many times when i have a losing streak it's because i was undisciplined and overtraded. i have absolutely no problem taking a loss on the day if i felt as though i was making good decisions. after going through many peaks and valleys in trading, i tried to determine the root of my losing streaks. inevitably, it was because i lost my discipline and deviated from my style of trading... the style that works for me. i decided to keep a short daily log. at the end of every day i keep a log of: # of shares traded, gross profit, net profit, overall feeling for the day, and discipline (a simple yes or no). i think the act of writing down your thoughts in a journal really helps my trading. it forces me to really consider what i did wrong and how to not repeat those mistakes in the future. whenever i have more than 2 days in a row of being undisciplined, i scale down my size until i regain my confidence. it has definitely helped.
If I am having a bad day I simply stop trading. For example today, the trend started off down - was shorting doing great. Then the trend changed started scratching trades and losing. I stopped for the day. Ended up $592 but if I had stayed in I would definitely have given it all back. Know yourself and your temperament. I get moody so If I feel myself getting pissed then I know it is time to stop trading for the day.
I know that on any given day i will lose x amount of coin (stop for the day)........I will only get pissed if that x-spot has been violated...Anything between that and my stop gain is a good days work..........
I'm guessing most people who have a hard time coping with losing streaks are discretionary trader. Am I correct or am I assuming too much?
wavetrader, I had a very bad losing streak. It can be very damaging to the mind and body. People who didn't even know me would stop and ask, "What's wrong." And I was doing everything right. Disciplined trading. With the trend, fading the trend. Small moves, swing moves, long, short. It didn't matter. At one point, 16 losers in a row, and each loser costing me 2% of my stake. And that was after I had gone to a one trade per day limit. So that was a very trying 16 days. (That's more than 3 weeks without ever seeing anything.) You don't need advice, so I won't give it. Just letting you know you are not alone. The thing that finally got me out of it was, I just quit trading and was watching a baseball game, and some hitter in a slump said he got out of his slump by trying to hit a grounder to short. After he proved he could do that, next time he hit one to second, and pretty soon, he was hitting them wherever he wanted. So that's kind of what I did. You can't believe how triumphant I felt when I finally got my first one tick profit.
I guess the biggest difference mentally is the fact that you always have a hard stop in, instead of casually watching the position go against you and think "oh well, i'll just add some more down here." For me I was getting too lax about positions going against me and got into a habit of resorting to avging down to turn the trade profitable. This method definitely doesn't work for every style of trading, it only suits me now because I'm just intraday trading NQ's with relatively tight profit targets and stops. I will at most try a triple lot (hasn't come to that so far), and if I get stopped out of that one then it's a good bet that I better just step aside and let that train barrel through (today was a good example). I think it's just a corollary position management method to averaging down; there are certain situations where you definitely want to be in but just can't pinpoint the bottom, but where the lower it goes, the more you want to buy (best applied to sectors and indices, not single stocks imo).
A time-honored way to deal with a losing streak is to take small profits. Nothing like ringing the cash register a few times to improve your outlook. Now if you are a scalper or are already looking for small profits, that is a bit of a problem. Another method is to go only with your best set-up, and force yourself to wait for it, days if necessary.
IMO great question/statement. See, Vulture and Nitro aren't the only intuitive Chicagoans on this board. I am a truly discretionary trader. In fact lately on many days I haven't even looked at a chart. They're often just a hindrance to my play. Depends. I use whatever I think I need that particular day. But Gann, you can bet your bippy it makes me cautious-paranoid about how I'm going to ultimately handle the downside of a trade. I add to both winners and losers. I initiate off of strength or weakness. I also may trade responsively to either. ideally I flip freely during optimal range extension periods, but when it works best it comes from my belly not my brain. Therefore I really shouldn't be mechanical with my losses, but should let my feel get me out. However for several reasons I am relying increasingly on set stops. For starters as a discretionary trader I have biases on many days. Very hard to let that stuff go. Even worse, ever notice when your the most bulled up is invariably the huge down day. Those cognitive illusions! Only a predetermined exit will save you from that carnage. Secondly, since like most traders I don't milk the good ones for what they're worth. The big loser really screws with the P/L, if the winners are too ordinary. Even with a win ratio as high as mine, I've spent years chasing the dragon because of ridiculous bad days. And lastly for now, it gets to a point where you have to think this trade is undeserving of this kind of stress.I mean how much shit is worth it to make several points. I love the old saying, it can't work if it's not working. See it for what it is.
Wavetrader, I've been in the same boat, after a winning streak you naturally want to increase size, but with futures margins being what they are even adding a single lot could really throw off your future expectancy/drawdown. Overconfidence was probably a factor in perhaps making you less rigid in your stops or making you overtrade, but it's also likely that in increasing your size after a winning streak you just fell victim to the law of numbers. Winning streaks are destabilizing by the very fact that we get less used to taking even the smallest losses, while large drawdowns tend to disappear from the realm of possibility in our heads. As for getting that edge back, go back over your trades you made when you were profitable and ask yourself questions. Did the trades executed follow some sort of planning, or were they kind of haphazardly made? Did you need to average down alot to produce the winners, and did you need to sit through large drawdowns before the profits came? If you find that you really had an edge to apply that is profitable beyond random luck, then it's just a matter of getting back in the game and reapplying that edge, and cite the loss of discipline for letting things get out of hand. Large losses are inevitable; the important thing is to learn from them and not forget how they came about in the first place (doubling down, no stops, overtrading, etc). Having an edge is only 50% (or even less some might argue) of the game, the rest is money management and mental discipline. Study your winning days hard, but study your losing days twice as hard (forget who I'm stealing this from). Don't let that pre-paid market tuition go to waste!