How and Why I lost over 75% in 2 days and what I’ve learned

Discussion in 'Journals' started by mabenn, Jun 24, 2013.

  1. mabenn


    "I’m writing this as a sort of therapy, in hopes of helping release from the brain damage that I’ve caused myself and also because I hope to be a consistently profitable trader one day soon, but this is a reality check for me as It might also be for you...."

    I will post what steps I am taking on my road to recovery on here as time goes on and I eventually achieve the consistency that I set out to achieve.

    I was trading my own account and 3 other accounts of approx 80k total for a $ loss of around 60k to put things in perspective. This is real money.

    If this resonates with you let me know and I hope this does help someone from making the same mistakes I have made.

  2. mabenn


    Attached is what happened and what I have learned.
  3. i am going to guess why because its to much to read. i am going to say you were long with a lot of margin. i spoke with a few people about the major risk with believing the market will move up forever and i am very much against margin plays for a lot of trades. i know how to use margin but i learned it the hard way of course along time ago. its a scary sign when IB has commercials on CNBC stating 200k capital gets you 1,000,000 buying power at 1.3%. its a sign that things will get rocky at least short term. i hope you learned from your tuition. also i hope most of what you lost was past profits and not working money. the market is like history it always repeats itself, its a little different, and yet a little the same so don't listen to people on TV that say the market will only go up. you have to remember they need you to buy into that logic for it to work and that's how markets become irrational short term.

    my best tip for you is to trade small and don't overly margin yourself. you will last a lot longer if you do that. the key is money management because you can be wrong 75% of the time and still make a lot of money % wise.
  4. mabenn


    Hey Brokerboy, I wasn't long with a lot of margin, I actually did very well shorting Crude Oil from 98.50 down and then got caught in the noise around 93 fighting the trend and that lead to the over trading i describe in the document. I agree that very little leverage should be used and I knew this. Being careful was how I built up a solid buffer winning nearly every day (going long and short) before my bad habits caught up to me Friday and today. I have approx 20k left to work from but will take some time to reorganize before I get back in the game and hopefully set myself up to be trading full time (taking the plunge) before long so I can remove the conflict between work and trading. Thanks for your feedback and advice!
  5. you wrote a lot haha i don't think this is a day traders market and i watched it for 20 years. if you can trade smaller size with a longer view even if you take faster profits you will be much better off. you won't lose a lot on one trade, you have more room to let your positions trade, you have less fear, and you have less cost of transactions.

    i can't give day trading advice because i don't believe this is a market to day trade. you need a victim and it use to be the small investor or 15 years ago big funds selling size. a small day trader could nx in front of that position and even bounce it at the end. you are now playing computers and you are the hunted.

    you lost 60k it feels like sh*t. first you should take a small break so you don't revenge trade. you will be fine if you trade smarter and don't try to make it all back fast.
  6. To lose 60k you have to allow yourself and your trading to lose 60k.

    Trick of this game is to cut losses as soon as they begin to bleed and deplete you. Don't let them take too much of your money. Hope in this game is fear, and fear is hope.

    To do the above efficiently you must know when and how to enter, and price must react your way immediately as a sign of acting right, otherwise you bail on a tiny loss.

    Evidently, you do not know how to trade that way, so you must stop until you learn. No one will teach you how to do it correctly and whoever promises you to for a small fee is full of it. You can only learn it on your own.

    However, the board will likely sympathize with your post as most can identify with your situation.
  7. its cut losers fast or small size (basically money management). i think smaller size is better because the moves are to extreme to money manage with a lot of size in today's market.

  8. mabenn


    Yes, patience to get in, patience to get out and patience for the next trade!
  9. nice to hear someone being so honest with that.

    any time i did this was due to revenge trading on the second day trying to get back first days huge losses due to disregard of rules. comes down to self-management. i know how difficult it is to stay out of market after a giant one day loss, thinking you still know where moves are going next day.
  10. mabenn


    Yeah i took a small loss the day before in comparison of about $2200 and then hit it hard the next day, was down 1k within 2-3 trades and then went straight into over trading, sabotage mode.... I couldn't believe it when I hit a 5k loss in a day and then thought i'd try to dig out only to watch the loss get bigger.

    I've made some key revisions to my trading plan and seeing good results so far but back to 1 or 2 contracts until I recover.

    I imagine brokers make big money on the 2nd day after a volatility spike!

    Happy trading.
    #10     Jun 26, 2013