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Pension_Admin
Registered: Nov 2006
Posts: 2208 |
01-16-10 03:51 PM
Neke, I feel your pain. $90k is a lot of money and the lesson from from this is so basic that I don't think it is worth $90k. You need to realize the money in your account is real money and you could have used the $90k to buy something real.
Average down may work before and it may have help you bring your account to this level, but you may want to think about your account size relative to your strategy. Average down is not too big of a deal if you have a small accont and can afford to lose it all, but now your account have grown to a good sum, average down is a huge deal. You need to rethink your trading strategy with a focus on capital preservation.
One good advice I have gotten is that trading is not a sprint race, but is a marathon. There will be a lot of people running faster than you and each time they passed, you will get tempted to out run them. So, don't get tempted.
PA
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NoDoji
Registered: May 2008
Posts: 8125 |
01-16-10 04:34 PM
Quote from neke:
This time, it is activating my max stop rule for a trade. Sometimes it could get you out at the worst time (to see the trade subsequently go in your favor), but on the whole I think it will make me think hard before deciding to average in, and if that helps resolve that, I would be delighted.
I've found that a "max loss" price zone is often the point at which price pivots, because the professionals are familiar with the kind of setups that lure traders into picking the wrong direction and also with the price zones that these trapped traders believe are simply way too outrageous to ever be hit. So your max loss stop is hit and THEN price turns in your favor and this causes the rotten thinking that makes you average down later on and refuse to take a loss until the pain is overwhelming.
This has happened to me so many times (resulting in my largest losses) that I've learned to place my stops very close, right at the price where the setup becomes invalidated.
You can always get back in. If you took a $10K loss on BIDU with $5K of that being spread and commish, then tried again and took another $10K loss, then decided enough of this, BIDU is way too strong to be shorting today, you've conceded with a manageable loss.
I've had days where I overtrade and get whipped around to the tune of my max daily loss. But this beats averaging losers because price will NEVER get to THAT point, only to find myself down 5 times my max loss.
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BPtrader
Registered: Jan 2009
Posts: 625 |
01-16-10 05:39 PM
Quote from neke:
Lost 102K in stock and 14K in options.
Loss in one day: 102k+14k=116k.
With that amount of money, you could buy a 3-bed-2-bath newly constructed house in a subdivision not far from where I live.
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Pension_Admin
Registered: Nov 2006
Posts: 2208 |
01-16-10 06:15 PM
The money is real. To put it in perspective, you could have bought a nice car with that money.
I am sure there are some other successful traders telling us to not think about money when trading, but that is a complete BS! (Yes, I am a newbie and I am calling it a BS) It's too general and it doesn't tell you when and to what extend we have to not think about the money.
The bottom line is that we trade to have a good life. You are already got the good life. Don't throw it all away. Preserve your capital!
PA
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usman88
Registered: Dec 2007
Posts: 848 |
01-16-10 06:31 PM
Goodluck for 2010!
Btw why do you have a day job when you actively day trade a considerable amount? Considering your profits in earlier years, I can't think of any job which pays more than your profits.
Or maybe you are is a different time zone so that your job does not affects your trading?
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Pension_Admin
Registered: Nov 2006
Posts: 2208 |
01-16-10 06:46 PM
Quote from ThePropTrader:
Here we go again.. geez... the difference between you and Neke is that he is one of those people that you and most others question how did they do it when they made it big. When trading, you must detach the value of money and treat it only as credits or points but if you look at the value of money in terms of what kind of car I could buy then you will be the person that all your life you will wonder how the guys driving a 100k car and living in 500k house do it. Sorry for being so blunt but I dont know how else to put it.. Think about this.
I know exactly what they do and how they get there. Unfortunately, I know where they are heading. That is why I post in this thread to give him a different perspective.
Just a little post from memory lane of a successful trader who average down and successfully created his own hedge fund.
He has disappeared now.
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