aside from commissions, traders that are conistently losing money are doing the wrong thing correctly. everything you are doing is the exact wrong thing. the trouble is, once you know this, it's hard to distinguish what exactly you are doing wrong. most people who lose money trading would probably be pretty happy to make money at the rate they are currently losing it. it's just hard to see what everyone is doing wrong. everyone is gonna reply to this saying "cut your losses short and let your profits run"....but it's more complicated than that. what matters to trading is what your setup is, when you enter the position, where is your stop loss, what is your exit strategy for a profit. if something like less than 10% of traders are making a lot of money, they must be doing something a lot different from everyone else. for those of you who lose money, think of what it would take for you to be very profitable. not only do you have to stop losing money, you have to start getting profits above break even. that's the exact opposite of what you're doing now.
I have a suggestion for all losing traders...perhaps if you do the opposite of what you intended to do,you'll make money.
I think the answer is in "cutting your losses and riding and pressing your winners ".... Although thats not the answer you're really looking for. Outside of all the TA and mental war games; this is pretty much the only thing you can really control and tweak in our trading world....Charts do fail u know.....its funny that it all comes down to when you are actually in the trade ( only way you can lose or make money )..so cutting your losses and riding your winner is by far imo the most important thing to trading...and pretty hard to freakin master ( emotions )....
Do not tolerate losses. As Gordon Gekko says, "Nothing spoils my day more than losses." If your position starts to weaken get out with a wash or a one tick loss. Never wait until you are absolutely sure you have a losing position.
Dealing with losers is my biggest problem. Not individual trades. I cut my losses very quickly on individual trades. My problem is cutting a losing day quickly. Small losses add up if you keep trading. Most of the time I know early if things are not going my way. If I would just walk away on those days I would be doing very well.
do you have a stop loss for day? ( ex. $500.00 ).. Its pretty hard to determine if your day is going to get better or get worse ( only at the end of the day can you determine that).. I use a stop loss per trade and per day...I also have a stop gain ( which is very hard for me to follow, but i try ).. stop loss: stop gain: per trade .50 per trade 1.00 per day $500.00 per day $1000.00 stop for day per month $3000.00 per month $6000.00 stop month this is just an example not what i actually follow....changes as the flow of the market changes...also it is easier said than done...because human nature is to forge ahead...at least for me that is
I have been trading for 3 years full time and if there is one thing that I noticed from the analysis of my P&L, it is that the main thing that ruins my weekly, monthly, quarterly and yearly P&L are those few huge down days. I believe that if you can elminate those major blowout days, we can be successful traders. Of course, that takes many things: descipline, mental toughness, yada yada yada. But you have to do whatever it takes to make sure you do not have those major blowout days. For me, it works like this: + 1500, +780, + 2000, + 1250, + 3000, - 15,000. There goes my week. In 2001, I had 11 days where my daily losses were over $10G. If I had a maximum loss cap of, let's say $3,000, that alone would have saved me at least $80G. Of course, there is the opposite side of the story: There were days when I was down $10G and made it all back and went positive for that day. But those days are far in between...and if I were to net out the difference, Im conviced that I would have been up by more than $50G more... How often were you down $3G by 11am...and end the day down $6G? For me, that is the more likely scenario than ending the day flat or positive after being down $3G at 11am. This means one thing for me: the trading method is not as important as money management. I believe proper money management is the most important aspect of trading successfully - which includes mental toughness.
I agree with your view on money management......the thing is looking back ..that shouldve couldve works better than looking forward....thats why i set stop loss for day and month also and stop gains....keeps me in da game
I do have a follow-up on money management...ie, setting max losses/gains. I believe that, ultimately, if you are to be a successful professional trader, you should NOT set maximum losses/gains. You should have the strength to ALWAYS make only those "positively expected" trades. You should never allow your emotion or anything else to make dumb trades...over trade or put on bigger than usual size trades...etc etc. That should be our ultimate goal. To be able to work all day - no matter what your P&L is - and always make perfect trading decisions. As amazing as it sounds, I actually know of a trader like that at Worldco. He had less than 10 days of down days the entire year in 2001. Amazing calm and coolness while trading. No emtions whatsoever.
this is what works for me......always tweaking it with the flow of the market......One day when my hit percentage increases maybe i will throw it out the window, but for now it keeps me in check...I know on any given day what my max loss is going to be ( great for the emotional rollercoaster)........ peace and good trading