Trying to Get Started again

[yongp]

Hello,

I've been trading for a couple of months on the YM and forex, and blew my account twice. Attended a course on using chart patterns and read too much books on trading, but am still struggling to find a set-up that will work for me.

Lately, I've been contemplating to quit but my inner voice is fighting hard for me to hang on. How would you overcome this "verge" of throwing in the towel?

Also, is there any e-courses / materials on the internet that you'll recommend.

Much thanks!

 

[TomTom]

Hi , Your at a difficult time in this business. My advise is if in dought stay out. Then having said that if you have not had good guidance to strat with you are on a road to now where.

I have to be blunt, sit with an expieranced trader, get some education regarding this business, set out a plan, money management, stratogy. Sing up with a good broker ( not SB Firm ) depending on capital 9 any thing less than £5k you should not be doing this .

Plenty of good traders here who might spare you some of there time in return for beers/curry , a few hundred quid ect.

So the trick is to get fully educated, then you have a greater chance of surviving, with out this you will cirtainly fail........

TOMTOM

 

[ejtrader]

Hello,

I can relate to your pain. I havent blew my account but i have experienced huge losses about twice. The 2nd time i really thought about quiting, too, but instead i decided to go with an broker assisted account. I had always gone solo and done really well but its 1 or 2 mistakes that kill me. The broker helps convince me to take profit more often and take losses instead of letting them run.

If u havent read them already i suggest u read Trading by the book and trading the ross hook, both by joe ross. Best books i have read. Well ive read only half of each but it gave me a better understanding of ranges, trends, support/resistance, and trading breakouts.

So now a days i just use price action and support n resistance to trade and with the broker as a voice of caution, ive avoided huge losses.

Well i hope this helps.

 

[wallstreet1928]

my advice- and I say this time and time again ..............is to trade small!!

only trade 1 point on FTSE and Dow jJones or any other indices...........even if you take a hit it won't hurt you. Eventually you will build up your confidence after trying several trading strategies and learning from your mistakes......

always trade with a 50 point stop loss and even if you have a 50% success rate, you are still breaking even........

40% success rate you are only losing 10% , 30% success rate you are only losing 20% of your capital

think about it ......

always trade with a 50 point stop loss

 

[Chorlton]

Hello,

I've been trading for a couple of months on the YM and forex, and blew my account twice. Attended a course on using chart patterns and read too much books on trading, but am still struggling to find a set-up that will work for me.

Lately, I've been contemplating to quit but my inner voice is fighting hard for me to hang on. How would you overcome this "verge" of throwing in the towel?

Also, is there any e-courses / materials on the internet that you'll recommend.

Much thanks!

How long have you been interested in Trading or more importantly how long have you been looking at charts and studying them?

Also, have you read any books on Money Management?

 

[advfntrader]

I know how you feel. I too am thinking of re-entering the market for real after huge losses. been demoing for a while with some success

 

[wallstreet1928]

I remember I lost £2500 in one day from the 7/7 bombings in london when the market crashed...........

I never believed in stop losses then but now I believe in them religiously.........stop losses help take the emotions out of trading, which eventually cause you to extend your losses and hold your position until the inveitable happens...liquidation!!

essential formula: stop loss = no emotions= efficient trading

 

[advfntrader]

new traders don't understand the real need for stops until they suffer a huge loss. you just can't recreate the feeling, the nervousness, panic, fear, not knowing what to do. you money is gettign taken...close out and take the hit....or just hope it comes back.

better to define the stop before placing the trade

 

[wallstreet1928]

I may have understood/semi- mastered the concept of stop losses but I don't think I will ever master the concept of an exit strategy............

I am always too quick to take my profits and then watch the stockmarket roar ahead.........

With CFD's you don't even need a massive amount of capital to start............£2k is minimum with CMC markets and thats more than enough whilst trading 1 point on the indices.???

 

[yongp]

Hi , Your at a difficult time in this business. My advise is if in dought stay out. Then having said that if you have not had good guidance to strat with you are on a road to now where.

I have to be blunt, sit with an expieranced trader, get some education regarding this business, set out a plan, money management, stratogy. Sing up with a good broker ( not SB Firm ) depending on capital 9 any thing less than £5k you should not be doing this .

Plenty of good traders here who might spare you some of there time in return for beers/curry , a few hundred quid ect.

So the trick is to get fully educated, then you have a greater chance of surviving, with out this you will cirtainly fail........

TOMTOM

You're right...i need to get my mind set right and get the basics in place first. My small capital of less than £1k is definitely contributing to my poor performance too.

thanks!

 

[yongp]

Hello,

I can relate to your pain. I havent blew my account but i have experienced huge losses about twice. The 2nd time i really thought about quiting, too, but instead i decided to go with an broker assisted account. I had always gone solo and done really well but its 1 or 2 mistakes that kill me. The broker helps convince me to take profit more often and take losses instead of letting them run.

If u havent read them already i suggest u read Trading by the book and trading the ross hook, both by joe ross. Best books i have read. Well ive read only half of each but it gave me a better understanding of ranges, trends, support/resistance, and trading breakouts.

So now a days i just use price action and support n resistance to trade and with the broker as a voice of caution, ive avoided huge losses.

Well i hope this helps.

i never thought about using an assisted broker. Perhaps that's why I've been over-trading too. Read the other three of JR's books. However, found that entering at a tick below the Ross Hook or when #3 is taken out was dissappointing as most of the time, prices will have a pullback and that went smack onto my stops.

cheers!

 

[cryten]

Yong YM and Forex are both highly volatile markets to start out trading. Have a look at the FTSE, I havn't looked back since I did.

 

[advfntrader]

cryten what system do you use on FTSE ? I have found it difficult to trade in the past

 

[jimbob42]

The entire subject of stops really deserves a thread of its own. I have been doing paper trader for a few months now and wonder what tpe of stops people are using on the ES?
The idea of a 50 stop on the YM seems interesting and I think I will try it
I have been trying Ninja Trader to get a feel for it and have tried to combine stops with profit targets to keep my risk under control using 1 contract.
Any thoughts on trailing stops while we are on the subject?

thanks

 

[Charlton]

Maintain capital at all costs

At all costs maintain capital then you live to fight another day.

How do you maintain capital ?

Know in advance what signals will demonstrate to you that your assessment of the market is incorrect. If these signals fire just GET OUT.

If they the signals fire too often it tells you that your strategy is wrong, but at least you are no longer trading on emotion i.e. fear of loss. Once you have sorted out the strategy when you are no longer under pressure you can resume trading.

If you are missing out on profits by exiting too early, you are again trading on emotion because you fear the loss more than the potential gain of staying in. To remove the emotion again, determine what signals would inidicate to you that the risk of staying in the position is mounting. When those signals occur and you are in profit then close 75% of the position to bank your profit. Leave the rest with a stoploss at break-even plus 2 cents profit for the rest of the day. This is a free trade for you with zero risk, so all emotion is removed. At worst you will exit at breakeven on this remaining 25%. At best it will yield further risk-free profit (and often I have seen it yield more than the original 75%).

Balance risk with reward. If market circumstances because too risky e.g. too volatile then you can still trade but reduce risk by using smaller position sizes.

Don't lose opportunities - It is madness to stay in a losing position in the hope it will turn around. Not only do you risk losing more and more, because clearly the market did not turn out as you anticipated, but you are also denying yourself the opportunity of reversing the effect. By exiting at a small loss your funds become available again for backing the right side of the market and you will probably find that you can easily cover the loss and more. This is called the opporuntity cost lost by staying in.

Charlton

 

[cryten]

The entire subject of stops really deserves a thread of its own. I have been doing paper trader for a few months now and wonder what tpe of stops people are using on the ES?
The idea of a 50 stop on the YM seems interesting and I think I will try it
I have been trying Ninja Trader to get a feel for it and have tried to combine stops with profit targets to keep my risk under control using 1 contract.
Any thoughts on trailing stops while we are on the subject?

thanks

Think it depends on the market your trading, I can get away with trailing stops and better sized stops on say the FTSE or DAX where as FX having a trailing stop too soon in the trade can kill it too soon and cut your gains short. I also found I needed far larger stops though this mainly being a weakness of my system, ie setting a limit order say x amount of pips away to allow for retrace can allow for smaller stops if done correctly.

i guess at the end of the day it depends largely on your risk/reward. 100 point stop aint so nasty if your targets are 400. A trading buddy of mine who trades FX has a 20 pip target a day once this is met he still trades but from this point once a trade reaches + 20 he moves his stop to be + 1.

Perhaps tightning or locking in profits more as you start to get opposite signals to your trade may help. Or using a moving average to trail your stop.

 

[yongp]

my advice- and I say this time and time again ..............is to trade small!!



always trade with a 50 point stop loss

Wallstreet,
when i reflected on my trades, most of the time the direction is right but my 20pt stop always get hit. i think it's also my fear of losing more money and small trading account that's depicting my stop loss size.
thanks for the tip!

 

[yongp]

Yong YM and Forex are both highly volatile markets to start out trading. Have a look at the FTSE, I havn't looked back since I did.

I might give it a try. What about the DAX? Do you trade it too?

 

[yongp]

At all costs maintain capital then you live to fight another day.

How do you maintain capital ?

Know in advance what signals will demonstrate to you that your assessment of the market is incorrect. If these signals fire just GET OUT.

If they the signals fire too often it tells you that your strategy is wrong, but at least you are no longer trading on emotion i.e. fear of loss. Once you have sorted out the strategy when you are no longer under pressure you can resume trading.

If you are missing out on profits by exiting too early, you are again trading on emotion because you fear the loss more than the potential gain of staying in. To remove the emotion again, determine what signals would inidicate to you that the risk of staying in the position is mounting. When those signals occur and you are in profit then close 75% of the position to bank your profit. Leave the rest with a stoploss at break-even plus 2 cents profit for the rest of the day. This is a free trade for you with zero risk, so all emotion is removed. At worst you will exit at breakeven on this remaining 25%. At best it will yield further risk-free profit (and often I have seen it yield more than the original 75%).

Balance risk with reward. If market circumstances because too risky e.g. too volatile then you can still trade but reduce risk by using smaller position sizes.

Don't lose opportunities - It is madness to stay in a losing position in the hope it will turn around. Not only do you risk losing more and more, because clearly the market did not turn out as you anticipated, but you are also denying yourself the opportunity of reversing the effect. By exiting at a small loss your funds become available again for backing the right side of the market and you will probably find that you can easily cover the loss and more. This is called the opporuntity cost lost by staying in.

Charlton

Charlton,
what intraday time frame /tick / volume chart would you recommend for beginners?
i have another problem of always lowering my stops. I guess i did not trus myself enough. thanks.

 

[Charlton]

Charlton,
what intraday time frame /tick / volume chart would you recommend for beginners?
i have another problem of always lowering my stops. I guess i did not trus myself enough. thanks.

I would recommend a top-down approach using multiple timeframes. Determine what the market and its sectors are doing first at different timeframes ranging from 60 down to 1 min. Explore how an individual stock's movements relate to the sector and market over these same timeframes. Is there any correlation ? Do some stocks move more than others compared to their sector/market ?

I no longer use volume extensively . I used to be very interested in the analysis called VSA - volume spread analysis. This was proposed by Tom Williams in his book "Undeclared secrets that drive the stock market", which was later revamped by Tradeguider software as "Master the Markets". However the market has changed since he drew up the original concepts and programmed trading results in the distortion of volume, such that it doesn't reveal what it used to reveal.

With regard to lowering your stops, one thing you can look at is volatility of a stock. This is traditionally measured by indicators such as ATR (average true range), which is effectively the average movement in price over typically a 14 bar range at the timeframe you are trading in. As long as the market retains its current characteristics then this will provide some measure of how far you can expect the stock to move in that timeframe. Still, I think it is better to have a more inteligent get-out, which recognises conditions are no longer suitable for the trade to continue, using the stop as last resort.

However you shouldn't lower your stops, because if the trade is really going against you the chances are that you have got the direction wrong or missed the exit signals and it is likely to continue that way. Get out when the loss is minor and then you can trade in the opposite direction if the right signals are there.

There is no shame and nothing to beat yourself up about in making a losing trade. There is shame in not having a pre-planned trading strategy or not following it.

Charlton