How does this happen?

Discussion in 'Trading' started by traderaped, Sep 12, 2008.

  1. I had about $125K a year ago when I started day trading stocks. Did well at the beginning, getting it up to $140K, then did horribly earlier this year, dropping down to $75K. Took a break for a few months, then started day trading again a couple months ago. I went on a hot streak of 9 straight days with at least $4K of profit, trading solely FNM and FRE, and I was up to $130K. I thought I finally figured it out. Then I went on a business trip for a week, came back and FNM and FRE were done. I tried day trading LEH, WB, MER, AIG this week and I had only one winning day. The other days I lost $8K, $20K, $36K, and $4K. Now I'm back down to $75K. I am very discouraged at this point. How do you recover from 2 blowouts?
  2. Cheese


    You simply don't know enough to be trading.

    It requires a finely calibrated and thorough methodology to be successful. That methodology utilzes a market as a conduit of money flowing into your pocket. A haphazard chain of results such as yours - bigger losses than profits - is not worthwhile trading.
  3. Bushido


    The first thing you need to work out is your risk/money management. How could you let one trade wipe out more than 10% of your account?

    I know it may have been more than one trade but that's even worse, after a couple of bad trades you should stop, analyze what happened, write a journal if you have to, the purpose is to learn from your mistakes, not regret making them.

    It is necessary to learn to spell out how much you are willing to loose on a strategy/idea/trade/day etc. and to accept the possibility that you will lose rather than fighting (with yourself and the market) to make every trade a winner.

    Confidence in trading is rarely achieved from the ever so common "i figured it out"/winning streaks. It comes from the fact that you will eventually (hopefully) learn to accept the fact the "shit happens". You have to take the loss. Get up. Analyze what happened, what you felt, what was going on in your mind, understand that, tame yourself, come back the next day and be determined to not repeat the same mistakes.

    The day you learn that taking losses is a part of the game, you will figure it out.

    I am not here to bash you, or tell you that you are not ready, cause you may never be more ready than right now. Scale down your account, do things differently, work on your money management skills, strengthen your mind.

    Another thing, don't know if you will find sense in it, but high risk is not always equal to high return actually it quite the contrary, the best trades will usually turn out to have the tightest (mental/hard-stop the later being better to begin with) stop-losses. And if you go wrong wait for the next setup, btw in this case having low risk is not a setup.