I look back and think, "Why the hell did I do that? That was nothing more than a gamble. I would have been better off putting my money down on the blackjack table." _____________________________________________________________________________ There are some great traders that emerged from being former pro black jack gamblers. They say they are using the same risk mgmt for trading from what they used as pro gamblers. I have incorporated this approach into my own risk mgmt by copying their bet/risk sizing and frequencies for making bets.
So what trade went wrong? Tell us so we can learn from your mistakes It's all about risk management, know what to do and when... that's basically your exit strategy, especially important when in the red. I know, it sounds easier than it is...
It's all about risk management, know what to do and when... that's basically your exit strategy, especially important when in the red. _____________________________________________________________________________ Most of the top traders emerged from having blown up a few accounts before they got hip to risk mgmt. While new traders obsess over entry signals, the seasoned pros obsess over risk mgmt.
I like to think of it as starting up a new business. Like a new clothing shoppe or some sort of restaurant. You need 50K to 100K to do it. This will include the basic equipment you need such as fast internet, trading PC and monitors, printer, trading platform, data-feeds, accountant for tax advice during the year's activity, and oh, the capital for your trading account, etc. So do that for your trading business, and you'll be way ahead. Rather than trying to get into it with a HP luggable and dial-up modem with a grand in your pocket. You dig?
After 10,000 hours , most people are still here ,you had 20 replies , none of them told you the correct answer because they dont know the answer after years . None of them bothered to read into the most important subject , emotions and phsychology. Let me again explain what happened , You had desire (an emotion) to make money . your emotions clouded your judgement , it is called amyglada hijack or emotional hijack . In one of your other threads , i gave the same answer , traders need to learn about phsychology and train for "perfect trading mind". This is virtually impossible because human brain is wired incorrectly to trade the markets . read on mindfullness https://www.google.co.uk/webhp?sourceid=chrome- instant&ion=1&espv=2&ie=UTF-8#q=mindfullness a mental state achieved by focusing one's awareness on the present moment, while calmly acknowledging and accepting one's feelings, thoughts, and bodily sensations, used as a therapeutic technique. amygdala is a overreactive emotional brain , it will act to defend you in times of need , but also it overreact with desires and greed.A trader I knew , ended up put on larger lots , than his trading plan ...... all due to to the emotional brain hijackings.Another trader used to come in and out of trades , because his amyglda was overeacting to small moves.Another trader used to put on trades driven by emotions , when all the technical odds were against him. 10,000 hours bs is not going to solve the problem , going back thousands of years , your dna and how the human brain is wired.
I started this thread to help people understand , why traders go wrong with information processing ,related to a particular trade https://www.elitetrader.com/et/thre...-processing-information-about-a-trade.303149/
I should note that tomorrow marks exactly one year since I quit my job and started trading full-time, and so I've been doing a lot of reflecting. When I started trading full-time, I made up mind to get in the game. Don't keep money sitting on the sidelines. Push myself. Don't keep money in the holding account because its safe, employ it! Make mistakes, lose money, win money, but be sure to learn and grow from each and every experience. Like the old adage, "A ship in a harbor is safe... but that's not what ships are made for, and eventually its bottom will rot out." With this attitude, I have made a TON of mistakes. Some that are weighing a little more heavily right now are 1a. Crossing orders. I crossed orders THREE TIMES today. On one occasion, I was watching the market like a hawk, waiting for the perfect time to cover a short. Finally, after hours of staring at my screen, the price spiked to where I wanted to cover! I moved fast--too fast--and sold instead of bought! I ended up stuck with double the position that I wanted to dump! AARG! In the moment it took me to realize what I'd done, the price had bounced up again. 1b. Hoping. Later that day, I crossed buy and sell again, and picked up an extra 400 shares of something instead of reversing a position. I decided, "Maybe it's for the best. Keep it in." Nothing doing: it moved against me. Another time, I entered a limit order instead of a market order, and lost the price that I wanted. I really need to be more careful. I find the order entry on my terminal to be clumsy; maybe I can switch it somehow. 2. Gap Spike Strategy. I noticed a pattern in some equities: in the morning, they would upspike/downspike at the opening bell, and within 10 minutes, swing back to the previous close. I decided that, right at the bell, I would scan for equities that made a big move in a direction, and bet the opposite way. Quick, easy money, right? Well, it worked a few times... but then I tried it with Nasdaq:JNPR on 22 Sep 2016, and shorted at $22.70. It just kept going up and up and up!!! I'm still holding some as a deep float. 3. Reversing too soon. I like to work groups of equities within the sectors, get to know how those specific stocks move, and swing trade. I strive to stay long when the price is going up, and when I think that its going to swing the other way, reverse to a short. The hard part, of course, is hitting the turn at the right time. Sometimes I find myself reversing my position, but the price just keeps on going, and I lose my profits almost immediately. This is to be expected with this strat, but it still hurts to lose. My goal is 60/40: Win 3 out of 5 bets. If I can get that good, I get $1 every 5 trades. I really shouldn't be beating myself up over this one, but I am; hence this post in the Psych forum. 4. Gambling. This mistake was a while back, when I was still learning just how dramatic the effects of earning announcements can be. I decided to bet long on Nasdaq:SWIR earnings. The next morning, I watched it drop off a cliff, and my account value drop almost 2%. I really had no business keeping those shares through earnings. I didn't really do any research on the company, other than glancing at their Web site and thinking, "The Internet of Things. That sounds sexy! I'm in." It was nothing more than a roll of the dice. 5. Winning by luck. Oddly, the thing now irritating me most is that my biggest win was by pure, unadulterated luck. It was 18 Aug 2016. I was long on Nasdaq:BRCD, and it was the day of their earnings announcement. After the experience of #4 above, I made sure to do my research this time! After several hours of careful study, I determined to exit the position, and not reverse. I breathed a sign of relief as I listened to the call, and watched it spike down. "Good work," I said to myself, "you did your homework, and got out at the right time." I kicked myself slightly for not having the balls to go short, but I was happy that my research and analysis was correct. So what? You might be wondering. Well, I then glanced at my screen, and saw that my account had soared up almost 3%!!! "WTF?" I thought, "What happened?" As it turns out, I was long on Nasdaq:NTAP, which also had earnings on that day, and exceeded expectations with great forward guidance. The price soared up almost $5 per share! I was on the right side of it, but it was total luck. I was so busy researching Nasdaq:BRCD, that I completely missed the fact that NTAP was also announcing that day. That, my friends, is the story of my biggest win ever.
1. Crossing Orders? Stop trading so fast! Get success on a slower timeframe, first. Why add latency and speed into the battle unless you can improve some proven profitability that you have trading slower? 2. Analyzing gaps isn't a terrible baseline for a strategy, but something as simple as "A gap always reverts" surely sounds too simple to do better than a 50/50 bet. 3. Reverse? Why not just cover? Stick to trend trading or countertrend trading, but don't put them together until you've gotten good at both individually. The dream of perfect efficiency in a trading day is alluring, I get it, but...
Also, I don't think "reversing" should be an idea you consider...it's really like two trades. If you're long, and the trend shows weakness, covering could be prudent. But is it a short signal? Would you enter a short if you were flat at the same moment?