Bad Trades.....

[DemonHeadmaster]

All traders have both good/bad runs....i'm currently on a bad one.

I've noticed from my log that im closing out good positions too early and locking in bad trades (stops are getting hit). All this is slowing reducing my account size. Im hoping other traders have experienced this and would be grateful if you could tell me how you overcame the problem.

cheers

DH

 

[Henry]

If your trading style allows for it (ie if you are trading multiple futures contracts, or shares), try closing half your position where you currently feel the need to exit, and run the rest with your stop at break even. This way you lock in some profit but retain enough interest in the trade to practise letting it run.

H.

 

[DaveGos]

I would suggest you trade smaller lots for a while until your profitability returns. I think it was either Mr Charts or Chartman who suggested that new traders only trade 100 shares until they consistently made $50 a day then move up to 200 shares and $100 a day and so on. While you may not be a new trader it certainly is not a bad idea and allows you time to look at your trading methodology without risking to much of your trading capital.
It is a system I use and it's one of the best pieces of advice I've taken from this BB, right up there with Stop Losses and trade the US market.

 

[oatman]

Halve your volume when you lose. After 3 winning trades start to increase back to your maximum level. If you're being stopped out early your volume is too large for your equity, ie. no bottle. You must have objectives when you enter and at least 3:1 ratio risk/reward. It's down to confidence. You've already done the work before you enter the trade.
And of course......

Good Luck

 

[Skimbleshanks]

It sounds to me as if you've lost your confidence. You're probably entering a trade, staring too hard at the screen, gripping the mouse until it nearly squeaks, and are frightened of turning any win into a loss so you're grabbing it when it's there.

Well, if that's not you, then I've just described what I went through when I went through a sticky patch in the past. :cheesy:

This is how I cracked it. I paper traded for 3 days then traded for 1 day, paper traded for 2 days then traded for 1 day, paper traded 1 day then traded 1 day. I discovered that I knew my system perfectly well, and could trade like a dream on the paper trading days. Once I realised that I really did know what I was doing, I used to look forward to my trading days with renewed confidence, and never looked back.

Just reassess your risk and make sure it's within your comfort zone, make sure you never expose more than 1% of your trading pot on any one trade, and if you have three consecutive losses give up for the day. I find it also helps to set yourself a reasonably low daily target, then when you reach it give up for the day. You'll find your targets are reached earlier and earlier in the day, and then you slowly increase your target per day.

I also keep meticulous records, and I find it helps to tot up my average win, average loss, average daily win, etc. That way I know when I'm on course, and I very quickly know when I'm off course. I keep my records in Excel, and have a brightly coloured square next to each day which exceeded my target - it's nice to see the coloured squares get so frequent that they turn into long coloured blocks. Childishly simple, I know, but little things please my little mind. :cheesy:

 

[bonsai]

I keep records too.
but when I make a loss, I look back a day later and try and analyse why - and that goes in my log.

it surprised me to find that several of my losses had a common theme.

I found that very helpful.

I also try to analyse why I make a profit, but as I am a system trader, its no surprise that the system takes the credit !

 

[Mr. Charts]

Hopefully you are trading US rather than UK. It's impossible to judge without knowing your stop loss policy whether you are getting stopped out because you are not allowing enough wiggle room or if the problem is deeper.
I advise my clients to lock in half their profits as soon as the momentum of the trade fades and run a tight trailing stop on the remainder. And yes, the 100 shares/$50 etc. is also what I advise.
Good advice as always from Skim and I would add to her comment about 1% that you should also ensure that if you have multiple positions open their cumulative potential loss shouldn't add up to more than 3% of your trading capital. After a run of losses, figure out why, do as Skim suggests, and consider reducing your position size as has been suggested.

 

[DemonHeadmaster]

cheers for the replies. i've jotted down some good tips from all of them. decided to sit and watch for most of the morning and noticed a nice support level @ 8822 which was eventually broken. closed for +40pnts and turned off the charts. decided to finish reading my john grisham book (the summons) and will start trading again with the new month from monday.


DH

 

[ZigZag]

I endorse the combination of Skimbleshanks and bonsai methods. My reasoning for paper trading when I have 3 straight losses is that I consider my trading method is out of sync with the market.
Similar to bonsai I review yesterdays and todays chart after the market closes to analyse what I could have done better. I work on printed charts annotated with hand written notes and various support and resistance lines. Good Luck