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Good/bad trading rule?

  1. So I started looking over my trades for the last couple weeks and especially looking at my big losing days, my big winning days and days I was up in the morning but ended up down for the day. So I came up with a rule after the fact that would have improved my trading. I've noticed one major thing.

    If I have 2 large losing trades in a row(10 cents for me), I should stop for the day. I've looked over my winning days and I'm usually up in the moring but as soon as I have more then 2 losing trades, my net has NEVER came back. I might make money through out the day but my net will always be lower from commisions and other losing trades. I've also noticed on my loosing days, if I'm down early, i'll be down all day. In the 3 months that I have been trading fulltime, I've only come back from a losing day ONCE! So this should keep my losing days in check.

    The only problems I see with this is that I'm still learning, and loses are part of the game. This rule could keep me from other profitable trades through out the day. Another is that this is the summer months and most moves seem to happen in the morning anyway, so by sticking through this rule year round might hurt me also.

    Any thoughts?
     
  2. When you are an inexperienced trader, you have to go FULL THROTTLE. Your goal must be to make the most amounts of trades possible, while losing the least. You must give it all and should never be half hearted about trading.

     
  3. Just curious why you stopped posting your blotter?

    Regardless of what anyone says, YOU need to do what YOU can do to improve your performance, and improve the amount of money you make. Reducing your losses is always a good idea. Following rules is a good idea, if they help you.

    There are plenty of ways to approach this, why not just try it and see if it improves your performance over the period of a few months or something?

    Things getting rough lately?
     
  4. well, I just didn't think posting my +$11 days and -$40 days was all that interesting for anyone. I was going to start posting a journal but I never got around it. I might just force myself to do it so I can look over my past trades and have other people look at it to. And yes, things have gotten pretty rough lately and posting it publicly would not have helped me so I stoped posting PNL blotters.
     
  5. wtf is that? :confused:

    Anyways, a rule like "stopping after two losses in a row" would only make sense if your abilities to objectively assess opportunities is impaired following a couple relatively large losses. Otherwise, it's just not rational.

    Sure, it may help your bottom line temporarily in applying such a rule, but I suggest you look into why you would be letting prior losses affect subsequent trades (I know it's natural for that to happen, but nonetheless you need to get over it). What you'll eventually realize that this kind of "incidental" rule-making doesn't really help you fix the root cause of your problems in the first place. Your main concern should be getting to a place where you are just taking the opportunities that the market offers, regardless of whether you are up or down on the day.
     
  6. This is good advice, I was just about to post something similar but you beat me to it! :)

     
  7. illiquid has great advice, he knows more about the topic than I do.

    I think a key to being a good trader is confidence, not giving up. Once you start feeling like your doing bad, and then start to fear failure because your thinking about it, I think it just goes all downhill from there.

    Be optimistic. Try new things. Learn from them. Try a different timeframe, try scaling in and/or out of a position... whatever it takes.
     
  8. My mentor has been telling me the same thing, it's just hard for me get past it though. I keep thinking rule #1 is to preserve my trading capital, and that tomorrow is another day, so when I get down, I start thinking about that saying "when you find your self in a hole, stop digging." I try to keep my loses to a max of about $100-150 per day and the days I try to come back from it, I end up just adding to my loses and I've had days where I lost $300-$400 cause I kept trading.

    On tuesday, I had a great day going from the open, I was up $340, it would have been my best day so far. And I kept thinking about people saying, when your doing good, don't stop, push harder. So I put on a couple more trades and they all went agaist me big. I only ended up walking away with $130 for the day.
     

  9. that is the paradox most people do not understand, you have to make contact to learn, without it you don't have enough tour of duty to become proficient at trading
     
  10. Everyone that posted is right. I've had intraday P/L's that were negative all day and I thought I would never recover, but I kept trading and looked for the next setup, just like how you play poker and take the next hand that is dealt and play it the best you can. Preserve capital and gain experience. Trade small until you become good. Maybe take a break next time and re-evaluate your criteria for trading setups if you are getting a string of losers.
     
  11. The advice about figuring out why and fixing it is good advice.

    But you might find an intermediate step helps. Try taking a 30 minute walk to calm down and break your bad set then come back and go thru your premarket routines again to get yourself setup. The retrade the initial period in your mind to "fix" it.

    Then for a couple of weeks just paper trade the rest of the day. This will prove that it could work and build confidence in the process (good belief).

    Once you are recovering properly by this or a similar routine reintroduce proper trading ... maybe gradually by taking one paper trade then the rest cash if you perform the first ok (ie stick to your rules and are in phase with the market).

    I was initially plagued by bad leads to worse days but gradually managed to overcome the pattern I got myself in.
     
  12. If you want to be a successful trader you need to learn how to make money back, it's very important. As for thoughts, what I do when I am down in the morning is not size down like most people, but rather keep my size the same or size up BUT only take high probability trades. I become really selective in my trades and it usually works because I'll have a success rate of like 8 out of 10 trades to get back into the game. Then I trade like I normally would. But at the end of the day you are going to have to find out what works for you. To be a success in this business you have to have good self evaluation skills of yourself. Because everyone has their own demons to over come.
     
  13. Great advice too. If you have "better setups" or some trades that really are great win raters then limiting yourself to them after a losing streak will pick you up again.
     
  14. market.
     
  15. I dont know how long you have been trading but do you have any idea what your average winning day is? I think it is important to limit your losing days to around your average winning day. Big losing days will cause a lot of emotional damage that is hard to repair.
     
  16. I think it's an awful rule. If you are making stupid mistakes, then figure out a way to eliminate them.

    It is more than likley that you get started on a cycle of losing and it perpetuates itself. Which means you are focused on your P&L and not making good trades. Get yourself to focus on making good trades and you should be able to get yourself out of the red. Nearly any bad day can be fixed with just one or two trades....remember that.

    It is a good idea to have a maximum stop. A point at which you screwed things up so bad that you will just close out of everything. This will keep you from turning a bad day into a career ending day.
     
  17. another issue you have to consider is the fact how you maintain/record your trades, alot people underestimate the power of keeping a daily journal. These is highly associated with discipline.
     
  18. Losing is part of the game. How you react to it is the other part. I think it makes no sense teaching people to become emotionless when you trade. What are we, even the beast have emotions!

    the trick I think is to try and get over it. It's like the bully at school, unless you stand your ground and stop running everytime he gets you, you are only doing yourself a disfavour. Get back to the bully (market), take another trade, reduce size, approach from a different angle, but keep on trying.

    from some1 who started with $10000, lost $7000 in 2 months and now back at $ 8000 now! But none has bragging rights in this business. the markets will humble you.

    Wish you luck, trader
     
  19. Losing days, pal, mean that you should quit or go back to the drawing board.

    Best rule for the ill-prepared: don't trade.
    :)