and is a very good trader but you need the time to sit in front of a screen, good luck with your trading you need to go back to basics and start small until you can become consistent all part of the discipline. Hope this helps.

 

[jpwone]

Four years ago we were at the height of the dotcom boom/bubble. It was relatively easy to make money trading. Buy, wait for it to go up and then sell.

The market is very different today. If you are consistently breaking even in the current market then you are on the way to consistent profits. Don't rush it now - just keep plugging away and the profits will come.

 

[Trader333]

pkfryer,

Can you clarify the following:

1) What were you trading ? ie UK stocks, US Stocks etc

2) What time frame were your trades over ?

3) How did you decide when to enter a trade ?

4) How did you decide to when exit a trade ?

5) Did you have any form of plan for the whole trade and if so what was it ?

The last thing I would say is that no-one anywhere is able to "Predict" which way a market will move. This is why planning a trade for any eventuality is of critical importance because whatever happens you will have an action for it. The second part to this is quite simply doing what needs to be done, at the time it needs doing whether one likes doing it or not.


Paul

 

[TWI]

I think that just about every trader goes through this sort of thing at the beginning. Some give up, some lose all their money through lack of discipline and some persist, stay focused, continue to learn and pull through.
I still have periods of incredible frustration. Sometimes you can sit on a position for days and try to change it around or spread it into all sorts of nightmarish structures yet at the end, still have to concede defeat and be man enough to scratch it. In quiet periods I still do the occasional boredom trade too, but who's perfect?
Main thing to remember is that it takes incredible patience and discipline. Don't go into the market looking for a trade, let the market show you a good trade and then take it. If you see nothing good, sit back and wait until you do. Better to be out of the market wishing you were in than in the market wishing you were out.
I think you will learn more on boards like this than you will in any book. The only worthwhile books IMHO are the ones that are more about psychology than actual technique or ones that give you enthusiasm and drive like the Market Wizard books.
Never follow somebody else's signals or system, listen, follow and learn but do your own thing, your own analysis and generate your own signals otherwise you are doomed.
Keep going, you obviously already have the addiction, once you get bitten it is hard to put down.
You will get there.

 

[llew]

Has anybody else had similar feelings and felt down because they have worked so hard and have nothing to show for it? Has anybody else had such a nasty learning curve? Am I thick for not just giving up?.

I've been down the same road as you,it is difficult to get back on your feet after all this punishment.Can i recommend a book that is helping me at the moment. Trading For a Living by Alexander Elder.it explains a lot about the learning curve as you put it it is very steep for some and i hope your's doesn't get as steep as mine.As the previous post said you can learn a lot from these boards but this book is helping me a lot.
I think when i first got in to trading i was focused on finding a method and whenever i experienced big losses i would blame the market or my method,so i kept on driving to improve my method and understanding about the market,but this is not the answer i should have been focusing on the mindset to trade instead.Because no one has this mindset to trade successfully in the beginning.What this meant to me is firstly was to find the reason why i was trading and the next to figure out who was trading.I start out the day with a well set up plan on entry and method and management,but as you know this does not go as planned ,why because once i'm in a trade my ego takes over if the trade goes against me , i then get emotionally involved and if you have an ego like mine then he doesn't want to stick to any trading plan or management.How to combat this or separate the two a lot of hard work in the mind department.
There is a poster called SOCRATES on this website that has written some very good articles on this Dilemma,check his posts they might help you.
A lot of this can be explained in certain trading books like Mark Douglas Trading in the Zone,John Piper The Way to Trade,but the best i've read so far is the one i mentioned above.
This is a good article about the ego and trading.
http://www.ruthroosevelt.com/article_ego.html

All the best
P.s
I'm sure that you are not thick ,if you are like me then just a bit stubborn,what we need is to be stubborn the other way around.

 

[oatman]

It's a very familiar tale. You should build your confidence with small, low risk trades.
The successful ones in this game are the ones who chip away day in day out.
Don't go looking for the big one. It ain't there :!:

 

[Buk]

"why because once i'm in a trade my ego takes over if the trade goes against me , i then get emotionally involved and if you have an ego like mine then he doesn't want to stick to any trading plan or management.How to combat this or separate the two a lot of hard work in the mind department".........................

you've hit the nail on the head there llew......we've all been through that phase, which highlights the importance of sticking to "rules" & adhering to the important aspect of your plan/strategy : ie, stops!!

as Oatman say's, building confidence via the route of chipping away consistantly will help strengthen both discipline & patience. Running before walking (looking for the big punt) pitches more folk out of this game than any other, and the longer you can stay in the game, the more experience you'll glean to enhance the progress....vicious circle really, but I guess it's the same whatever business you're in.

 

[dc2000]

Has anybody else had similar feelings and felt down because they have worked so hard and have nothing to show for it? Has anybody else had such a nasty learning curve? Am I thick for not just giving up?.

Most of the traders I know and myself included have been through this learning curve, For me the turning point came when I stopped trying to regain the losses and started to trade very small amounts I stopped concentrating on the amount of money and put more emphasis on the points won as you say "like a game of chess". One of the main problems I had in the early days was not having an exit strategy, sounds silly I know, but I would get into a trade not having a clear idea of where I would take the profit and inevitably the trade would turn around and I would get out with a small profit or even a loss.

If you are trading individual shares I would take a look at the way Naz and Mr Charts trade they are both accomplished traders who also teach their techniques.

 

[Buddhist]

depressed beginner

Me too! education can be expensive in this game. I lost about £10k before I realised I didnt know enough about it (I started after reading 'Campion Trader' which is waaaay too simplistic.

Then I went to a trading seminar by Sandy Jadeja, where I got an intro to Fibonacci - a bit of a defining moment for me to be honest - a very good start and it got me on what I believe is the right road but what I really needed was a mentor and Sandy just doesnt have the time. I subscribed to Stephen Pierce (Impulsive Profits) and this added to what Sandy had taught me - seriously good stuff if you can resist the 'special offers' (though to be fair I did take the last one and am still reserving judgement).

The last few months I have been making a small profit; it is *very* small but at least it isnt a loss! I am much more cautious now, but even so the past week has not been good (dropped £600).

I am making mistakes still, mainly those of not following the trading strategy and being reluctant to stand aside if no clear buy signal is there. A clear trading strategy is essential, and sticking to it is even more essential! Still, I am a hypnotherapist so at least I have no problem accepting losses now and I dont get getting palpitations if the market appers to me moving against me. At least I have been able to resolve most of the mindset issues!

I am determined not to be one of the 90% of new traders who dont make it. It seems to me that there is money to be made here and I am determined to succeed. Slowly slowly catchee monkee.

Happy to correspond with anyone who wants to share...

david.brook@stonygate

Also happy to accept help from anyone who can do a spot of pro-bono mentoring (come on you successful traders, helping me is good karma!).

I use spread betting through Fispreads - I wish they would hurry up and allow placing orders by stop online.

David Brook

I started trading four years ago with normal shares then switched to after a year CFDs. Made some really spectacular profits with my first few trades nearly doubling my account size. Then I made a string of terrible trades, holding on for too long and lost thousands and thousands. Got margin calls and paid them with my credit card and then lost that.

 

[TheBramble]

I am much more cautious now, but even so the past week has not been good (dropped £600)

And that's being cautious David???

You may well be trading a capital base beyond my wildest dreams to consider that slightly higher than average drawdown for the week, but...that would make me step back for a while - to be losing at that level with stoploss, entry/exit criteria in place etc.

In fact, I wouldn't get anywhere close to that level of loss in any one week - I'd simply sterp back and take a break.

Just shows the different levels of tolerance we individually have toward loss.

 

[Buddhist]

Well, to be frank, it has given me pause for thought, but then I have been gaining steadily if slowly for about 6 weeks... and this week is explainable in terms of 3 *seriously* bad decisions.

An aberration.

David

And that's being cautious David???

You may well be trading a capital base beyond my wildest dreams to consider that slightly higher than average drawdown for the week, but...that would make me step back for a while - to be losing at that level with stoploss, entry/exit criteria in place etc.

In fact, I wouldn't get anywhere close to that level of loss in any one week - I'd simply sterp back and take a break.

Just shows the different levels of tolerance we individually have toward loss.

 

[Mr. Charts]

I can't comment on the London market, but I think there must be a problem if anyone trading the US didn't make very substantial profits yesterday. Although last week was more difficult, there were still very good trades to be taken intra day and last Wednesday was another great day.
At the risk of being simplistic, if the trade finding systems are good, the patterns correct, the TA understanding reasonable, risk, money and position management methods right, and someone is still not making money, then the answer lies in themselves as they are not trading the plan, even having planned the trade.
Richard

 

[pkfryer]

I wasn't expecting so many reactions to my thread! I felt a bit dubious as to whether I would post it and everyone would point and laugh! I'm glad I posted it now.

pkfryer,

Can you clarify the following:

1) What were you trading ? ie UK stocks, US Stocks etc

2) What time frame were your trades over ?

3) How did you decide when to enter a trade ?

4) How did you decide to when exit a trade ?

5) Did you have any form of plan for the whole trade and if so what was it ?

The last thing I would say is that no-one anywhere is able to "Predict" which way a market will move. This is why planning a trade for any eventuality is of critical importance because whatever happens you will have an action for it. The second part to this is quite simply doing what needs to be done, at the time it needs doing whether one likes doing it or not.


Paul

1. I traded (and still do) UK stocks.

2. Concentrating short-term trading. Mainly because I've been told day trading is extremely difficult and I work full time. Although I'm starting to wonder whether
playing the closing hours of the US markets might be worth considering.

3. I followed a few shares religiously, but adding shares to my list at an alarming rate as I got bored. I then really only used chart patterns and gut feeling as I could never make sense of signals enough to make any meaningful decisions from them (then anyway). I wasn't aware of indicator optimisation. I looked at the visual trend on closing price only, and the series of peaks and troffs... Timing my entries according to the visual patterns. Trying to sell at what I thought looked like a peak at the right edge... dangerous! Its so easy to recognise peaks in the middle of the chart

4. I didn't have any clear idea of when to exit trades, so when it turned against me, I would wait till it turned around. Then when it didn't turn around I wouldn't dare ditch it, as it would be a guaranteed loss! "If I could just hold on to it long enough, it will turn around and I wont make a loss!" I would think. So, often I would take the loss when my account had shrunk considerably and I wanted to avoid a margin call I wouldn't be able to pay! Better to have a tenner in your account than be blown out by a huge margin call, I thought!

A big problem was not knowing when to take my profits. Many times I actually got a trade right, but held onto it too long. Waking up the next morning with it suddenly turning against me.

5. I had no real plan

Also, I didn't have risk management at all and risked way too much each trade to try and hit the big £2000+ trades I had got before. Biggest in my first few trades was a staggering £4000, so it just shows you how much I was risking. The slightest tick against me with big trade sizes on multiple shares, would swipe hundreds off the profit. I was addicted to the big wins and felt paultry sub thousand profits not worth my while!!

Looking at it now.. its so obvious I was doomed! But at the time I thought I was something special and couldn't accept the idea that I was plain wrong! I'm a stubborn chap sometimes and have a high risk tolerance (not a good combination)... The markets have humbled me significantly now and I bow my head in respect!

...

Ive learned a lot and the signals have to be very positive for me to risk a trade with it. I still have a problem with boredom trades that I shouldn't take and when to take profits on a trade that is working out. Sometimes the signals fail and I forget that signals dont predict they just show an increase in probability. With short term trading, the stop losses have to be placed a distance from the entry so when I do fluff, which is often, I lose a chunk and then I dont get a very efficient profit take due to hanging on too long.

Its a difficult game to master!

 

[Faris]

I completely agree with what your saying Mr Charts.
Iv only been trading for a short while (6 months), the last three being very profitable for me.
I found that my main problem was my psychology.
Reading books on the Art of Zen and Neuro linguistic programming has helped me take my trades without to much emotional thinking.

Faris..

 

[donaldduke]

pkfryer,

I was deeper in the hole than you are now when i first started trading.

The thing is you have to forget about those losses and start again afresh. A few months
out of the markets maybe helpful in this regard.

Thats hard i know, you should think about every month from now on as a fresh month
starting each month with a clean slate. Your aim should be to first have break even months
and then to have profitable months.

You need to start trading in small lots, 1 pound a point or 1 contract etc

Up until now your trading has probably been ruled by the pain you have been suffering.
You brain has been overwhelmed by the pain of your losses and hasn't been able to take in the
learning experiences that will help you grow as a trader.

When you trade small lots you can concentrate on trading and not on money.
You need to concentrate on following your rules and not about the money you are making or losing.

Also consider finding a good mentor to help you.

 

[adrianallen99]

I find it easier to not look at how many £'s I make, but concentrate on points. So if I make 40 points @ £1 a point, it would be a better day the 5 points @ £10 a point.

This week I have made 140 lost 40, so a total gain of 100 points. @ £1 is £100. In the past Ive made more money but less points. My balance looks better, but I have actually performed worse.

 

[Naz]

Ditto Richard,

Naz

 

[Mr Euro]

PKfrer,

As many have said you are not alone in your experience. I feel all traders go through this educational process until we find a way that works for the individual. If your education costs you 20k it's cheap IMHO, it cost me much more.

What you will find even more frustrating, is when you finally find a method that works for you (because you will) it suddendly stops working. Nevermind, you need to be quick to recognise this (and don't even try and win at a game with a different set of rules using your old techniques asthrough experience I can you this is costly too), take your principles around money management etc.. and find a niche were you can find that edge. Play that game until the rules change and so on.

You can be taught techniques, principles and such forth but you have to find your edge IMHO, nobody can help you there. Be smart enough to find it.

Good luck.