If the stock is moving big on heavy volume, they can easily break through s/r zones. You should monitor your positions here for signs of reversal, but don't assume that they'll turn around. Fibs or pivots are nice tools to help you get an idea on what might be possible under some circumstances, but no system is right all of the time. So learn them if you like, but don't think that they're the one thing that you need to turn your trading around. After reading this thread and your journal, the biggest concern I have is what you're hinting at here: you aren't following your own rules. This is a huge problem. If you make or lose money, will you know why? If you get a signal, will you have the confidence to pull the trigger after a series of losses? Most traders that I've seen will exit early from their winners because they don't want to let them become losers, and will let their losers ride hoping that they turn around. If you aren't following your rules, there is a big danger that you will fall into this trap. I strongly urge you to keep a notebook or spreadsheet or something in which you list all of the reasons for taking the trade, what problems with the trade you see, what your profit target is, and what your exit criteria are. And then make sure you stick to it. Your goals for the next few weeks shouldn't be to make money, they should be to follow your trading plan. At the end of the day (for day traders) or at the end of the week (if you hold overnight) review your trades and see how you did. Are you consistently leaving a lot of money on the table? Are there better exits? Are you following your plan? Would you make more or less if you changed your plan? As a disclaimer, I'm a new trader and am trying to learn these lessons myself. I can tell you that having the discipline to detail the reasons, warnings, targets and exit conditions for every trade has helped a lot. I've gone from having -$150 losing days and $50 winners, to having $20 "losers" and $350 winners. I'm definitely not where I want to be, but I'm paying bills and I have the information now to actually learn from each trade. I suspect that people fail as traders, not because they don't have a good system, but because they don't follow it, and they lack discipline. If you work on those two things, I think you'll see dramatic improvements. Luck!
With your account size, your main concern right now isn't making $$...or losing $$. You are still young and time is on your side. Your main concern right now is learning what style of trading works for you. Managing risk, handling losing (and winning) trades, remaining disciplined, and the biggie: managing your emotions, are major concerns. That said, you won't be able to do these things without a concrete plan in place; if you don't have confidence in that plan and your ability to execute, then you will never master the above. Finally, when you think you have all these things in place, BE CAREFUL. This is when you are most likely to deviate from your plan, take too much risk, and most likely blowout. I've seen a lot of traders short circuit and somehow lose it right when they are on the verge of getting into the green. (myself included.) Nathan, you are way undercapitalized. This will definitely be a huge roadblock. On the plus side, you've made it longer than many without losing your stake. You've kept the cost of your education down. When you stop worrying about the $$, and concentrate on the discipline, $$ will eventually follow.
Wrong. Self esteem may well be your problem; its not mine. You may read posts literally. But the words used and the way a problem of trading hopelessness is expressed make it obvious so many times how poor a candidate is to become a successful trader. You may not be able to see this because you transpose your own hopes and goodwill for yourself on to that candidate.
You may be right, and you may have a knack for finding losers. I couldn't care less. That doesn't change the fact that you have a repetitive habit of seeking out certain types of people and trying to prey on their insecurities, and I am simply pointing out the pattern I see. 9 times out of 10 this is caused by a low self image and manifests itself in other ways. Whether or not you believe me is not important, just note that my perception is probably shared by many people who see you on this board, and there might be a reason for that.
my7tvette I know I'm undercapitalized..no wonder the guys at Scottrade are always so nice to me! . But to be honest, when I first opened my account, it was to swing trade, because as I said before, I dont have the money, mental math skills, tools (broker & software), to survive. I've been drifting away from my original plan, and that needs to stop. If its one thing I can do, its being honest with myself. I recently closed out one my mutual fund of about 15.8k to add to my account. I hear that next two months from Aug-Sept are the worst months to trade. I'll take it easy on these months and probably put most funds in an ETF, or bank CD's. I would like to go to IB, but they require that you be 21 to open an account. I have been looking at MB trading. Their 4.00 commission deal looks attractive. As far as Scottrade goes, as I increase my account, I can trade larger size. Here's the problem that I see.. If I cant make a profit on 100 shares.. 200 wont be any better and just add losses faster, NO MATTER what broker I go to. -- Recent posts suggest that I go to a prop. Here's the problem: The closest prop firm is in Atlanta...or maybe Houston, I have not taken the series 7 exam, and I have no idea how hard this exam is to pass, Do these props welcome non-day traders?, will they force me to make a certain # of trades?... There are alot of sharks in this business who just want my money. They will Bullshit me, lie to me, cheat me..do what ever it takes to get my dollar. I dont know if its worth it long term, or at all for that matter. Maybe it is, I dont know. - Nathan
You're doing good. Most people lose all their money within the first 3 months. At least you still have money.
The most interesting part about the learning curve is that in the pursuit of knowledge, that should ultimately lead us to increasing profitability (otherwise what's the purpose, right?) we eventually end up at a point of returning back to the basics of trading (some quit along the way or run out of funds or move on to extremely complex algo based systems) - supply/demand based chart trading and even though all learned systems get scrapped along the way, in time the picture gets a lot clearer, mostly due to the cycle that has to be present, unless one is some sort of genius. Just some thoughts out loud.
Good post Dan, Reminds me of some of my own experiences. The only thing I would add to that is that in the forward testing using paper trading is worthwhile. I know it doesn't bring all the emotions in but its the best way of proving that your strategy works (not hindsight biased) and building the habits of taking your signals and exits properly. If after you paper trade successfully you find that your money trades are worse you have the possibility of comparing the two so that you can figure out what you need to work on. Cashmoney, Good to see your analysis. Change brokers - can you get your father or mother to open an IB account for you? To be honest you seem to be trading without a plan (I haven't read your journal yet but will do so). When learning the plan should start of rigid with no variation possible. Read Mark Douglas's "The Disciplined Trader." To become a long term winner you need to back off, simplify a bit and work on discipline. Borrowing some from dandxg's post: - take 1 or 2 of the simplest components of what you are doing out - get them described on one page of paper (setup, entry, stop, trade management) - backtest the hell out of them (paper walkforwards on old data is fine to see if you've got inconsistencies in your simple rules) Now you have something simple that works so you can build the habit of doing it each time and get rid of BAD habits that may have been taking your profits. Also in this next phase you'll make sure that they are not hindsight biased. - paper trade until you have 4 profitable weeks (yes 4). you want 20 days of following your rules 100% to get rid of old habits and to prove that they work. you should use a simulator (like zerolinetrader or bracket trader with ib) to account for slippage and commission and to build the same habits you need for real time trading. If that works you now have a forward test proven system and you have good perception, entry, stop and management habits. You now need to put money on the line to check the emotional component. - start really small, for the first week make it smaller than you've been (maybe 10 shares) and dont worry if you lose money because your goal is to follow the rules and be able to say "if I'd traded 100 or 200 this would have been great" - scale up - still ok, scale up again Now you should be out of summer into better markets with a working strategy, good habits and the chance to move forward. Sounds simple The very best of luck PS. I did have a quick look at your journal. Make those 1 or 2 trades that are in your plan intermediate term trend following trades if you can and it will be easier for you. Also I always remember what John Hill told me: if you can buy pullbacks in a trend you'll have a much easier time of it than if you buy breakouts. PPS. You might try building and posting your plan here. I wont be much help on US stocks because I only trade futures but there are plenty of others who could assist. Also, Drawdown might be right below ... an Oanda account to trade EUR/USD and JPY/USD might be a good way to build your trading skills. You get nice trends with currencies.
First off, great post Dan. In regards to trading futures, you only need to make $100 per day (actually I use weekly goals, so that's $500 per week) ... and then starting compounding it as you increase your capital base (more money to work with, more e-mini contracts you can trade) and you'll find that you're making money in no time. *** You really need to implement and follow everything Dan mentions here cashmoney (not to mention as Don says, learn some consistent trading methodologies as well), and then either seriously build up your capital base (while your moniker may be cashmoney, you actually are severely undercapitalized) or develop a method for trading the e-mini's ... because what you're doing now is a one-way-trip to the poor house. Cheese got a few flames for what he said, but he was pretty much on-the-money. Good trading is really just a statistical odds game ... and consistently doing what works over and over again. You have to change (a lot) cashmoney if you really want to succeed in this game, otherwise the odds are severely against you, so why bother? Best, Jimmy
Cashmoney69, Hate to tell ya, brother, but with $3045, the stock market ain't the place to be. Commissions at $20 to $30 a pop on RTs will eat your profits up. You may want to try trading currencies. No commissions (spread is taken, instead, but only once). You get higher leverage, to 50:1 and more) - 50 * $3000 = $150,000 trading power. You can short anytime for any reason (no uptick rule). You can make as many trades as you want (no PDT rule). And you can trade as small as .02 cents of your money on any trade(s). I tried trading stocks - blew out my acct in 3 mos. With forex, I've been trading 18,000-hours, no probs! Any questions, would be glad to help - PM me. DD