Any Scenarios or sample of big loss day?

Discussion in 'Professional Trading' started by innovest_11, Nov 13, 2010.

  1. For daytrading, What if u bought size 2000 aapl and within seconds, it drop $4, and it is still dropping, then it stay at low price, will you hold for the rest of the day, hoping it will rebound or cut loss or keep holding overnight hoping next few days will rebound?

    This is just an example of how big loss day will occur , pls add on any example of getting big loss day.
  2. may916us


    If your account is big enough to hold 2000 Apple, I would suggest hold to next week. Apple has a conservative price target of $415 from Merrill Lynch.
  3. lescor


    A lot of trading cliches apply here:

    - Hope is not a viable strategy
    - The market doesn't care where you entered
    - If your reason for entering the trade is no longer valid, exit
  4. Redneck


    - Know the time frame you are trading and stick to it

    - No holding overnight in your day trading account (One of my hard learned rules)

  5. ammo


    every trade is a bet,each bet is a win or a loss,all bets are risk,the max risk should be determined before entering the trade,the undetermined max profit is how you win at betting,if your aapl trade is suddenly at that risk point, take it off, you can always buy it back,failure to follow this simple rule leads to failure....never look at a loser at the entry point,if you paid 2 and it closes at 1,the next day you own it at 1,the loss has already been taken, now do you still want to own it at 1,thats the question,not where you bought it,same goes for profits,already taken into your account,do you still want to own it at the new price.
  6. I nearly got into this position, luckily it did rebound and I got out with a small loss, normally I will not get into this position, anyway, Friday aapl action did remind me of the May flash crash of aapl to the very low, wat happen if u have too big size and the drop is so fast, and you miss executing your stop loss, hoping that it will rebound, but it just keep dropping, and the devil of avg down just linger around the corner... The size of 1000 avg down become size 2000, and it's still dropping, and finally if it never rebound, have to cut loss with a BIG loss
  7. bat1


    I learned if it's not acting the way you intended it to act

    GET OUT!!!! otherwise your little loss could turn into a bigger

    don't even think about it apply your trading rules

    if you don't have trading rules you best get some fast!

    other wise you will start to let emotions come it play

    then your really Doomed!!!
  8. ammo


    that happens to everbody,and hoping is the first response, , ...there is also an emotional pain where if i get out i will be mad at myself,if i get out and it rallies i'll be even more mad at myself,being mad or happy is unavoidable,but it clouds your judgement,you have to avoid it when trading, ,when you put on your trading helmet ,block out all the emotions, never judge yourself...just look at the trade...use your risk parameters,apply them ,they are there to keep you in business,its just a bad trade ,you take a loss ,nothing more...losses are good,every winner you have was someones loss,you just give it back once in awhile
  9. I would only stay long if I thought it would be, on average, more profitable to hold it than to sell or go short at the current market price. The prior loss would have no influence on my decision, assuming I had sufficient remaining capital for 2000 shares to be an acceptable size.

    Any other answer is incorrect.

    There's a simple set of questions to ask:

    1. Why am I Long? If you have no reason to be long, get out.
    2. Why 2000 shares? If that's too big, or too small, a position, then adjust as needed.
    3. What is my exit plan under each market scenario?

    That's all you need to know. If you have a reason to still be long, then stay long until your exit signal is given. Adjust to the appropriate position size for your capital and risk tolerance. If you don't have rules or systems in place for making these decisions, then stop trading and develop such rules & systems until they are ready, then start trading again.
  10. Unless there are new reasons for staying in the position, that were not applicable when the entry was made.
    #10     Nov 13, 2010