Here's a quick dumb and dumber story on how this thread helped me. I just resumed FX trading after a long layoff; had 6 good sessions then 1 HUGE loss; good session summary is: 2 "large" wins (on my small scale); 2 small wins; 2 tiny losses. The wins were good entries (sometimes after a "stalled-out" entry), followed by pyramiding a winning position. One of the tiny losses was notable: 2 failed entries (movement stalled on resistance and fell back); switched displays from single-currency/multi-timeframe to multi-currency/single-timeframe, got confirmation of direction, entered the trade, doubled a little early so took a little heat, then exited at target which was high for the day (homegrown zigzag lines with fib levels worked great). Overconfience caused immediate increase in risk tolerance, with immediate result of 1 HUGE loss from 3 WHIPSAWS. Mistake #1 was a BAD ENTRY -- no trend, no real breakout, but the move looked good so I'm in. Obviously NO PLAN. Rationalizing that I wanted a bigger position anyway, I went "bargain-hunting" by increasing when it drifted a little negative. Mistake #2 was INCREASING A LOSING POSITION. (yeah, DUMB) When this drifted past my new increased risk tolerance I'm out, but I'm in for the opposite direction at the first intersting move. Mistake #3 is a multiple: bad entry with no clear plan, AND increasing a losing position. (yeah, DUMBER) As this drifts to bad heat limit I'm thinking "I need better entries", then I'm out and in poker parlance "my nose is open" -- I'm gonna beat this game. So I'm back in for my original direction at the first sign of a move. In my defense, it was a vigorous move, but of course no follow-through (it did later in the day). So, mistake #4 -- not really revenge-trading or out-and-out gambling, but the combination of overconfidence, bad judgment and no clear plan. So as I think about these errors and mutter "MORON...MORON...MORON", I wanted to post this so I wouldn't forget and also to let others know that this thread helped me figure things out.
I just went back and read the entire thread, which started off great for the first 10-15 pages or so -- one of the best threads in these forums. After reading the whole thread, I have a few thoughts: 1) keep a detailed trading journal so you can learn your lessons quickly and thoroughly. 2) spend some time reading/modeling/testing not just stop losses, but also trailing stops to protect profits. I think there is a significant opportunity for you to improve here. 3) keep reading to speed up the learning process. In particular, I'd read and/or re-read the three Schwager Market Wizards books another 2-3 times until everything in them is drilled into your head and becomes second nature and/or a ready reference. 4) consider the possibility that "revenge trading" and "revenge posting" here might be two symptoms of the same issue. You don't see many Zen traders get caught up in pissing matches on a discussion board. Good trading!
I'm happy you took something away from my experience. I like the way you got out and then you jumped right back in. That is so much better than just sitting in a losing position, IMHO. Don't go back to trading until you know you can trade without thinking about your major loss....
Thanks for your comments. I need to protect profits definitely. You are right on the money there. I can't tell you how many times during my 2-week losing streak I was up $700+ on the day (i'd say like 7 out of 10 days). Problem is I hold out for more....i guess you call it greed I'll take your advice. Thanks
TruthSeeker247 On a good day what was your average win/ loss? for me, a good day is 200.00. My worst was 293.40 because I ignored by .50 cent stop loss. I got what I deserved. My point is, when you hit your average profit or loss, its probably best to stop for the day. Think of it like poker. At least in my experience, the longer I sit at the table, the more $$$ I lose, and I always end up going broke. Know when to get up and walk away. There is no shame in that. - nathan edit: btw, I play poker with fake money.
With a 6-lot trading size, I try to make at least $600 for the day. That would be a decent day ($100 per contract traded). My losses tend to be about $800 with 6-lots. I know that that is not good. I haven't been trading over the last few days but when I do start trading again, I want to be sure that I do something about that problem. Problem is, when I'm down $400, I trade like hell to make it back and sometimes go over my loss limit of $400 (that's the theoretical loss limit). It's funny, my losing days tend to be the most active trading days I have so you may have a point there. Another way to look at it though is that when I lose, I trade more to make it back. Whether the trading more is what is causing me to have such losing days is yet to be determined... Thanks
You know what's funny, I was watchinig a BBC documentary that said guys love competition. So when they're losing, their testosterone goes up, they take unreasonable risks, and end up losing worse (this was based on an experiment on go cart racing). So, if we can be like women when trading, we'll all be ok! I do agree with what you're saying though. I try hard every time to stop myself from revenge trading.