I wish this thread was started in the Psychology section. The issue is two part...having something that tells you that you've reach your maximum and the other 1/2 involves you having a way to enforce stop trading. The latter is the most important because a lot of traders make "a lot of promises" in their head. In reality, they really have no way to enforce those promises due to the lack of discipline. Its kind'uv like watching all those people on New Year's Day make a important resolution that they will go on a diet and lose weight and most have no specific plans to enforce such and no specific plans to keep from regaining the weight back after reaching the first part of their goal. You got to determine a lot of things about that Friday so that you'll be better prepared to manage it when that type of trading day appears again...it will appear again. For example, you stated you broke many rules. Is it possible on those prior trading days (including the profitable ones) that you were breaking rules but got away with it ? Thus, you were enforcing psychologically that its ok to break your rules because you can still make a little profit. That's just one example of many things you need to carefully look at involving "breaking rules" because its common for us to enforce bad trading habits when the trading day concludes as a profitable day until the big day hits like Friday where the market is is not forgiving at all. Another example, you stated you had "several chances to get out even or with small loss, but silly me somehow it ended up with my biggest loss ever". Does that imply you didn't use a stop, does it imply you cancel your stop, does it imply you stayed in your Long position even when you got a Short signal, does it imply you had some personal distractions during those trades and caused you to make poor trading decisions... What happen ? Seriously, do you document your trading day with thoughts from trade to trade so that you can re-read the information at a later trading day. This information is just as critical as your profit/loss info at the end of the day. In fact, most traders do not document their thoughts via a daily trading day. They can't even pick a random trading day a year ago to determine what was occurring in their personal life and trading day to cause whatever trading result they had on that specific trading day. Therefore, its possible there was something there for many trading days that wasn't good for your trading even though you had profitable trading days. You will not know what that is because you do not document what was going on in your personal life and your day as a trader. Simply, there's a ton of missed learning experiences to help them psychologically to navigate current market conditions. P.S. Sticky notes on the monitor does not enforce discipline. P.S.S. Someone here at ET couldn't determine why his trading was in a drawdown after he had a year of consistent profits. Then he realized his drawdown occurred during a time period when there was heavy construction next door due to someone buying the empty lot and building a new house. That's when he suddenly remembered how much of the "distraction" (all that noise) it was while he was trading and he realized he didn't document any of it in his trading day.
Confidence in what: in yourself or in your method? probably both , because the method is an extension and projection of yourself onto the market Why did you abandon the rules of your method? - probably because you did not believe that your method works... and probably you right since those who believe that they have a working method do not abandon it. So the answer to your question "When to stop the game?" is when you stop believing in your method. For each one it will take the different number, combination and amount of losses, but end result is stop believing in the method (yourself). So your mistake is - not stopping trading when you recognized that you already stopped believing in the method (in yourself) by refusing to follow your own rules. Was the lesson learned by you ? I am not sure... But it was definitely paid for... - $1700. How many lessons one needs to take to stop trading without the method? I am not sure, but definitely not one... The will be many more... and prepare to pay for them ! That what education of the speculator is all about. Good luck.
When I first started trading I noticed I had a several days like this. For me it seemed to resolve when I thought of this like a business. If you were the owner of a grocery store and buying milk and fruit to sell but that milk and fruit started to go bad you would off load it quick at a reduced price and sell it all before it spoils completely and it becomes a complete loss. This is no different other than there is no physical fruit/milk. The other thing that helped me was I thought my "setups" we're great. When they worked they worked really well. However, everything else about my system was shit and I thought the entry/setups were everything....you can't be more wrong. Sometimes my setups would lead to fantastic gains but when I set my stops they would get triggered and then the market reversed and IF I had stayed in the trade it WOULD HAVE BEEN a fantastic gain. Now when you see those stops getting triggered you think is this one of those times?...I'll let it ride a bit....BAD MOVE. This all stems from you the following in my opinion: 1) you have poor stop placement or worse yet no stop placement 2) you have been risking too much per trade causing wild swings you are not comfortable with. Is 6% loss too much for me....does not matter. It OBVIOUSLY is for YOU. This is a rule you need to know and follow. If you trade 6 trades a day and risk 1% each that's too much risk for you if they all go bad. Trade 0.5% and slowly build up as you hone your "system". 3) you apparently have not done any or much back testing on your system. You need some statistics with your system before you trade it live. Trade your system on paper if you cannot program (I can't). Pick times the market was a raging bull, a raging bear, and choppy non directional market and trade your system on paper through the data already available to you from history. This tell you valuable information and builds confidence in knowing how your system performs in different markets. This confidence translates into you KNOWING you need to exit when your rules tell you to because you KNOW how it performed in the past. 4) Next, do LIVE paper trading going forward on your system for several hundred (at least) more trades and again PROVE your system works. If your system fails that is just as important to know as it succeeded. Now you can break down WHERE it fails and fix that. Then,....rinse, wash, repeat the above. 5) for me my biggest issues were I was risking too much because my stops were placed poorly. Money management and position sizing determines how much to risk per trade. Proper stop placement is what helps you determine how many shares to buy. when to get out both on a loss and on a win. PROTECTING PROFITS and MINIMIZING LOSSES. Work on stop placement!!! Once you are CONFIDENT through your back testing and forward testing that your stops are appropriate you will take them. When you aren't sure you are developing the system on the fly. 6) Lastly, don't trade with money you can't afford to lose. If you stress about the money you will not trade it well. Again, if this were a grocery store you owned you would not stress about the fruit starting to spoil you just consider it part of doing business and move on. My 0.02
Hurricane You are responsible You are accountable You allowed this to happen I know exactly what you were thinking when price returned - repeatedly..., where you could have exited even / or for a small loss =========== And believe me..., this event could / can easily evolve into a reoccurring loop - it did me So what now (rhetorical of course) Extract your head from yer ass RN
That's how I blew up last time. Found it smart to average down ... Smart enough to break even for two days. Then the third day of evil preaching, I lost huge. Not saying that averaging down is bad. It can be done well. Even worse ! Thought I could make big money while being wrong !!!
Your largest loss can after your largest win streak. Do your +/- days correlate closely to +/- days in ES ? Are you long biased and require good days in the ES? Simply, after a 50+ handle run up over many 10 days or so around yellin/nfp38 a risk off day Friday hurt you bad. Arent those issues correctable? Why does a 15 ES down day produce larger losses than wins in a 15 handle up day? Just curious.
*before* you start trading, set up all your rules: What days to trade/not trade (i.e., not on weeks with certain economic events) What time to trade (i.e., first trade one hour after market opens and last trade one hour before market closes) What positions to trade When to enter a trade When to exit the trade Never break the rules *especially* during a trading day. You can take notes on changes you would like to do and review them later, but do not act upon them. Sometimes a mindset where you are so impartial to the activity that it should not matter what is going on in the market, you are just an automaton executing someone else's orders on their behalf. In essence, you are the customer who placed orders with yourself as the broker, and the broker follows the customer's orders Learn from your mistakes, and avoid them again. Additionally, if you find this hard to do, are find it uncomfortable, then perhaps this approach is not for you and a different approach to the markets may sit better with you.
Many thanks for all your very helpful feedback, really appreciated it... will read the replies again and again to understand better. Glad that I posted this thread. Basically I scalp es with KD, volume and average price, I don't know what constitutes a trading system, I rely on feel a lot and don't have definite entry/exit signals, maybe it's just a trading method. I only trade outside the regular trading hours before this big loss. At the beginning of every trading day, I evaluate the overall trend of the day, if I think it's bearish, I will do more short selling. Some of the errors I made and rules I broke: 1. Trade with my phone. Sometimes I trade while I'm outside. e.g. in restaurant, I thought it's fun. This time half of the trades were made while I was sightseeing, the biggest loss was over $600, I had a chance to get out with a small profit after I got home, but obviously I didn't have the correct feel about the market just by glancing at my phone every one hour. I think this is why I didn't take the chance to get out immediately. New rule: only trade when I'm sitting in front of my desk. Trading should be serious and focused. 2. My evaluation of Friday's market is "could be very bearish", I should go short for most trades. For long positions, I should cut losses very quickly and no avg down. This is a rule I broke. 3. I had 7 winning days in a row, and the previous day was a lucky day, I settled for $90 profit because I think it's a dangerous day. Friday is more dangerous but somehow I took it less seriously. Usually after 4 or 5 winning days, I will tell myself a big loss is coming, it's wise to stop trading for one day, or must be very careful. For now, I have set up $300 as my game over loss, I will have more losing days, but it should be better than a big loss. I have subscribed to button trader to enforce risk management, but I'm not sure if I will use it as my primary trading tool, I can't get used to its UI.