I dont really know how neke trades because he doesnt give details, but its possible that the trading strategies that he once used to make good profits, are no longer suitable in this new market enviroment. I'm sure Neke isnt the only one struggling to make the money they once were. Is it fair to say that he is gambling because he is down 40%? If he is not following his trading plan, they yes, he is gambling, but if he is sticking to his plan, then I think that he should get some props for that.
Neke made it clear that this week's excessive loss was a result of not sticking to his plan: "Watched helplessly" is ego's way of saying "Surely I can't be this wrong! I have to hold this position until I am finally made right or am knocked unconscious." Which is a metaphor for capitulation or margin call, usually at the point where price does turn your way, making it all the more difficult next time to exit a loser before it runs out of control. Today I posted in a different thread about the most underestimated risk in trading: "I still believe the most underestimated risk in trading is your own ego, whether it's the inability to accept a loss (to be "wrong") or the inability to have faith in a proven system because you believe you can do much better than the system. You can pick up one of many excellent books on trading or locate free educational materials on-line and learn how to trade. You'll learn risk management and position sizing, you'll learn to identify high probability price patterns that give you a statistical edge, and you'll learn how to target reasonable profits in relation to your risk and how to take even more when the market is offering it. Since all this information is available through inexpensive books and on-line for free, how is it possible that the majority of traders fail to become consistently profitable? What causes a trader to put on a trade before price fully signals the appropriate entry? What causes a trader to chase an entry when s/he misses the entry price that allows for an acceptable risk/reward ratio. What causes a trader to decide to trade without a stop or to trade dangerous size because a setup looks so good? What causes a trader to believe s/he knows when price is too high and is "due" to reverse when the majority of market participants are bidding price higher and s/he has no idea how many additional people will bid the price even higher still because they're afraid they'll miss the move or they have to cover their short position before they blow their account? The cause of these mistakes is the trader's belief that s/he knows more than the market, the belief that all those market participants are idiots for buying this high (or selling this low), and the belief that s/he knows what's going to happen next. The key to profitability is to surrender to the market (to the price action), which will carry you along with it most of the time if you allow it to happen, and to surrender to your risk management rules, which means your ego will have to accept being "wrong" at times." (Hopefully long before it's knocked unconscious.)
Gambling is a serious addiction. When you set unrealistic goals you are setting yourself up for failure from the get go. Trying to turn your capital into a major return (410 to 4 mil) in one year is like the guy hoping to hit the lottery.The gambler hoping to get rich over night. Trying to hit the home run every week and taking such large positions is being done for the rush. ANY TRADER that doesn't first and foremost protect their capital and cut their losses is ultimately doomed. Averaging into losing positions in an attempt to recover failed broken bad trades instead of cutting your loses,, you are hoping for luck to correct your mistakes. That's the gambler at the roulette wheel. There is so much wrong here. And it's ALL examples of Gambling Addiction. I and others have suggested you take some time off but you simply can't. I strongly suggest you speak to a professional about gambling addiction and have them explain it to you. But an addict won't do that till they hit rock bottom. Good Luck Neke.
No... he's gambling because whenever he's down in a position he adds a lot more to the position without any reasoning behind. The only reasoning of him adding to the position is to average down his entry price, so that once the stock reverses in his favor it's quicker to make it break-even. These acttions were the main reasons why he's down almost 50% ...
What you have basically shown is you do not have a trading edge. 10 months and this many trades is statistically showing you are not a trader, but random. The question is, when do you realize this and move back to sim/paper trading? You seem honest, except with yourself. In your head, you are in complete denial.
I think you might have been better off trying to make 20 or 30% for the year and actually doing it or making 10 or 15% instead of risking swinging for the fences. Looks like both your automated and discretionary systems don't work. I wonder what's different between what you backtested and what transpired?
Here is something to keep in mind ...If you are using TD Ameritrade the level 2 quotes may be wrong .. I lost over $100,000 only to find out that there is a known issue with the level 2 quotes being wrong . i.e he level 2 quotes are lagging the realtime by a few minutes . I have it all documented on my blog but if I post a link in here my account will be restricted ...If you are using Ameritrade and mounting all these losses it could be your level 2 quotes !
Weekly Update for week 40/50 ended 10/16/2010 Positive week, up 12.5K (5.9%). String of gains (13 of 16) added to make for some restoration in confidence. Biggest gainer was picking up some GOOG calls after their earnings on FRI, which I closed for a 5.7K gain. Back to trading my pared down size, and watching like a hawk for any urge to violate the sizes. Did put in additional automated means to check excess size, and limited my ability to remotely shut down system. I will not respond to every one commentary on my last week's loss, but to say taking time off does not cure anything. I have had enough time within the year to look at the issues (including vacations where there wasn't much beside automated trades), and while I recognize the principal reasons, addressing them is an ongoing endeavor. What is the need taking two weeks off, to return and continue where I left off? If I am going to emerge out of this, it will be by addressing the issues one step at a time. A lot has already been built into my automation as additional aid to fixing the urge to average down. And yes, I believe I am making progress (in spite of all the doom-and-gloom forecasts. A measure of steadfastness will be the frequency of occurrence of violations. As for having no edge, or this being a train wreck, I will only point out that, take out the first 8 weeks of the year (the losses of which are well known), the last 32 weeks have been somewhat flattish by comparison, hardly the weekly train wreck some posters want to present. If you have followed all my prior years' postings and results, you should have an idea of your own what is random and what is based on edge, I will not enter into argument with anyone on that: I know where I have come from over the years (say since 2005). In addition it is interesting to observe so many posts that come from people that seem to have such mastery of themselves and their trading. It would be nice to have some real-life trading journals from these (yes I know a handful do post such). Code: Opening Balance: 213,102 Net gain for the week 12,508 ------------------------------------------------ Net Balance: 225,610 Number of Trades 16 Number of Profitable Trades 13 Since Inception of Thread 01/10/2010 - 10/16/2010 Opening Balance: 410,000 Net loss(Less Margin Interest) 184,390 (Down 45%) ------------------------------------------------ Net Balance 225,610 Number of Trades 1110 Number of Profitable Trades 596 BREAK-DOWN BY AUTOMATED/DISCRETIONARY Number P/L Best Gainer Worst Loser AUTO 7 545.20 2,393.70 -2,475.70 DISCR 9 11,962.30 5,700.10 -2,393.50
you are right. and I would also say this to you: if you are going for such a huge compounded return, then these drawdowns you're going through are really not so bad. think back to when the turtles were compounding at these crazy rates in the 1970s and 1980s: they had drawdowns, too. but that doesn't mean that what they were doing was wrong.