So I've just lost a large amount of money because I stupidly left a trade on all weekend, thankfully I've built up a small reserve stash so I should be able to get it like it was. $200 lost though, burns! I was well on my way to making back what I lost too. Any of you had any major slip ups like that due to simply not understanding how the markets work? I know I'll be able to make a lot of money with some good effort just like I was a week or so ago but I'm beginning to wonder if there's anything else I should look out for as someone who's just started trading. I've also found myself completely buggering up for a long while due to opening up a trade way to early or alternatively too late, think that might be another sign of just needing more experience again.
You must be under capitalized to consider a $200 loss a "large amount of money" along with making a message post about such (seriously). Further, you clearly stated in the beginning the reason for your loss via saying "I stupidly left a trade on all weekend" and then you later say or imply it's "simply not understanding how the markets work". Resolution * Don't hold trades over the weekend if a $200 loss is going to bother you this much...it could have been much worst. * Don't trade if you don't understand the markets. Simply, you can learn to understand the markets without trading...without that first real money trade. Lets put it this way, would you let a doctor operate on you if he/she didn't spent years learning and understanding what to do prior to their first surgery? * After learning about the markets...that's when you'll be prepared to learn how to trade to fix those trading mistakes you've mentioned. ------------- Simply, most newbie traders think learning how to trade and learning how to understand the markets are the same. They are not the same...one must occur prior to the other. Incorrect Learning how to trade ---> Understanding the markets Results: "costly education" but you can get started trading immediately. Correct Understanding the markets --> Learning how to trade Results: "inexpensive or free" and obviously takes a long time of preparation prior to the first trade. Mark
To correct myself I lost about $100 completely trading as a newbie and then another $100 in one trade because I left it on over the weekend. I know what you mean though I pretty much have a reasonably solid system going now and I know how the market works it's just a matter of making sure I don't do anything stupid with my money again. I dunno what can be considered undercapitalized really, because it's like when you lot are talking about wealth. What exactly do you consider to be wealthy? I guess it may well be the same thing, I know for a fact however that you can't really do much with less than $50 though. Edit: Thanks very much for the info by the way.
Now it sounds like you're doing good...you have a reasonably solid system going now, you know how the market works and you now know not to hold trades over the weekend when that wasn't the initial goal of the trade and the worst you've done is loss a total of $200. That's great and you're welcome. Mark
lmao Considering I originally had about $500 in total I suppose it isn't that bad but still, ARGH! >_< I've just been really burned by this loss lately and it sucks because it was almost exclusively because I wasn't experienced enough.
Hopefully, your losses will continue to remain small. But if your doing some things right your equity will grow and so will the amount risked and therefor your losses too. Not trying to play my loss is bigger than your loss but.... I have lost high 5 figures in one day due to my errors. My most recent loss occurred after putting on a short copper swing trade just before an earthquake happened in Chile, markets reopened Sunday night and tada instant 14point loss times $250 a point. This loss was an unforseen effect of a global disaster. I had my stop loss in and it did its job and was a vivid reminder that a stop loss may not limit your losses to amount expected but only gets you in line to exit the trade and then the market takes over after that. It was also a lesson in not overleveraging since if I had 50 contracts on, I would not be able to continue trading. I'm a graduate of the "Incorrect" school of trading and damn proud of it. Seriously, Losses are part of trading and understanding how you process such an event is unfortunately through real life experience. No amount of papertrading will similate how you react to the loss of real money. Paper trading is a great way to practice the mechanics of your chosen trading methology but after that your on your own. Even trading a automated strategy on your own has it own set of emotional hurdles to overcome. That is why some use a broker assisted automated trading strategy so they are almost completely removed from the emotional process of trading. Studying market structure and learning the mechanics of trading are important. It really gets interesting when you learn about how you interact with the markets. If you can learn the dance you have a shot at profitablility and getting your toes stepped on often goes along with learning to dance. Good Trading.
There is one major flaw you refuse to accept. Being inexperienced is one thing; being underfunded is a completely different matter. Even the most experienced trader would have a helluva time with mere $500 trading capital. As an inexperienced trader, you stand no chance of winning, let alone surviving. My advice: Don't trade before you have at least $10,000 under your belt. Even that is not enough.
A 40% loss is part of the game, no matter account size. I haven't lost that much to the market yet, but I have lost 100% of invested capital several times in other business venture. Make sure you learn something from it.
I don't think 40% down should be skirted under "it is part of the game". If you lose 40% of your equity in one trade, you have taken on too much risk. It is gambling not trading. Or that you are very under-capitalized. If you have a peak-to-trough 40% drawdown in your equity... it happens. But you need to seriously look at what you have been doing and something is very wrong. Again this is not "another day in the park... just part of the game."