This is what happens when we don't use stops...

Discussion in 'Trading' started by xelite777, Oct 5, 2013.

  1. It's happened to everybody at some point . . . not really trying very hard if you haven't been there
     
    #11     Oct 6, 2013
  2. Until it happens, you won't begin to respect risk management.
     
    #12     Oct 6, 2013
  3. The only way to turn a very modest starting capital into an 8 or 9 figure income is to pyramid our profits to the max.

    For instance, gutsy traders who rode the fantastic up trend in the gold or oil market (from bottom to top) while adding to their winning position on each pullback are now sitting on a fortune.
     
    #13     Oct 6, 2013
  4. blakpacman

    blakpacman

    If you're pyramiding on the way up, then you're adding more and more contracts on each pullback until one larger than normal pullback wipes you out. In late 2007/early 2008 I pyramided Eurodollar futures from $10,000 to $200,000 within a few months until one minor move caused the equity to drop to < $80,000. That amount subsequently was wiped out on other trades.
     
    #14     Oct 6, 2013
  5. That is what happens when you add to winners without knowing what the hell you are doing.
     
    #15     Oct 6, 2013
  6. blakpacman

    blakpacman

    By your tone you seem to think you know what the heck you're doing. You must be making deep six or 7 figures from your trading? If not, then stfu.
     
    #16     Oct 6, 2013
  7. Well of course, a trend cannot go on forever.

    The trick here is to move your stop as you go along, to protect your profits and avoid a catastrophic and inevitable loss.


    Sorry to hear that. But I do hope you learned something from that 200 grand loss.
     
    #17     Oct 6, 2013
  8. blakpacman

    blakpacman

    If your pyramid is upside down, the trick is to know when to get out before you're stopped out because your average cost is so high with so many contracts that any medium correction would essentially wipe out your account. Heaven forbid a limit move that would put a debit balance in the account.
     
    #18     Oct 6, 2013
  9. That's why successful traders with large positions also buy put options (or call options if they are short).
     
    #19     Oct 6, 2013
  10. Everyone on ET is a billionaire. Didn't you know? :)
     
    #20     Oct 6, 2013