reg, You wrote "I don't have a defined, profitable trading style yet." I lost approximately 30k before I took the words 'don't' and 'yet' out of the above sentence. I have also been trading about two years, and I still have days that I let 'my thoughts' overide what my method calls as a trade. Guess what! My method scores a helluva lot more points than my thoughts do. I am working on my own "never ending process" of keeping 'my thoughts - emotions' out of the way of trading my method. I have finally stopped my overall losing. I have a lot of work left to do to slowly retrive my 30k loan to the market. (I do not dwell on it). My mission is to focus on becoming more consistently profitable over 'time'. My current A # 1 goal is to become better at letting winners run. Countless times I have let my emotions (namely fear or is it greed) be the deciding factor on my exits. I say posssibly greed because I don't want to give up a five point minies gain of 100$ etc. so I close the position only to watch the move go 15 points or more. I am still working on exit strategy in "written clearly defined plan"...lol So my current focus is on exiting only for a "good reason". I do have a "clearly defined" written trading plan. Do I always have the discipline to adhere to it? "NO" Am I getting better at my discipline? YES Has my trading improved because of this? YES With this being true, then why do I sometimes lose my discipline and not trade my "clearly defined plan" MUST BE EGO !!! Maybe my ego is getting in the way of my discipline. My method is profitable "more often than not". My failure to strictly apply discipline is my biggest profit diminisher, I suppose. I prepare my stew, put a flame under the pot and often don't allow the stew to cook - so to speak. I need to get the cook out of the kitchen, or at least away from the stove, long enough to let the prepartion cook until done. So in my case having the discipline to stick to my plan is the key difference to whether or not I will be a mediocre trader or a good trader. Now, what I have to do is get my ego/intellect out of my trading and let my plan do the work. Easier said than done! But doable!
Since "exits" were mentioned here i thought i'd jump in with my own problem. I"m relaitvely new to trading the Eminis... i buy with a stop point in mind based upon chart support/resistance, and try to let it run, and raise my stop whenever possible. I usually try to enter my positions so that my stop is within $250 (i'm currently only trading 1 contract), if the stop is too far away, i wait for the chart to develop so i can enter the trade with a tighter stop. The problem i'm having is that too often i'll have a profit of $50, $100, or $150 (if i'm lucky) without being able to raise my stop. I'll eventually be able to raise the stop, but not enough over my entry price, so i'll often see the above profits turn into minor losses (-$50). Have i just not been trading long enough to catch the big "trend" i'm looking for which will more than make up for numerous small losses, or should i add an add'l rule that once i'm up a set number (say +$100) then i'll stop out when i give back half the profit or the chart dictates, whichever occurs first. So in this example, if i'm up $100, then i'll be sure to stop out if the profit dwindles to +$50. If it only goes down to +$60 and then to +$150, then i'll raise my stop to +$75. I'm sure the first time i implement this will be the time the position runs on me! I guess this is more of a money management question, so any suggestions are welcome. I can handle the small loses, i just get tired and frustrated of watching positive P&L turn negative. BTW, my style generates 0-3 trades per day, and i'm often in a position anywhere from 10 minutes to 3 hours. Thanks.
Reg, Your question is interesting because it hints at the common view among beginning traders that at some point, if I try hard, then I will begin to make money. unfortunately, trying hard has little to with it. How long you trade has little to do with it. First, for you to make money you have to first develop a precise mechanical plan that trades one vehicle. Either QQQ or nasdaq futures or S and P futures or MSFT or any highly liquid instrument. This plan has to give you exact entry points and exit points. Second you will have to execute the plan flawlessly, without exception every time it gives you a signal. Until you develop a mechanical trading plan you will never make money consistently month in and month out. If it takes you 5 years to do this it will be 5 years before you make money. If you decide to do this next month then you will start to make money next month. It really is that simple. John
Thanks for all your responses. Some of them have been very helpful. The problem with me is that I tend to jump from one trading style to another without giving myself enough time to specialize in any one technique. I would be an intraday swing trader doing good for a couple of days, then lose money the next 3 days and then switch to stochastics scalping the following week. I would trade Nasdaq then switch to NYSE stocks and switch back to Nasdaq, etc. The only silver lining, if I may call it that, is that I have not blown out my account (yet). I have learned to cut my losses quick, but will have to be more patient and consistent. Reading some of the posts on this thread, I think there is some hope for me. Cheers.
Not being able to focus on one style or trading vehicle is a sign of ADHD. Time to call the doctor for some Ritalin. Just joking...