I've always been trading futures and I've done very well for a period of two years, but I was a idiot and blew my account in one trade. I was on a massive winning streak and felt I could not lose. I lost my money when price did a massive move within a short period of time, and I didn't hedge properly because I was arrogant & thought the move would not go against me by that much that fast and that I would have chances to close my position manually. Ever since then I've used much smaller position sizes (around 30% of original account balance) and honestly felt disgusted with myself. I ended up being emotional and despite a great performance the past year, ended up using leverage to make up for the smaller account and right now my account is 20% from its peak this year as I messed up by taking too much risk. The past 40 trades basically did nothing for my account, since I broke even with those. I'm a hobby trader and I thought I was profitable, but recently I'm having doubts. I don't know what to expect. Should I just keep going and see what happens?
If you made money for two years, on a reasonable number of trades, then you should be able to do so consistently going forward. The caveat is that your risk management was (evidently) fatally flawed. Without more info as to how you trade or the circumstances of the loss, it's not possible to say whether the flaw can be easily and permanently corrected going forward, or if it reflected underlying risks in your strategy (e.g. martingale) that came home to roost. IOW, you have to determine how much of your past profitability was due to excessive risk-taking, and how following properly conservative risk management protocols would affect your profitability going forward.
I agree with you. The move that destroyed me was a movement of 22% in around 1 hour, and I had no stop loss and only a small hedge. The move occured when a wall of 80 million was instantly bought, and I was part of that group. I've always been able to get out of bad positions manually and my stop loss is rarely hit, so I became used to not having stop losses. In this case, I shorted and chose not to use a stop loss because I was confident price would not break beyond the sell wall, and if it did, i would have time to close. By the time I closed the position, the loss was very big.
Xzhi, Welcome. Something similar happen to me about 3 weeks ago. I got careless and didn't put a stop loss order and took at $650 loss. It was all my fault. It was not my trading ability, just poor discipline. All you can do is learn from it and get better. Trading well consistently is our main objective.
You are trading futures and hedging them...How are you hedging them? With what hedging implement? "...Ever since then I've used much smaller position sizes (around 30% of original account balance)..." IMHO, you should always go back to 1 contract if you are starting to have trouble. In fact, you should have stayed with 1 contract from the get-go and not gone larger until you were absolutely sure you had your system in place. "...I'm a hobby trader and I thought I was profitable, but recently I'm having doubts. I don't know what to expect. Should I just keep going and see what happens?" Well, no you should not keep going, you should be in pause mode. If the futures you are trading have micro equivalents, do one contract on those rather than the mini versions, so the pain is less as you develop your system. I've been studying/trading futures for just over 5 years now, and have stuck with one contract live 99% of the time, because it was the least amount I could so I get into the least amount of trouble when I go bad. But when I make a major mistake, I don't blow the whole account out with 1 contract. I give myself a lot of leeway, and you should too.