This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
I took 9 trades today, all losers–9 in a row, all between -1.3R and -0.3R. All of these losers were within my 1% of equity risk parameters, but I took an -8% drawdown from these trades. Now my Prop results stand at +17.3% overall, +26R. My PnL chart is now not as impressive next to Trader Mike’s. At least I didn’t do what I did last Friday, by trading out of control. I took setups that looked reasonable as I saw them, but they turned out to be wrong is all. I did have one that went in my favor on CAL, but I left the computer and it retraced and stopped me out, filled above breakeven (hence the -0.3R loss). It’s pretty discouraging, but I tell myself that this kind of thing will happen from time to time. Today I’m not so upset about the 9 losses in a row as I am the -8% drawdown. It’s a big number! At least I didn’t blow myself up by trading bigger and bigger trying to make it all back. This choppy, listless market environment is really wreaking havoc on my style. I need a rule to keep me from overtrading on days where it’s not working out, but I don’t know what a good rule would be, as you never know when the market will change and things will pick up. The next big winner could be right around the corner, or another 9 losers–it’s hard for me to tell. Any thoughts on that would be hot most kindly appreciated :p
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
August 21st, 2007 at 3:37 pm
I have a rule that if I make 3 losing trades on good setups I stop trading.
August 21st, 2007 at 4:08 pm
The traders that made money today were just lucky, and additionally will have to go without the character that a day like this builds. Poor bastards.
I am going to look over my charts tonight to make sure… but I don’t even think I missed (m)any big opportunities with clean entries. I think it was just a pretty crappy trading day.
As long as you make more on your big winning days than you lose on your big losing days, you will be fine. But maybe you’ll have to wait to see that first-hand until after labor day.
August 21st, 2007 at 4:46 pm
richard: LOL…those poor bastards will have to go without the character a day like today builds
prospectus: i notice u use the word “hot” a lot…have u been hanging out with paris hilton…i know she likes studs with money! btw, don’t tell her about today…and u can do much better than her anyway
August 21st, 2007 at 5:33 pm
@Bubs: What if trade number 4 would have been a big winner? I find that I have a 2 or 3 down small, 1 up big pattern in my trades. Also, do you differentiate between 3 losses from bad setups vs. 3 losses from poor market conditions, where the first could be solved with a psychological reboot, but the other is systemic and persists until conditions change? I guess you did say that 3 losses in a row on “good setups” was the criteria…
@Richard: Determining that today was crappy early would have saved me a lot of $. How can we identify days like this earlier? Any ideas?
@john: Well, I do have a chihuahua, but he’s definitely a guy (or was, anyway). If Paris likes guys with money, then she’ll want nothing to do with me. I did stay in a Hilton once, but it wasn’t Paris…
August 21st, 2007 at 9:12 pm
I basically only do breakout trading and from what I have learned is that they usually work in bunches. If the first couple work then there is a better chance to see other setups work. If the first couple setups fail then there is a better chance of the third failing. I believe this type of logic works with other styles of trading.
So when I take 2 or 3 breakout trades and they fail I just stop trading. It really has nothing to do with me but rather the market is not favorable to my style of trading. There have been many times when I have taken more then 3 losses in a row from scalping but I don’t count these against me. Hope this helps
August 22nd, 2007 at 2:55 am
Yes, thanks Bubs.
I had the idea that after X losses, I would move up to a higher timeframe–e.g. if I traded the 5 min and lost, I go up to 15 min. The idea is two fold:
1) If there’s too much volatility for the lower chart, moving up will help avoid getting chopped up again.
2) Moving up will also slow down your trade rate, cutting down on overtrading.