What is wrong with me?

[daz2345]

Hi guys,

I know its my first post but i've been reading T2W for a while and was hoping to raise a smile or two and maybe a few friendly words of advice .
So bit about me i've started trading recently after 6 months of paper trading and being successful using demo accounts etc. This is after working on a trading strategy for about 2 or more years. So the big day came and I credited the account and blew it all in a few days - this was about three months ago. Realised that my account level was to small to over come the spreads and that i needed to be more disciplined to my trading strategy :idea: So with this in mind i saved up my pennies and credited more to the account.
Dont need any guesses as to what happened next do ya?
Made some successful trades and thought I had it cracked so I then
1). upped my stake - i dont know why
2). went to sleep whilst having a trade on (i work nights and trade the dow/spx)
3). Completely blew the lot
This is even after I drew up a checklist to mark off all the things I can and cannot do as I enter a trade.
Did i use it - did i hell!
The worst thing is i reviewed what had happened the way I should have traded as per my strategy and it would have been a bloody good week so far - oh and i worked out how much i've blown so far £1000+ not good for me being as im pretty poor.

So guys the question is what is wrong with me and what can i do to fix it. I have read nearly every single post on keeping your cool and trading psychology and I also feel that my strategy is pretty good and I have complete faith in it. Its just that im the weak link i suppose.

All comments good, bad or particularly funny will be much appreciated.

Thanks Darren

 

[Trader333]

It appears that you are placing trades without taking into consideration the market volatility of the instrument that you are trading in your given time frame.

When entering any trade your position size should be such that it can cater for the loss that you will incur as a result of the market moving against your position by the amount of expected movement as indicated by a volatility measure. Many people use ATR to do this and it works well enough for this aspect of trade management.

So how did you go about determining what the maximum loss could be before entering the trade ?


Paul

 

[daz2345]

Hi Paul,
Ok my general idea is that losses should be kept to a minimum as a percentage of my account total I dont have that much money so my thought would be to set this at 3% until my account would hopefully! grow. But this didnt happen in the slightest as I seemed to become transfixed by this stupid notion of just a few more points and i will cash out, just a few more, oh c**p get out get out of the trade and then damn its hit the auto stop loss and i didnt even have the chance to place my one in the first place - because shock horror I was making money and even adding to the stake size even when there was no indication of trend continuation because it must keep going in the same direction.
Told ya i am the weak link
Thanks - I will look at ATR for volatility as it had not entered my mind but that may be due to my particular slant on things

 

[damianoakley]

Hi Darren,

If it's any consolation, there's absolutely nothing wrong with you! - what you have done is human nature and nearly every trader has done what you've done. I blew up 2 accounts before I managed to finally get my act together and make a living from this.

You must never forget that trading is one of the toughest businesses in the world. Don't get downhearted about your losses, just make sure that you stop trading immediately and don't start again until you've taken some time out to actually learn how to trade properly.


Thanks

Damian

 

[Nut]

What is wrong with me?
Absolutely nothing.

Firstly I notice that you are perhaps spreadbetting, it's hard to beat the bookies. Consider other instruments. Some may disagree with this but it's based on my own experience, the spread kills.

You don't mention which if any books you have studied eg Murphy's Technical Analysis which is a great book covering most of the basics. Recently I did find another book which I feel would be most useful to beginers, it's called Channel Surfing by Michael Parsons.(Try your library)

Where Murphys explains the technicalities Channel Surfing explains a method of trading, it's a simple method but it works. I have traded for many years now and it was a long hard road to get there, if indeed I am there. Perhaps this road would have been shorter had I known about this book.

I wish to make it clear that I have no business connetion with Michael Parsons though I do use some of his advanced methods and from time to time we speak on the telephone.

Another good book in my opinion is Trading in the Zone, until recently I never bothered with all that psych mumbo jumbo, having recently read this book I must say it has it's merits.

I am beginning to sound like an add for a famous web based book site.

Good luck, take your time and learn to relax.

Nut

 

[rnl16616]

I would suggest that there are two areas to focus on: risk and stops. You need to consider that some trades you will win and some you will lose therefore you need to know how much you will risk and stop your losers before they blow your account. If you read books by people like Alexander Elder there is a strong recommendation to only risk 1-2% of your capital on any one trade or if you are being a gunslinger 2-5%.

In relation to stops - always set an automatic stop loss, unless you are watching the market like a hawk and will execute the stop manually. You don't know what will happen whilst you are away/asleep and that stop will protect your account.

Good luck

 

[daz2345]

Thanks

To all of you that have come to my beck and call I thank you sincerely.
It means a lot to me

and to the other 100 or so people that have viewed it so far - sorry for wasting your time but if you can contribute then again will be much appreciated.
Oh and by the way I have sat silent on this website for over two years and the amount of positive personal messages I have received since opening this thread has been overwhelming and truly inspiring - you know who you are guys!
So my point is if like me and you are, or have been, of a quite disposition then speak up - not specifically to me but anyone you like - you, like I have been, may be very surprised by the response you receive once you do,

Good luck to all with these stock thingy-ma-jingy's
Darren

 

[new_trader]

To all of you that have come to my beck and call I thank you sincerely.
It means a lot to me

and to the other 100 or so people that have viewed it so far - sorry for wasting your time but if you can contribute then again will be much appreciated.
Oh and by the way I have sat silent on this website for over two years and the amount of positive personal messages I have received since opening this thread has been overwhelming and truly inspiring - you know who you are guys!
So my point is if like me and you are, or have been, of a quite disposition then speak up - not specifically to me but anyone you like - you, like I have been, may be very surprised by the response you receive once you do,

Good luck to all with these stock thingy-ma-jingy's
Darren

Darren,

Read this thread:

http://www.trade2win.com/boards/showthread.php?t=21066

Pay close attention to the posts by SOCRATES & DepthTangent

 

[laptop1]

Darren,

Pay close attention to the posts by SOCRATES

Are You Serious???:

 

[Paul Wilson]

Hey Daz.

Stick with it man. You will be fine as long as you are a bit more sticter with yourself when placing future trades.

I have got the the same t-shirt. My first couple of trading accounts didn't last very long. That was mainly down to silly mistakes and guess work.

I agree with Trader333 in regards to the volatility of investments instruments. Indices are pretty dodgy for a newbie. Just ask anyone who was long on the FTSE on Thursday!

Maybe you should be looking more towards slower moving stocks? Losing 5/10 pips a day wont take you out as long as your stakes are reasonable.

 

[daz2345]

Paul,
Thanks have been thinking similar since posting this.
Suppose just stupidity of wanting large profits and being rather reckless.
Slow and steady at least until my trading account is larger I think is the key now

Ta Darren

 

[Splitlink]

Paul,
Thanks have been thinking similar since posting this.
Suppose just stupidity of wanting large profits and being rather reckless.
Slow and steady at least until my trading account is larger I think is the key now

Ta Darren

What you say, here, is the only way to go, so you have made a step in the right direction.

You have to develope an aversion to losing money. Most of us start with the idea that sooner, or later, you will have a big winner. That could well be true, if you have studied your strategy. But your string of losing trades must have small losses, or you will always be struggling to cover them and the chances are that you will not.

My feeling on this is that the only way to trade with a small stake is to day trade, because you have to be in front of the computer. It's not such a question of putting a stop. It's, also, one of re-entering the trade. This is difficult to do if one places the trade and walks away from the computer. The stop loss must be farther away, then, and the risk consequently greater.

An example is a trade I made on Friday, a long one on Footsie, which was doing very well. I placed my stop at breakeven and went away. I got stopped out. I did not lose anything, but I didn't make anything, either. It's not the first time that that has happened to me. I doubt if it would have happened if I had been there.

Split

 

[damianoakley]

My feeling on this is that the only way to trade with a small stake is to day trade, because you have to be in front of the computer.Split

You don't have to day trade to keep your stake small.

You can risk 1% of your trading capital whether you trade on a 1 minute chart or a daily chart.

Day trading could actually be very dangerous for a beginner because it places that beginner under pressure to make split-second money decisions about something in which they have limited experience.


Thanks

Damian

 

[Splitlink]

You don't have to day trade to keep your stake small.

You can risk 1% of your trading capital whether you trade on a 1 minute chart or a daily chart.

Day trading could actually be very dangerous for a beginner because it places that beginner under pressure to make split-second money decisions about something in which they have limited experience.


Thanks

Damian

Thanks Damien, and fair enough,

Right, the stakes can be any size at any time. It's where to put the stops. My present strategy keeps them pretty close. Therefore, when the trade goes against me, I need to re-enter again. Perhaps this is difficult split second stuff for a newcomer, as you say.
I don't like split second timing, myself, either, and always hope that I don't have to do any but losses incurred by stops too far away are the very devil to recuperate, IMO.

Regards, Split

 

[damianoakley]

but losses incurred by stops too far away are the very devil to recuperate, IMO.

Regards, Split

Hi Split,

Not sure I follow. Your stops can be as wide as you like and still only equate to 1% of your trading capital lost if they are hit.

It's all about how you size the position. A wide stop doesn't have to mean increased risk.


Thanks

Damian

 

[Lightning McQueen]

You don't have to day trade to keep your stake small.

You can risk 1% of your trading capital whether you trade on a 1 minute chart or a daily chart.

Day trading could actually be very dangerous for a beginner because it places that beginner under pressure to make split-second money decisions about something in which they have limited experience.


Thanks

Damian

Hi Damian

Yes agreed this should work ok on paper but as a beginner having looked and paper traded different time frame scenarios, I'm getting the impression (rightly or wrongly) that day trading could actually be the safer option for the beginner.

Plenty of time to contemplate whats going on if trading off say 1, 2 or 3 hour chart for setup and only looking at say 1, 3 or 5 min for trigger and entry.

Ability to keep stops tight as a D.A. therefore capital preservation at its best...wider stops on inter-day strategies a recipe for disaster for newbs, why would we want to lose 1% of our capital when only a fraction of this could be safely employed intra-day.

Intra-day trading = control = less stress.

Inter-day trading = less control = more stress.

Just my view here from my learning perspective, corrections of course welcome.

Lightning

 

[damianoakley]

Hi,

Why does the general opinion seem to be that a wider stop means that you lose more money?

Your stop can be $5 wide or 50 cents wide........if you size your position correctly, then you can lose exactly the same amount of money if the stop is hit in either case.



Thanks

Damian

 

[Jay.B]

Iv only read the first post so i maybe repeating some things that have already been said.
First of all how do you caclculate your stops? If you are basing them on a £ loss for example "i can only afford to lose £200 on each trade" then thats a big mistake!
because in a volotile week you could lose your £200's all day long.
Any £ or $ amount doesent mean nothing to the market. A stop loss should be a point of no return where the odds have just been stacked against you that the trade is no longer going to go in your favour. A £ loss will not suggest that. If you would like an example diagram of where i think an intraday stop should be then ill be happy to send you one.

Secondly as a new trader the BIGGEST mistake i made was thinking a great stratergy was good enough to make oney from the market. But believe me creating a stratergy that works is easy. Sticking to it isnt.
Trading physcology and learning to controll your emotions(greed,fear,euphoria) will be biggest transaction you will ever make in your trading carreer. I strongly recomend you learn this skill as it is the core skill of every succesfull trader.
Trading in the zone by mark douglas is book worth reading.

Hope this helps
Jay

 

[Splitlink]

Hi,

Why does the general opinion seem to be that a wider stop means that you lose more money?

Your stop can be $5 wide or 50 cents wide........if you size your position correctly, then you can lose exactly the same amount of money if the stop is hit in either case.



Thanks

Damian

If you are sure that you are correct in your assessment of the trend direction surely it is better to have a close stop, for the, hopefully, small percentage of times that you are wrong, than a far away one? Why be in a bad trade? I have given an example of my experience of Friday. A stop put at breakeven, one that I did not expect to trigger, got taken out. If I had put it closer......Oh, well The same old story. You've all heard it before.

Another point, though. I have found, because it always happens to me, is that if a trade goes down 7 points, it will keep on going and, eventually, I end up wondering if it has bottomed out at 17. So it goes on and quite often, where one eventually sells is, precisely, the point at which one should be buying.

Split



Split

 

[chump]

Relatively small capital.Use of SB's.Short time frames.Emotional indiscipline.

All of the above means there is nothing wrong with you,but you are treading a well trodden route.On a probability basis you would be a bad bet ,BUT some can and do emerge from the above combination of circumstance to trade their way to profitability.
Whether you will be one I don't know as I don't know you.

To improve your probability though I would suggest increasing your capital before sustaining much more of the losses that accompany the learning curve.If you retain SB's then increase your timeframe (and having more capital makes that possible)...and last but not least ,become obsessive about writing trading details down to try to cure the emotional indiscipline.If you can't cure the latter you're stuffed ,or at best marginalised because 80% of this stuff is in the 'mind' and taking and keeping control.
Practically , for where you are at 3% losses for stops should be trimmed to 0.5-1% maximum until you have a record that amounts to positive expectancy AND some people would say don't exceed that even then...I'm not one of those,but I understand why they say it.