Successful trading is ironic. The way it SHOULD be is this: You have many more losing trades than winning ones. BUT... a few of the winning trades are huge enough to eat up all the previous small losses and much more. Anyone who says they consistently have more winning trades than losing trades AND is making big profits is fulla BS. Only a handful of people in the world fall into this category and I can guarantee you that they do not read/post on sites like ET.
Trade small size and get more experience to preserve the account while you get better. Steve T is right. It's all about screen time. Trading is a job and it is stressful. Revenge trading and averaging down is often done when you say "screw this, it's not going any lower", and you average in not thinking about where your profit target is or where your stop is. Your only profit target is back to break even on the trade and if it doesn't go that far then you ride the trade to the ground because your psyche doesn't want to be "wrong". Cut the losers and let the winners run, and if you get lucky on one of your losers retracing to near break even, put in a stop loss (why wouldn't you if you think the trade is going in your direction?) Linda Rachke was in Active trader this month and she said she had to have trade rules from mistakes hammered into her head hundreds of times before she got it, and I think that's the way it is for almost all traders. I said I would never break a certain rule after a bad loss, and then the next day I repeat the same mistake. Think of it as a dog that see's food on the other side of an electric fence, and he repeatedly shocks himself trying to get the food until he can take no more, that's how our brains work sometimes. Moral of the story: learning to trade is painful and takes a long time.
First off, the above is totally wrong. You can and should trade 200-400 shares if that's your optimal position size as determined by your risk management rules (especially if your commish is low, as it should be at a prop shop). You said "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." Well.. this depends. Are you calculating your max equity at risk/trade as a percentage of your actual capital, or your leveraged capital? If you're calculating on the basis of your leverage, you're making a mistake, IMO. Bottom line is what Steve told you in the first post here. 4 months isn't enough. If you are breaking even after 4 months of active daytrading, you are doing fairly well. There are some Cheeseheads here that will say "If you're not winning in 4 months, you suck and you should quit". I don't believe this for a second. There's one thing I notice about posts like this. Out of 20 that we see here, maybe one guy actually does the thing that makes the most sense - start a journal and post his trades along with charts and reasons for entry/exit and ask for feedback. Hmmm... I wonder why that is? Good luck. You found the right place, I hope you take advantage of the info available here; you will have to sort through some crap, but the results may be worth it for you. EDIT: Just read your last entry at the blog, and yeah, seems like you had a bit of a mental meltdown. Not much analysis to do here, but at least you have the guts to post that you had one. I know you aren't going to like this, but... part of your problem is that you have an idea that you can make a living with your $3000 stake.
But, forgetting whether you can or can't make money on the stake you have (its just a scaling issue, work abit more etc). What are your rules for exiting? What does your plan say? Are you obeying your plan? Is your plan good enough (see the prior thread I referenced where, sadly, Cashmoney's plan failed to make it to "plan")?
That's right. Agreed. There are two different philosophies in trading. It's either one or another that reside in the trader mind. - Willing to take money from the market - Unwilling to give money to the market To be a successful trader, the latter philosophy is the right one. The resulting of the first philosophy is to be satisfied by large number of winnings, generally small gain, while each loss is widen. The resulting of the latter philosophy is to be able to cut losses early, generally when it passes an accepted level of tolerated loss, then each loss is small while the gain is large enough for being profitable despite the number of losing trades exceeds the number of winning trades. Why it is easy to be successful in paper trading because you're not willing to take money from the market, actually it doesn't make sense for wanting money from the market in this context, you're just concentrating to play a better game. Then you aren't falling into the first philosophy.
In my humble opinion trading is 1% knowledge and 99% DISCIPLINE!!!!! You must set your rules for entry and exit and follow them religiously. It IS a kind of religion. The insidious thing about breaking rules is it is the mental damage done to yourself. You mention getting over the hump. This hump is actually a mountain and the only way to get over it is to keep climbing. I went almost a month without breaking a rule. This morning I broke one, then did it again, and then took an angry trade in the opposite direction which also was a loser. I finally came to my senses and quit for the day before the damage got serious but I will spend my weekend wondering how I could fall back again.
It could be because you care about the money rather than the trade itself. Your fear is fear of monetary loss, a very typical flaw which is usually emphasized when you are in a winning trade. Is it because you tie your success in the trade to the money asscoaited with it? While this fear is occasionally helpful, you need to determine whether this fear is adequate/appropriate given the market movement you are attempting to trade. I hate to make this sound trivial or trite, but, your lack of experience is what is keeping your mentality from taking the necessary steps forward. The more market moves you experience the more knowledge you will gain, that, when combined with discipline will allow you to convince yourself that your current position is a correct one and hold it. My own resolution to this matter comes in the form of understanding market direction and development. The last two days are an outstanding example of an unlikely event preceded by upside range extensions. This type of dynamic occurs at tops often and the FED news was the selling catalyst. The downside potential, even today, is still high. I'm not going to go into my personal ideas behind why I hold certain positions versus others but this is the type of thought process you need to develop in order to effectively make strong winning trades...
What??? Look I know thats how SAC does their thing, but in the equity daytrading world, most consistent and profitable scalpers have much more winning trades than losing ones. It's the basic idea of aiming for singles, some doubles and occasional homeruns, but keeping all your losses to a minimum. I have sat to a number of traders that almost always have had more winning trades than losers, and their strategy does not rely on a few big winners to wipe out their many losses. That's scalping. Only way it can be done is if you intraday swing & position trade because it can be expected that you will be knocked out of most of your trades. That requires that the stocks move enough on average. It's also a higher risk strategy that is not too reliable in choppy markets. Let's say you make 20 trades a day with 100 shares. Let's be very hypothetical and say there is no slippage and you pay half cent a share (forget SEC fees, ECN charges, etc). You keep a tight stop loss of 5 cents. So you make 15 losing trades and 5 trades will be the winners. To cover all your losses and commission, your winners will have to be an average of 19 cents. That is just to break even, without consideration of slippage ( a big factor) and of how are you actually planning to exit your winners. To capture 20 cent moves with a 5 cent trailing stop is not something you can expect 5 times a day, not from this market. To say that the only real successful trading is having many more losses than winners is an ignorant and closeminded view.