losses, drawdowns, stress... it's the biggest cliché in the markets, but i'll say it anyway: trading is probably more about learning to control yourself and being disciplined in cutting your losses, letting your winners run and not overtrading. the last goes for both frequency and position size. ok, some of that might be a tad hard to do when daytrading, but that is your own free choice, and you have to live with the consequences. forgive me if that sounds harsh, but we are not talking about a game here. i really wonder sometimes though why so many choose to make their lives so difficult plus face the cost of limiting their potential capital growth when daytrading, plus, face a much higher risk of ruin. when trading longer term you don't have to care how often you're right or wrong, you just care about how large your profits are when you do win. trading longer term offers the added advantage of being able to grow your capital geometrically. and it doesn't really matter if it's a bear or a bull market, there are so many markets to choose from, eg the forex markets have always had some of the best trends around, definitely worth having a look at for some really great longer term trading opportunities. as long as one sees the markets as no more than a means to an end you won't get stuck on one segment, you'll move to a market that shows potential. good luck
nov =) usually the reason that we ignore stops is because we never accepted the possibility that we might have to stop out in the first place.. how you think about stops is vital to your ability to keep them.. here is what has worked for me.. 1.) there is a book called "What to say when you talk to yourself" by Shad Helmsetter.. it addresses the subject of changing our mental environment to effect changes on our behavior.. i use a simple form of "Self-Talk" to brainwash myself into thinking certain things are true.. throughout the day, repeat this to yourself.. "I always keep my stops. Stops protect my account from large losses. When my stop price is hit, i exit without hesitation. I always keep my stops." if you do this 10 times a day for 1 week, you will find that you almost cannot keep yourself from stopping out when the time comes.. 2.) accept the loss.. for me it was difficult to take the stop because if i was up say 500 for the day, and the stop would cost me 250.. mentally i wouldnt want to lose what i had already made, and that led to hoping the stock would at least return to my entry price.. the way to overcome this is to mentally accept that you have lost whatever money your stop would have cost you before you place the trade.. so, if im up 500 dollars and the stop will cost me 250 if triggered.. i accept that i have lost 250 dollars and mentally remove that money from my balance.. this prevents a mental conflict from creating frusteration and confusion should i have to stop out.. 3.) your stop needs to be placed at a level that has a reason.. not at some arbitrary number like .50 or 1 dollar.. some people are able to trade with arbitrary stops but for me, i feel much more confident when my stop is at a level that if violated, tends to indicate the stock is going to go in the other direction.. for instance, today i shorted RATL at 23.13 (10:17am).. my stop was at 23.30 an area where there were alot of offers on ecns and where the previous rally had fizzled.. also 23.30 was near the intraday downtrend line.. if it had broken that level, i would have every reason to believe that RATL would continue to go up and would have no internal conflict about not wanting to get shaken out of the trade.. now, about revenge trading.. this will be less of a problem if you accept your losses before hand as i mentioned above.. i can tell you that for me, my worst revenge trade violations have occurred when something not related to trading is bothering me.. one day i remember i was trading.. i had alot of things going on personally that were bothering me.. and i got hit in a stock for a couple points.. the thing just took a nose dive.. and everything i touched just seemed to die that day.. i was so pissed.. i didnt stop trading that day until i was down over 12,000 dollars.. man that hurt.. and there was no one to blame but myself.. its a lesson i wont forget.. i had to learn that i cant control the market.. i can only control myself.. now, when i realize that im taking trades on revenge.. i force myself to call it quits for the day.. revenge trading never works, and if it did it would only reinforce a negative habit.. sometimes i still screw up.. i just forgive myself and move on.. i hope this is helpful =) -qwik "What the superior man seeks is in himself. What the mean man seeks is in others." -Confucius
viangi =) on stocks like cien, jnpr and issx (with todays volume), buying on the bid isnt probably the best strategy.. if you get a fill bidding then its probably because the stock has further to fall.. buying the bid and selling the offer (spread trading) is much more effective on slower, low volume stocks.. as far as slippage is concerned.. again, on stocks like cien and jnpr.. the real market in those stocks is ECN's.. trading with a MM is a good way to get your head handed to you.. they have too long to hold your order without filling it or cancelling.. if you are new to trading i recommend that you find some less risky stocks to trade.. good trading =) -qwik
For anybody not able to follow the plan, think of every trade as one of the hundreds you are going to make. It should help you to decharge your emotions (at least little bit).
november, stick to slower trading. Trade stuff you can watch. My biggest win this week came from NCH. Superthin, but I was still able to think it through completely b/c it moved so slow. I took 5k under 39.5, and sold em in the high 40's for an 8k scalp. Forget cien, jnpr. Forget scalping too. You need to trade slow so you can think about things as a newbie. Let the guys with fast trigger fingers figure out issx. I know I never will, and I will not even try it.
Qwik, This is a great concept for dealing with the mental side of stops. Thanks for sharing it. I use a similar method by assuming that a trade is a loser as soon as I enter. I then focus on managing the loss. When I win, great, but when I lose, I've already prepared for it mentally. I still expect to win in the long run, but for that particular trade I am able to accept the loss if necessary and kill the trade before it gets ugly. Kirk
Praetorian2 I have a friend who used to trade CP (at lower levels). Couple thousands shares at a time, one or two trades a day. He said he would make 6 figures a year if he didn't get bored out of his mind doing it. They have a big family business so 6 figures income is not that important to him. I have never tried this kind of trading but reading your posts it's probably not a bad idea. Would you say it's easier to figure out these stocks b/c they trade "under the radar"? Thanks
Leems logical. I know that if I just traded DIS, I could make about 2-5k a day every day on 5k positions taking 2-3 .15-.5 scalps. It's b/c there aren't many daytraders there. Just funds duking it out in slow motion. You can watch it and figure it out fast. I will NEVER trade those fast nas stocks except in pre/post market.
âThere is much to be learned from a rainstorm. When meeting with a sudden shower, you try not to get wet and run quickly along the road. But doing such things as passing along the eaves of houses, you still get wet. When you are resolved from the beginning, you will not be perplexed, though you still get the same soaking. This understanding extends to everythingâ¦â¦â¦â¦â The key to your problem november is lying within this passage............ The mistakes that you listed were a result of not applying the meaning of this message........ PS: Im sorry for not explaing this in greate r detail but its the fourth and im awfully drunk and pressed for time PEACE and good luck with your trading, COMMISSO
praetorian, What, you don't want to make an easy $500,000 to $1,000,000 per year? You must be wealthy and do this for fun...lol.