FAQ Do I Have to Accept some Big Losses in the Beginning?

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Tradez

Junior member
14 0
Accept big losses? Only if you've already made them. Use your stops and don't get into anything you don't yet understand. Don't let fear & greed get in the way of your common sense - Use your stops.
 

ofurbaldur

Member
82 1
You should not have large losses at the beginning. Loss over 5% on a small account is large. 10-15% is gambling.
You will have losses sure, keep them small, it can take years to understand how to make profit in the markets, by that time it is wise to have some money left to be able to put your knowledge to work.

Regards

Baldur
 

DangerMouse70

Newbie
4 0
No you don't need to accept large losses - losses albeit controlled ones are a fundamental part of trading and you have to learn how to take those. You need to learn how to limit the size of your losses and the size of each bet so you'll survive in the long run. Trade Your Way To Financial Freedom by Van Tharp would be a great start. And then have fun exploring and discovering a way of trading that you enjoy that makes you money.

DM
 

gooseman

Experienced member
1,776 219
i think you have to be alert to the possibility of a large loss. if you trade (on a SB) with stops and don't pay for guarantees then you could get massacred. Obviously paying for stops makes you less profitable but hey-there you go. If you're DMA then stops could mean nothing if there are no orders to trade in the book so large losses are always possible.
 

msb751

Newbie
1 0
Good Observation

When I got into day trading had discovered this pattern on my own watching a few stocks that seemed to have this timing pattern. Jumped in doing a thousand shares a day and started on a winning streak. Yes, there are a few loses, but a careful watch of the market and a willingness to take a small loss against some large gains turns very profitable at the end of the month. The day trading approach using this time frame approach resulted in a complete balance of the unrealized losses of my long positions held through this crash. I'm in the difficult position of deciding which longs to sell for a loss to balance out the short term gains. Have decided to just make this a tax neutral year and walk away with the winning tax free. Of course there is the reality of the long term losses, but they can be put back in portfolio using the day trading/timing strategy. Due to the US wash sale rules it's difficult to do this for long term holds. But bottom line, this approach is fairly basic and does work. But keep the emotion out of it. I set my objective at $1 usd, and close it out unless the momentum and rsi are staying strong. For the novice, this is a very basic, easy to follow strategy and it sure isn't complicated. Just pay attention to what others are saying: Keep the emotion out of it, have a clear goal and stick to the plan; don't second guess an established pattern!!
 

fantastic4

Active member
164 6
I think the answer here is really easy too, absolutely not. Just understand that you have a 92% chance of failure and that most succesful traders started out by going through three accounts, then you'll be ready to go. The guys who lose a bunch are the ones going in thinking they're going to make a bunch. Open up a teeny, tiny, account with very very low commissions. Trade a few shares at a time. That way you'll gain real experience and lose only a little or nothing at all. Your first goal should be to lose nothing.
 

danielion

Junior member
10 1
I completely agree. I now trade very small lot sizes while learning how the process works. Find out if you are able to make $10 or $20 dollars a day consistently. If you are able, then you can build on this. If you are not able to be consistent then don't even bother dreaming about making lots of money. I have lost money because I "believed" in a stock, didn't think it would go below a certain point, or wasn't clear on short term vs. long term trades. I have only recently started keeping track of all my trades and wrote a simple program to calculate "expectancy" using excel. This has given me some accountablity to the profit potential of my trading plan. Over 37 trades I have a positive expectancy of about 9 dollars per trade. Doesn't sound like much, but it sure beats losing. And there is little emotion (like paper trading). Derive you excitement from building a good trading plan rather than scoring big on one or two trades. IB offers one penny per share commisions which is really good for new traders.
 
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oiltanker

Established member
955 89
a big loss would suggest a big stop loss?

a big loss suggest just one trade rather than the results from a statistical significant sample size of trades?

big sounds like an emotional term? if the loss is seen as big then reduce the stop loss to something that is not seen as big?

big losses suggests doing the one trade-loss-change the entry rules- one trade -loss-change entry the rules game. ie the inability to take even a single loss? which then just keep chipping away at the funds? is that avoidable? in theory yes if someone gets a good education in sample size trading from the beginning. otherwise probably not?
 

Ponce

Junior member
45 6
I think the answer here is really easy too, absolutely not. Just understand that you have a 92% chance of failure and that most succesful traders started out by going through three accounts, then you'll be ready to go. The guys who lose a bunch are the ones going in thinking they're going to make a bunch. Open up a teeny, tiny, account with very very low commissions. Trade a few shares at a time. That way you'll gain real experience and lose only a little or nothing at all. Your first goal should be to lose nothing.
The statement of failure rate of traders is overused ,and never qualified.Defining why you are trading,what is your concept of success,and are you willing to learn how to " trade" without indicators,alert services,etc... must be fully understood,and answered.The correct answer is not important,as long as you understand the question,and willing to look for answers that work.
 
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Adamus

Experienced member
1,898 97
going way off-topic....

If i lose myself and my desires, whats the point in making money? :smart:
Take your pick - it's either:

(1) to serve society
(2) to get fat and die with a big bank balance
(3) to fulfill the goals taught by any other religion (mostly all quite similar)

NB note (1) and (2) are religions too.

Happy Christmas
 

c_c405

Well-known member
256 19
Taking losses is part of the deal

I don't worry about taking a loss - it's of no consequence to me. I take the loss because I was wrong and the market was right, that doesn't mean I haphazardly toss my money around though. It just is, that sometimes you're wrong. Look how many thought Oil would hold above $75 - HA go figure - watch the biz news stations? uh huh what did the experts say? Look how many who went short closed at 100 a barrel - HA! and HA again! Many going long at 70 were thinking HA - look at it today - HA!

Small guys lose because they can't afford to hold on when they feel they should hold on - big guys win because they can.. Did anyone buy GM at 2.80? I did. When I bought it I knew it could fall to ZERO and So what? So I lost some... I certainly wasn't going to buy them at $50 just like I wasn't going to buy oil at 147 how many were saying 200 a barrel? I didn't buy copper at 4.15 a pound or gold at 950 an ounce. Don't listen to anyone and look at your charts!!!! when the price is low find out why and find out how much you can bet on it - don't do that process when the price is to high or mid-range

Patience! Don't listen to anyone! And look at the charts! Buy Low Sell High. If you look at a chart you can see where you could place your bets. If your bet was wrong and the other horse won ... oh well... I don't enter a trade without this attitude. It gives me a greater tolerance to seeing negative numbers.

I took losses when I started, I didn't plan to and I didn't try to, I just did. Sure it hurts but I'm a far better trader for it, and the lessons learned were priceless. I took a 200 pip loss on two trades recently (400) total... So what? I was wrong. I'm still wrong sometimes. No biggie. I mean how else would you know market direction right? :) there is no doubt about direction when your losing money!

I don't think a beginner has to lose big but losing little bit by bit is far worse. Eating away at them like a chewing, gnashing psychosis that just can't deal with losing another 1000 trades! ARGH!!!!! Widen your stops give our trade some room to breath, most beginners use stops that are just to small and they get chipped to death.

Losing is not a bad thing - If you learned from it. A trader needs to learn what he did wrong, and stops that are to tight will always lose. Usually you're proven right, after you lost your stop. Get back up and keep your hands on the handlebars this time!
 

rajms19

Newbie
4 0
We are humans. everyone makes small mistakes in the begining. The matter is that how he learns from that mistakes.So starts with small trade,then increase ur trade as u became established in the field. Thats all i can say.Maybe it seems to be joke to some other's ,but its the fact.

Regards
Vivek
 
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bottomdollar

Active member
217 1
People say that trading psychology is 80% and the actual trading process (or system) is 20%. The more I trade, the more I agree... no matter how good a system is, us humans like to tweak and play until the original system is no more.
I don't think there is any other way to gain the right trading psychology without trading which means losing money... there's nothing quite like trading which can build this up.
I'd be interested to know what other people think
 
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