When I have been most profitable I have been a P/L trader with watching my account value going up, up, up. The flip side is that I have been paralyzed into inaction or indifference as that P/L went negative. On the other hand, when I have been most successful (profit level being the least important factor) I have kept the account values off of the screen and just traded my charts like my plan said. I knew in my head that I was making money and I was usually right or close to being right in what I thought was my result. The difference was that the lack of the dollars on my screen kept me focused on the right information. The short answer to your question is no, an early profit is a false sense of security. Albert
$400 profit on a 5K account is by no means "big". Try several hundred percent return on one trade then it is "big".
fjmcc - I went through something similar as an off floor trader how scalped nazdaq futures and stocks. But I was making low six figure. then the market changed, I was recently married had a few young kids, lost some money in real estate and now longer had the desire to risk enough to make a living. Especially with a much weaker edge. I traded for a pretty good living for about 8 years. the last year was break even. actually up on gross but down a few grand on P&L. I still trade, but not for a living. Luckily I had a previous career to fall back on. Which made be a better trader when it was good but perhaps less willing to grind in the end. I was like why am I risking money to squeak out this kind of money when I can make 3 times more without the risk?
This statement can never be overemphasized enough... Newer traders please note - He's not saying this out of any egotistical or self serving means - It is the cold - hard truth
Great thread. But not all new traders lose. I'm a new trader with 4 days of live trading experience, and I'm green.
Some say the worse thing that can happen for a new trader is an early win streak. I know it was for me. Took 14,000 to 52,000 in the first 2 months of trading. The people who have been around the block know what happened next.
You're probably correct but how will he become ready unless he trades? Practically all-new traders have to pay for their tuition this is generally unavoidable. After all, most traders have blown their accounts from one time or another. Increasenow's postulation is logical and sensible if it was applied to a business which sells widgets but trading isn't that business. I think we all accept that the maximisation of profit is the ultimate objective in this game but (paradoxically) to focus on the profit outcome (rather than the process - method/edge/setup) is to inject unnecessary psychological variables into the mix. This leads to: @ increasing stop-losses mid trade; @ averaging up/down; @ over-trading; @ poor money management; @ revenge trading; @ swinging for the fences. IMHO, a trader must find an edge to which they are committed. Not risk a silly amount of capital per trade. Reward themselves for allowing a trade to run (whether a winner or loser). Associate pleasure to following the plan and extreme pain to deviating. Remember that psychological stability will have a significant positive impact on your consistency. Carving out a career as a competent trader is rock hard. This because - IMHO - there are so many paradoxes that exist in this field but one has to be exposed to them personally to understand and overcome them.
Thanks...I honestly do agree that it is best to get and stick with a method rather than off the p&l stop loss method...thanks