Hi ALL I m a new member.I am an options trader.I started trading last year and my account was up by 50,000 in 8-10 months and i had one bad month of 20000 loser. I didn't expect this big loss and i was risk averese from the beginning of my trading career. Still bcos of my mistakes(big position) as well as wrong information from trading model I lost. I am little frustrated and planning to llook for another option. Or I should give another try? Thanks in advance
It sounds like you were selling volatility. Lots of small gains and occasional big losses are very typical of a short volatility strategy. If as you say, you are an options trader, then you already know this. If you trade long enough, you can expect a spectacular blowup some day that will put you out of business. Shorting volatility and trading mean reversion are easy because they feel good. They win more often than they lose. Maybe you will get lucky and quit before the big blowup.
More info would help. If you're considering quitting after one big loss, you may not be cut out for this bizz. I know it can rattle you, but how you respond to these events is what will shape your future as a trader.
Well put. In trading, you will always take huge rips that just suck ass and make you question yourself and if youre really cut out for the business. Huge rips. You will learn to avoid and minimize them with time but they will come. Welcome to trading.
Learn to trade without allowing big losses. As simple as it sounds it is key in reaching the next level. Anek
Classic quote from "Rounders"... <I>Always leave yourself outs</I>... In other words, don't game up your entire bankroll on one shot. Make sure you are never forced to leave the pit by hearse...
Clearly, need more information on why you lost 20K. And, I agree with many other posters who have said that if you can't handle one big loss, then maybe you should rethink the strategy. But, more information would be of help to elicit some responses on how to best proceed in your options career if you chose to do so. Where were your hedges? Are you dlt-neutral trading? Thx and Best Of Luck, cbk/cbkswonk