Hello all, I would like some decent feedback because what I am writing about is a serious issue and I am serious about overcoming this. I have been trading for about 1 1/2 years and daytrading everyday for about 4 months. I have read just about every book there is on daytrading and taken mentoring classes along with purchasing several different strategies and even taking the Daytrading University's online course. I have spent numerous hours studying charts, keeping records and journals and have finally come up with a trading plan which is basically a pattern following system. My problem seems to be staying in the trade long enough to take decent profits. My winning trades far outnumber my losing trades(I am not bragging here) but a couple of my losers wipe out my entire winnings because of the fact that I am taking very small gains and sticking to my stops. I have even tried to scale out but seem to end up taking profits. Another big problem seems to be hesitating to enter the trade and before I know it its to late to enter. I papertraded my trading plan for about a month and did very very well with it. I am here to tell everyone that papertrading is no where near the real thing emotionally. Today I became so frustrated at a loss that I decided to load up on shares to play catch-up and ended up losing my ass today . I have a very small account with major leverage because I am with a prop firm. I don't need to hear about how stupid it is to trade with leverage because if you use stops and stick to a maximum amount of loss per trade then you are not over doing it. I usually trade only about 200-400 shares depending on my stops. Can anyone offer some advice as to how were able to overcome this? This is definitely holding me up from advancing in my trading career. If I could just get over this hump I think I could have the potential to do very well. I have never put so much effort into something in my life as learning how to trade and I really want and need to be successful at it. I even have a trading blog that I started, www.taleofadaytrader.blogspot.com, this is to try and keep up with my progress and also for others who are struggling to check out. Thanks in advance for the replies. traderdave
It doesnt matter if you have read every book on the planet on trading, the bottom line is you dont have enough experience yet to expect consistent results. You need to put in the screen time to gain the insight necessary to find success daytrading. I'm sorry, but 4 months is just not enough time. My advice, put in a full year and learn from every good and every bad trade you make and try and figure out why this happened or that happened. Work, work work! After your first full year, you will most likely have a better understand of how stocks trade (from my experience trading alongside others, most "get it" after about a year) PS "get it" means consistent success (5K+ a month)
It is not a fear at all. You just have no idea when to get out of a trade once you get into one. If you had an approach to selecting stops and objectives for your positions going in you would stay in longer if all signs point in the rifht direction based on your initial analysis. That same analysis should also include clear stop points to know when you are wrong. if you work on your set-ups and when to go into a position you should be able to better select stop points so that you cut losses quickly and let winners run a bit more. It is a hard skill I am still refining but it is basically the root of your problem.
Not disagreeing with the previous posters but would you answer one question for me please: Have you got a plan that says when you will exit your positions? Also you may find some food for thought in this thread: http://www.elitetrader.com/vb/showthread.php?s=&threadid=76477
This is really solid advice. Learning about trading is to a large degree learning about yourself. Learning about your own psyche. Also studying each trade you make or don't make for that matter is how you learn. What was going on in your mind when you entered the trade? What thoughts? What about the exit? What about during the trade? What was the thought process that told you to close your position or ride it? And what was actually going on with the trade itself while you were thinking these things? etc., etc., etc. There's no getting around it, you only learn about the markets and trading by putting in your time. Books can be useful or sometimes not by cluttering your mind. Learn for yourself by observing the markets and yourself. Good luck to you.
Really simple. That which puts you in a trade, should be that which takes you out. That should help you out.
I feel your pain. Day trading is hard, real hard. Watching that "real money" disappear from your account is tough. It's tough because if you're anything like me, you busted your ass to get that money. Worked long and hard hours for it. Then watch what amounts to a days pay evaporate in a few minutes. It's murder! Not to mention every losing day makes you feel like your dream is slipping away. It's a hurdle that every trader has to jump. You and I have already read the best suggestions. Screen time and learn from our mistakes, all the while hoping the money doesn't run out before "getting it". The hard truth is most of us will go broke before we learn how to do this successfully. Knowing that fact just does not scare me away. A man needs a dream. This is mine and the dream will die hard. I wouldn't have it any other way. How could I? It's who I am. I would say best of luck, but it ain't about luck. It's about learning as fast as we can before the cash runs out. In that regard, I wish you the best. Work hard and maybe, just maybe, we can beat the odds. Somebody is going to do it. Might as well be you and me.
Hey trader dave I was in the same situtation like u ( not well capitalized ) My lossses where bigger then my winner but i have to tell u i have learned a lot and whne start trading again i will be well equiped and capitilized. I have to say trading is not easy (i still do trade futures on my day off from work and the money i am collecting is not easy working 12 hours paying bill etc but hopeFully after 1 year should be ready and will strat trading from my house then at a location. 1) Very important thing i have learned may be it might help you is that no matter what Keep you LOSSES small or CUT your LOSSES TO the minumum very important thing, u can never be right always so what u r experience is very nice just hope u can stay long enought in the the game to win.
I have some questions as well as feedback. " I have read just about every book there is on daytrading and taken mentoring classes along with purchasing several different strategies and even taking the Daytrading University's online course" -- What books?.. Many books out there are full of sh*t, and from my own experiance, reading books will give you mixed messages that can make your trading experiance a living hell. Many mentors out there, just like the books, are useless because like many here on ET would agree with me, some of these "mentors" have never traded before, dont trade successfully, or have washed out. I hope this was not the case with you. "I have spent numerous hours studying charts, keeping records and journals and have finally come up with a trading plan which is basically a pattern following system" -- This may sound obvious, but you dont need to study every timeframe for a single stock, it will only confuse you. Dont try and calculate the open, high, low, and close for every bar/ candle, you'll go crazy. Instead try to get a general view of what that chart is telling you. I assume you know patterns?..like wedges, triangles, pennants, flags...etc. Sometimes all you need is a simple trendline which is a simple and powerful visual. Maybe Steve, and kiwi will agree with me on this, but dont buy a system from vendors. It does not matter if it has 100 years of backtested data, because there is no way it can predict what will happen tomorrow. The big question is, how much are you willing to lose before you lose faith in your system?. As far as your journal goes, I find it nice to write about what you were thinking before the trade, and what you were thinking after. "Today I became so frustrated at a loss that I decided to load up on shares to play catch-up and ended up losing my ass today . I have a very small account with major leverage because I am with a prop firm" -- Dont do that. Revenge trading will only make your account smaller. "My problem seems to be staying in the trade long enough to take decent profits. My winning trades far outnumber my losing trades(I am not bragging here) but a couple of my losers wipe out my entire winnings because of the fact that I am taking very small gains and sticking to my stops. I have even tried to scale out but seem to end up taking profits. Another big problem seems to be hesitating to enter the trade and before I know it its to late to enter" -- Ok, you say that you only trade 200-400 shares as a day trader?..Well no wonder you hardly make anything. Most day traders I know trade in AT LEAST 1,000 shares. 200-400 is fine for an over night swing play, but your blowing smoke if you think you're going to gain any ground with only 200-400 shares per trade. Another problem is that your stops are too tight, so every time the stock wiggles, you get stopped out. Adjust your stops .25 cents higher, see what happens (just an idea). Hesitating can be a good thing because it means that you dont shoot from the hip, however you need to jump in sooner, because the perfect trade almost never comes around, and those that do, are only obvious until after the candle was printed.
Perhaps your strategy is fundamentally flawed. I've met numerous rookie traders who get comfort from the fact that well over 50% of their trades are winners, but they still cant make money. Reason - if your strategy has you averaging-in to trades, this will mean that you will tend to take a lot of small gains and the occasional big loss that more than wipe out all the gains. Sound familiar? This isnt a winning strategy with an edge - and its terrible money management!