After a loss, I have the urge to get back into a trade and double the size. And if another loss happens. I'll do it again. Is it the idea that it's not possible to have another loss in a row or that I don't want to be at a loss for the day that makes me jump into trades without any edge. How does everyone have the discipline to sit on their hand until their edge appears? Do you ever get pissed off at a trade and jump in again with double size only to get run over again?
Hey Sanjura, I know exactly what you mean.. I don't double my size but I am very anxious to do another trade and get my money back or at least some of it.. I hate ending the day in the red.. and it causes me also to take trades that don't fit into my trading plan.. Once I get control of this I feel I will be doing very well.. Good Luck, Jeff
Sanjuro, The method of doubling your bets when you lose is called the Martingale method. I haven't tried it with trading, but was recommended to give it a go in the Casino. Anyway, on the day prior to my first planned visit I decided to crunch some stats to see what I could expect to make and the results were scary (in a VERY BAD sense). So one possible way to get discipline might be to fear the BIG loss which using Martingales will eventually bring. This link may be worth a read: http://keplerweb.oeh.uni-linz.ac.at/trading/moneyMan4.htm Regards, The Stats Monkey.
Maybe you should define a set of rules to follow and strictly adhere to them. You shouldn't be doubling your size just to get your money back. This is known as revenge trading and is comparable to gambling. Take a look at each trade as an individual transaction. If one trade doesn't work out just say to yourself "next", watch for another setup..be patient and strike when the risk reward is acceptable. If you really feel like the instrument your trading is going the other way just buy your normal size....this way if it doesn't you don't lose more money than normal and if it does you may make your money back and then some. Good luck!
sanjuro, Oh, I know what you are talking about! Oh boy Oh boy! I've been there and done that. Many times. Luckily, those days are a distant memory for me. Now, I know why it takes so long to master trading. You have to do ALL the stupid mistakes and experience the pain first hand before you move on to the next level. The calm I feel now is b/c of the many turbulent moments I had earlier. I'm sure there will be many more lessons to learn. But I'm glad I've learned quite a few important ones already and putting them to good use. It will come to you grasshopper... keke. j/k good luck!
Last week before the FOMC announcement, I found myself in this situation. Heres my remedy Remind yourself how much you enjoy doing this for a living and how much you want to continue doing it. It is in this frame of mind that you can nuke your account.
This is an extreme risky way to trade. I have traded like that in the past and still fight those urges everyday. I have lost money very quickly before only to add and keep adding as the loss grew in size. By the time the damage was done i had lost in 3 or 4 hours the equivelant of 3 months of profits. That really sucked. Why did this happen? I had played that game before many times and had some losses turn into profits and some still ended up being losers but i never got hurt real bad so i was under the impression i was doing nothing wrong. Believe me when i tell you this is a dangerous game. And if you do have a real blowout the psycological effects can be deadly!!! I am speaking from experience! In the long run when i look back those mistakes helped make me into the trader i am today so in a sick way i guess it was for the best. Hopefully you will learn from people posting here and not the way i did. good luck!
This can be solved: this idea is wrong It is only true if there is INDEPENDANCY as for probability law and it is not the case here and there can be several reasons - but I won't extend by giving a lesson on probability.
the situation you describe is a MAJOR issue. not knowing you, i can only base the following on what you wrote, so please do not think i am ripping on you--- it sounds like a gambling problem to me. i recommend stopping trading in total NOW ! best, surfer
Ahhh, you want REVENGE! But think about it logically ... if you put on a trade that you felt was right for you and LOST money what is the probability that jumping into another trade, doubling the size, with negative emotions flowing ... will actually be PROFITABLE? In my former days, after some expensive "revenge" trading I learned to get up and walk around the office or down the hall to cool off. Don't enter low probability trades trying to make a quick profit to offset an earlier loss ... you'll more often than not increase your losses.