The month of September was my first month in the markets. I was able to lose 45% of my account value through the month and into the first week of October. In the last three weeks of October I have been able to claw my way back up to only being down about 42% or so. I had no idea that making money in the markets was this difficult. I actually got to a point where my body was racked with pain so badly I thought that I had to go to the hospital. My consistency over the past three weeks has been good for my confidence level and my watch list is quite full of opportunities for tommorow. I just thought some of you might lend an ear and offer some advice. I do realize that my fate lies 100% in my hands and my decisions. Failure is not an option.
esepich, I was able to lose 45% of my account value through the month and into the first week of October. That's an unacceptable level of loss, and you might want to pull back for a little bit until your money management improves. Defense is absolutely critical, so consider setting maximum daily losses, weekly losses, monthly losses. And you must be disciplined enough so that if those loss levels are hit (on a daily, weekly, or monthly basis) you will stop trading within that time-frame. In other words, if you say that you will not lose more than $2000 a week, and if you lose that by Tuesday, then you are done trading for that week. Use the time to watch the market, read, plan.
esepich what kind of trader are you? intraday? swing? do you have a clear and well defined strategy? what was the cause of your losses? overtrading? loss of discipline? not following rules? just failed setups? are you controlling your expenses? why are you trading? what do you expect to get from trading? what are you willing to give in return for what you expect to get? my advice, dont trade until you know the answer to all of those questions.. -qwik
Magna gave you good advice...set your limit for loss...if you hit it...stay out...study what you did wrong...don't come back until you have the problem corrected and a good researched plan
Everybody has a different opinion on this but I definitely think position size is more important than just about anything else, including stops. Whatever your average position size currently is, divide by at least 10, if not 20, and I bet your results and profitability will consistently improve. When I was first starting out I was taking position sizes of between 30% - 150% of my portfolio size and I was both losing and gaining incredible amounts of money. When I really took a step back and determined what my daily goals were I realized I did not need to risk so much. The potential gains were not worth it. My max position size is now 5% of the size of my portfolio. And I've been completely killing it ever since I made that one change. Also, if you are just starting out then you are undoubtedly making about 3 mistaken decisions for every 1 correct decision. So why not make those decisions on smaller amounts while you are still losing. If every trade is 5% of your portfolio and if, on average, you are losing 5% per unprofitable trade (a big number even without stops) then you have to make 180 unprofitable trades in a row to be down 45%. Why not consistently make money before increasing position size? Don't take the risk of ruin if failure is really not an option. Finally, and of secondary importance to position size, do you have a system that you've thoroughly checked that you play mechanically during the day. Obviously if your body is in pain and you think you have to go to the hospital then your body is telling you two things: a. you are thinking too much during the day. Thinking is very bad for the body. You need a mechanical system. b. you are risking more money than your body is comfortable with. If you were up or down 5 pennies your body wouldn't care so much. You can read a comic book or watch a soap opera and occasionally glance at the quote screen. If you are up or down $50,000 then you are going to have a heart attack and a stroke. If you need to make a living where you need that $50K then you are going to fail and failure is not an option for you. Also, meditation might help a little bit. But reducing position size is better.
Try to book profits more often and cut losses more often. Try your strategy on daily bars to begin with, position trading with say 50shares. When you start to get consistent, go intraday.
What size are you traing? 100 shares at a time, 500, 1000? It makes a difference especially for risk control. Above all, you have to go by "Perserve thy capital." This is the most important rule for you to remember. It is job 1!! Good god, man, after losing 10% of you account, didn't some bells go off or lights flash (remember, I lived thru the 60s.) giving you the "hint of the century?" to stop trading because something was way wrong? Paper trade a bunch...five or six months or so is my recommendation. When you have mastered that, start trading 100 share lots. Good luck! Best regards, Jim
Most everyone here is giving you good advice...keep things small until you are sure what you are doing works and works well
If you lost that much you must be holding some trades till they turn into big losers. Hopefully you kept fairly detailed trade notes...go back and review these trades. Either your trading rules are bad or you dont follow them. A plan with strict dicipline is needed. Know that even if you start to get some profitable trades , losers this big over a month or two will decimate your account. I would urge you to stop trading till you can sort things out.
esepich- You need to stop trading. If you really think you were so physically damaged by trading, stop! I'm sure many of us have had the sweaty palm or a bouncing knee during our first few weeks of trading...but if you had to got to the hospital you should really consider another profession. If you can't get to the point where you take a loss, say "that sucked" and just move on with hardly a feeling...seriously man, it's not worth dying for. Just trying to help. Uptik2000