Cut losses short. Let profits run. Always use stop orders. Trade smaller size when you are losing, trade bigger when winning. Have a max loss level for each day. Trade with the trend, dont fight it. It took two account blow ups and three years of losing for me to learn to follow those rules. Everyone knows those rules but few people can follow them. The market teaches discipline the hard way.
Responding to chewbacca's post Very, very true post about day trading. But it comes down to knowing whether things are set up for a possible big move or not. Suppose ES for a week would rally 5 points or so and then give it all back, and then sometimes rally 4 points and later in the day fall 10 points. With a lot of this going on you would say that closing your position intraday was a wise move . What I think it comes down to is close intraday when you don't think the mkt is going to trend and hold all day or swing if you think it is going to trend. I did not place any trades today and obviously am not pleased with missing a 25 pt SP run but what the hell. I think the move was Fed news related and I didn't miss a technical setup. One could argue that you should follow news and if you had you could have taken a position based on the news,but thats not how I trade. Enjoyed your post and I do agree the big moves are where its at. Seems like success is many days of small gains and hopefully smaller losses and the occasional huge winner. The trick is to keep your discipline and not have any big losing days.
One thing I cannot understand is why many of u n00bs and pro alike have so many difficulties cutting losses short: do u enjoy seeing your p/l deficit adding zeros after zeros? Isn't it better to get out with a small loss? easier to put behind u, forget about it and move on imo. Explain me please; I don't get it: the whole pride/greed thing don't make sense to me. Thanks bit
I can see people undercapitalized or trading too large a position size holding on to losers. The old thought I can't afford to close this now it will come back. Very expensive words.
I don't see how people like you are incapable of understanding that every body thinks a different way. -Kastro
There are a couple of things I would suggest, and I hope they are "acceptable" to everyone. First. I would suggest that blowing out your account is not unusual especially if you are a retail trader. I have seen it a number of times and invariably the reason is lack of education (First) followed by lack of preparation (Second). In my first year of trading I lost $116,000 and it was without a doubt the low point of my life. If however, the original poster is a professional, or credentialed trader, then I have to say that blowing out your account worries me because it cannot be "blamed" on lack of education, or failure to prepare. Instead one has to call a spade a spade and say that is probably a lack of discipline. Only the original poster knows which is which The next item is the money. Depending on the amount, you will need to decide whether to show character, and find a way to replace the money, or just let it go and in essence admit that you failed and that this work just isnt for you. If you have a moment you may want to look up Mark Cook. He is a professional trader living and working in Sparta OH. Early in this career, he blew out his account and had to answer to his family. His mom asked him point blank "how long before you replace the money, son?" Reading about his career may help you to understand what some of your options are. Good luck Steve
Kastro/Bitstream: One of the great problems beseting retail traders is letting a position wiggle/setting a stop and sticking to it. This is one problem and it is "lack of confidence. I have seen it often from retail to professionals. The reason I mention it is that it causes a trader to "think" that they are just a hair away from success. They were stopped out just a tick or just a few ticks before it would have run in their favor. If only they had let it go a little bit longer, etc. This feeling that success is just around the corner is often the reason that retail traders bust their accounts. Not because they had big losers, but because they wittled their accounts down to nothing, over a period of time, trading with no edge and no real stop loss in place. All along the way, that little voice saying, "look how close I am", "if I can just get over this hump I will be making big money", and the loser's favorite "I can't quite now, I am SO CLOSE".... Usually a trader will not tell you how they really busted their account. But if you look closely, you will find it is something along these lines. Steve