What is your average daily profit? I think that you should not allow yourself to lose more money on any given day than your average daily profit. Pull the plug. The problem with a losing streak that gets out of control is that you lose control and rationality. You always think the next trade is the big winner that will redeem you and you even give back open profits because it was not big enough to pay back your losses. You want to get even, right? After a big losing day where you did not follow your plan or if you feel out of balance for any other reason, maybe a small losing day, take the next day(s) or the week completely off. You need to get back to a neutral mindset where you focus on the market and not on making back what you lost. The latter will cause you to lose even more. The times where I did not take a break, I pretty much always continued losing more money and the times where I did take a break, I pretty much always started out a winner when I got back. The best thing is of course not to have losing days, but even the best experience them so it is necessary to prepare for them and know how to minimize their impact.
Hi Daniel, Thank you for the advice. That makes a lot of sense and I think you are right about the psychological issue. So would you recommend also having a daily stop limit? Just to ensure I stick to the rules? Afx
Thank you very much for the response. That was exactly the kind of feedback I was looking for. I think I really need to implement that. I take it from the way you are writing that you are a day trader too? or at least you do some day trading? Thanks again Nexas
You have to know yourself and work out the parameters that make sense for you. I assume this may be correlated with the methodology and how discretionary it is, but there are traders who can handle a losing day without problem and be back on track the next day. Others may need to take a day or even the week off to regain their balance to avoid further damage. The essay I posted in this thread from Marty Schwartz was very enlightening for me when I first read it. Yes, I`m a day trader. Hope that helped. Regards, Laissez Faire
Your advice is really good! Thanks you soo much! We have something in common! I love Mart Schwartz, his book is great and his radio interviews excellent too. Would you mind me asking how long you have been day trading for and how long it was before you found your rythm and new you coul do it? Sorry if that is too personal. Thanks Afx
very common. my guess is: you are trading for P/L. I often get this problem. when I lost a trade, then I found another trade quickly, and I got another loser. I guess I was trying to fix those losers. I know I am stupid, how can I fix a loser? the best way is stop trading. after I totally forget about the loser, then I can focus on next trade. like some day, I am trading natural gas, I am shorting, but stopped out. then late it starts to drop just as I imagine, then I short it, it seems to tell the market: yes I am right, but oops, it bounces, cut loss again. at some point, I realized how stupid I am to let "this" mess up "all that" trades! the root problem is from P/L, also from EGO