This is really frustrating. Just got out of a painful trade. I thought I was starting to make sense of this and then, bam, there goes $15,000 right before Christmas. I haven't made a penny this year and I've been much more disciplined. Really wish I didn't have to keep paying market tuition. How does one handle this kind of disappointment?
Every time you are about hit the "BUY" button, first identify where you will place your stop. Then assume the trade will be a loser and ask yourself "am I comfortable with the amount of money I am about to lose on this trade?" If you answer is "no" then you must reduce your position size until the potential loss is small enough where your answer is "yes, I am comfortable with losing this amount of money." Besides that, make sure you go home flat every single day, that way you will be protected from losing more than you intended during overnight/weekend gaps.
Consider whether you're cut out for it, and perhaps move on. "Definition of insanity..." You're a bright, thoughtful guy who will succeed in another line of work.
its not just about discipline its about the working method too one can be extremely disciplined, but without the working method or with the one that works badly discipline will not make a difference do not want to pay tuition to the market - stop trading real money, until you have the method on hand (or at least you think you have) everybody went through that
I thought I did have a method that made money. It worked last year... then I started reading. I can't even figure out if I should regret reading. Somewhere along the way, my trading changed. And I can't figure out where, when, and how. I can't figure out what I was doing differently last year even with all my notes.
I wish I were reading those two lol That would be an easy fix haha No, I read stuff on "Price Action" (all the flags, patterns, triangles, etc.). I read up on candlesticks. I read a ton on how institutional traders trade - hundreds of forum posts (I concluded that they didn't do anything different than the rest of us). I read up on how to use market profile. I read both Livermore's & Lefevre's books (both were saying to take longer-term trades so I started doing that). Mark Douglas' Trading in the Zone. I also experimented with various indicators and basically tossed them all out (my chart only uses a volatility indicator and volume). I used Emmett Moore's blog to figure out which "courses" were fraudulent and what they taught (and summarily threw all that out of my mind and treated as "wrong"). Recently, I've been reading on price behaviour. So this thread: https://www.elitetrader.com/et/threads/tutorials-on-reading-pure-price-volume.315973/#post-4567199 . I also read this: http://www.streamhedge.com/ . And I read http://www.jltrader.com/strategy/ and tons of stuff from Vlad's blog. I watched a bunch of YouTube videos on trading, psychology, etc. The thing is, last year, I was bringing in $3,500 - $4,000 a month until I made a wrong move in one trade. It was a losing trade in Nike and I averaged down twice. I think that's when I started reading everything I could get my hands on. Prior to that, I was actually doing what SteveM was describing above. Except instead of 1 day, it was 1-3 days. The thing is, I don't remember how I decided when to enter and exit. But whatever I did, it worked! And I had to go ruin it all.
Ok, the questions have spurred me to once again try to piece together what I did prior to my reading spree. I know for a fact: - I used MACD with the histogram. When it was green, I held onto the trade. When the bars looked like there were not getting "longer" and the two lines appeared to converge, I got out and started looking for opportunities to take the opposite trade. - I used Marker Indicator from ThinkorSwim as a momentum indicator alongside with MACD. - I would always have a directional bias on the stock I was trading. It didn't matter if it was down or up. If after reading up on the company, financials, etc. I would decide "this one looks like it is profitable for the next 6-12 months". I would keep this directional bias in the back of my mind and have a tendency to take more trades in that direction. It didn't matter even if the general trend of the stock was moving in the opposite direction of my directional bias. - I would never trade anything less than 2M in volume. This hasn't changed. - I had no other indicators other than volume and volatility indicator. I did not use SMA lines, Bollingers, etc. What I don't know for fact: - I can't remember if I drew S/R lines. I don't think I did because S/R lines are part of all those price action courses/free articles. And I didn't start reading those until much later. - I didn't care about the candlesticks and what they meant. All I looked at was the big bull candles or the big bear candles. When I saw it, I *think* I interpreted it as validation for my current trade or something - I can't remember this part. The trading itself: This part is difficult. If we use VLO as the example, I would have taken a short near the top of today. Then waited for a day or two. If the next day showed a continued move upwards, I *think* I would've gotten out and waited for the next "high". Then I would use the MACD and the Marker Indicator alongside with volatility indicator and decide when to exit my trade profitably. I would then somehow, magically decide to take the opposite trade at the "bottom" of the down move. How I defined "bottom" is lost on me today. If I were to apply what I know today, I *think* what I was doing was going long when price moved back to the original breakout point (from consolidation). And then I would go short when price appeared to reach beyond fair value. If it broke out of that top, I would go long on what would be the "new" breakout point. This way, I only held for a day or two. Repeat and rinse. But this is hindsight... which is always 20/20. See, none of the above makes any technical sense. "Directional bias", all those indicators, no S/R lines drawn, no pivots marked... yet, I was making money. Pure luck? I know for sure I'm not making money now!
The thing is, I changed my methodology somewhere along the way. I'm no longer doing what I was originally doing. But what I was originally doing doesn't make any technical sense.