i think you have to be alert to the possibility of a large loss. if you trade (on a SB) with stops and don't pay for guarantees then you could get massacred. Obviously paying for stops makes you less profitable but hey-there you go. If you're DMA then stops could mean nothing if there are no orders to trade in the book so large losses are always possible.
-
New to T2W? Welcome! This forum contains a list of the most frequently asked questions (FAQs) that new members want answers to. We don't allow new threads to be created so if you have an idea for a new FAQ please post it in the How the FAQs work thread.
FAQ Do I Have to Accept some Big Losses in the Beginning?
Good Observation
When I got into day trading had discovered this pattern on my own watching a few stocks that seemed to have this timing pattern. Jumped in doing a thousand shares a day and started on a winning streak. Yes, there are a few loses, but a careful watch of the market and a willingness to take a small loss against some large gains turns very profitable at the end of the month. The day trading approach using this time frame approach resulted in a complete balance of the unrealized losses of my long positions held through this crash. I'm in the difficult position of deciding which longs to sell for a loss to balance out the short term gains. Have decided to just make this a tax neutral year and walk away with the winning tax free. Of course there is the reality of the long term losses, but they can be put back in portfolio using the day trading/timing strategy. Due to the US wash sale rules it's difficult to do this for long term holds. But bottom line, this approach is fairly basic and does work. But keep the emotion out of it. I set my objective at $1 usd, and close it out unless the momentum and rsi are staying strong. For the novice, this is a very basic, easy to follow strategy and it sure isn't complicated. Just pay attention to what others are saying: Keep the emotion out of it, have a clear goal and stick to the plan; don't second guess an established pattern!!
When I got into day trading had discovered this pattern on my own watching a few stocks that seemed to have this timing pattern. Jumped in doing a thousand shares a day and started on a winning streak. Yes, there are a few loses, but a careful watch of the market and a willingness to take a small loss against some large gains turns very profitable at the end of the month. The day trading approach using this time frame approach resulted in a complete balance of the unrealized losses of my long positions held through this crash. I'm in the difficult position of deciding which longs to sell for a loss to balance out the short term gains. Have decided to just make this a tax neutral year and walk away with the winning tax free. Of course there is the reality of the long term losses, but they can be put back in portfolio using the day trading/timing strategy. Due to the US wash sale rules it's difficult to do this for long term holds. But bottom line, this approach is fairly basic and does work. But keep the emotion out of it. I set my objective at $1 usd, and close it out unless the momentum and rsi are staying strong. For the novice, this is a very basic, easy to follow strategy and it sure isn't complicated. Just pay attention to what others are saying: Keep the emotion out of it, have a clear goal and stick to the plan; don't second guess an established pattern!!
fantastic4
Active member
- Messages
- 164
- Likes
- 6
I think the answer here is really easy too, absolutely not. Just understand that you have a 92% chance of failure and that most succesful traders started out by going through three accounts, then you'll be ready to go. The guys who lose a bunch are the ones going in thinking they're going to make a bunch. Open up a teeny, tiny, account with very very low commissions. Trade a few shares at a time. That way you'll gain real experience and lose only a little or nothing at all. Your first goal should be to lose nothing.
I completely agree. I now trade very small lot sizes while learning how the process works. Find out if you are able to make $10 or $20 dollars a day consistently. If you are able, then you can build on this. If you are not able to be consistent then don't even bother dreaming about making lots of money. I have lost money because I "believed" in a stock, didn't think it would go below a certain point, or wasn't clear on short term vs. long term trades. I have only recently started keeping track of all my trades and wrote a simple program to calculate "expectancy" using excel. This has given me some accountablity to the profit potential of my trading plan. Over 37 trades I have a positive expectancy of about 9 dollars per trade. Doesn't sound like much, but it sure beats losing. And there is little emotion (like paper trading). Derive you excitement from building a good trading plan rather than scoring big on one or two trades. IB offers one penny per share commisions which is really good for new traders.
oiltanker
Established member
- Messages
- 955
- Likes
- 89
a big loss would suggest a big stop loss?
a big loss suggest just one trade rather than the results from a statistical significant sample size of trades?
big sounds like an emotional term? if the loss is seen as big then reduce the stop loss to something that is not seen as big?
big losses suggests doing the one trade-loss-change the entry rules- one trade -loss-change entry the rules game. ie the inability to take even a single loss? which then just keep chipping away at the funds? is that avoidable? in theory yes if someone gets a good education in sample size trading from the beginning. otherwise probably not?
a big loss suggest just one trade rather than the results from a statistical significant sample size of trades?
big sounds like an emotional term? if the loss is seen as big then reduce the stop loss to something that is not seen as big?
big losses suggests doing the one trade-loss-change the entry rules- one trade -loss-change entry the rules game. ie the inability to take even a single loss? which then just keep chipping away at the funds? is that avoidable? in theory yes if someone gets a good education in sample size trading from the beginning. otherwise probably not?
The statement of failure rate of traders is overused ,and never qualified.Defining why you are trading,what is your concept of success,and are you willing to learn how to " trade" without indicators,alert services,etc... must be fully understood,and answered.The correct answer is not important,as long as you understand the question,and willing to look for answers that work.
Last edited by a moderator:
Adamus
Experienced member
- Messages
- 1,898
- Likes
- 97
going way off-topic....
Take your pick - it's either:
(1) to serve society
(2) to get fat and die with a big bank balance
(3) to fulfill the goals taught by any other religion (mostly all quite similar)
NB note (1) and (2) are religions too.
Happy Christmas
Take your pick - it's either:
(1) to serve society
(2) to get fat and die with a big bank balance
(3) to fulfill the goals taught by any other religion (mostly all quite similar)
NB note (1) and (2) are religions too.
Happy Christmas
c_c405
Well-known member
- Messages
- 256
- Likes
- 19
Taking losses is part of the deal
I don't worry about taking a loss - it's of no consequence to me. I take the loss because I was wrong and the market was right, that doesn't mean I haphazardly toss my money around though. It just is, that sometimes you're wrong. Look how many thought Oil would hold above $75 - HA go figure - watch the biz news stations? uh huh what did the experts say? Look how many who went short closed at 100 a barrel - HA! and HA again! Many going long at 70 were thinking HA - look at it today - HA!
Small guys lose because they can't afford to hold on when they feel they should hold on - big guys win because they can.. Did anyone buy GM at 2.80? I did. When I bought it I knew it could fall to ZERO and So what? So I lost some... I certainly wasn't going to buy them at $50 just like I wasn't going to buy oil at 147 how many were saying 200 a barrel? I didn't buy copper at 4.15 a pound or gold at 950 an ounce. Don't listen to anyone and look at your charts!!!! when the price is low find out why and find out how much you can bet on it - don't do that process when the price is to high or mid-range
Patience! Don't listen to anyone! And look at the charts! Buy Low Sell High. If you look at a chart you can see where you could place your bets. If your bet was wrong and the other horse won ... oh well... I don't enter a trade without this attitude. It gives me a greater tolerance to seeing negative numbers.
I took losses when I started, I didn't plan to and I didn't try to, I just did. Sure it hurts but I'm a far better trader for it, and the lessons learned were priceless. I took a 200 pip loss on two trades recently (400) total... So what? I was wrong. I'm still wrong sometimes. No biggie. I mean how else would you know market direction right?
there is no doubt about direction when your losing money!
I don't think a beginner has to lose big but losing little bit by bit is far worse. Eating away at them like a chewing, gnashing psychosis that just can't deal with losing another 1000 trades! ARGH!!!!! Widen your stops give our trade some room to breath, most beginners use stops that are just to small and they get chipped to death.
Losing is not a bad thing - If you learned from it. A trader needs to learn what he did wrong, and stops that are to tight will always lose. Usually you're proven right, after you lost your stop. Get back up and keep your hands on the handlebars this time!
I don't worry about taking a loss - it's of no consequence to me. I take the loss because I was wrong and the market was right, that doesn't mean I haphazardly toss my money around though. It just is, that sometimes you're wrong. Look how many thought Oil would hold above $75 - HA go figure - watch the biz news stations? uh huh what did the experts say? Look how many who went short closed at 100 a barrel - HA! and HA again! Many going long at 70 were thinking HA - look at it today - HA!
Small guys lose because they can't afford to hold on when they feel they should hold on - big guys win because they can.. Did anyone buy GM at 2.80? I did. When I bought it I knew it could fall to ZERO and So what? So I lost some... I certainly wasn't going to buy them at $50 just like I wasn't going to buy oil at 147 how many were saying 200 a barrel? I didn't buy copper at 4.15 a pound or gold at 950 an ounce. Don't listen to anyone and look at your charts!!!! when the price is low find out why and find out how much you can bet on it - don't do that process when the price is to high or mid-range
Patience! Don't listen to anyone! And look at the charts! Buy Low Sell High. If you look at a chart you can see where you could place your bets. If your bet was wrong and the other horse won ... oh well... I don't enter a trade without this attitude. It gives me a greater tolerance to seeing negative numbers.
I took losses when I started, I didn't plan to and I didn't try to, I just did. Sure it hurts but I'm a far better trader for it, and the lessons learned were priceless. I took a 200 pip loss on two trades recently (400) total... So what? I was wrong. I'm still wrong sometimes. No biggie. I mean how else would you know market direction right?
there is no doubt about direction when your losing money!I don't think a beginner has to lose big but losing little bit by bit is far worse. Eating away at them like a chewing, gnashing psychosis that just can't deal with losing another 1000 trades! ARGH!!!!! Widen your stops give our trade some room to breath, most beginners use stops that are just to small and they get chipped to death.
Losing is not a bad thing - If you learned from it. A trader needs to learn what he did wrong, and stops that are to tight will always lose. Usually you're proven right, after you lost your stop. Get back up and keep your hands on the handlebars this time!
We are humans. everyone makes small mistakes in the begining. The matter is that how he learns from that mistakes.So starts with small trade,then increase ur trade as u became established in the field. Thats all i can say.Maybe it seems to be joke to some other's ,but its the fact.
Regards
Vivek
Regards
Vivek
Last edited by a moderator:
bottomdollar
Active member
- Messages
- 217
- Likes
- 1
People say that trading psychology is 80% and the actual trading process (or system) is 20%. The more I trade, the more I agree... no matter how good a system is, us humans like to tweak and play until the original system is no more.
I don't think there is any other way to gain the right trading psychology without trading which means losing money... there's nothing quite like trading which can build this up.
I'd be interested to know what other people think
I don't think there is any other way to gain the right trading psychology without trading which means losing money... there's nothing quite like trading which can build this up.
I'd be interested to know what other people think
itsbearabull
Newbie
- Messages
- 5
- Likes
- 0
you have to accept SOME losses, but not necessarily BIG losses. i mean, you can use a stop limit and make sure you dont lose more than a certain amount. that's all about discipline and controlling yourself. even when the trend has reversed, sometimes people still hold the stock because they're hoping the trend will go in their favor so that they can break even, and perhaps take profit.
Now here is a paragraph I like from Trading For a Living by Alexander Elder, which by the way is a greatt book
"Traders often ask me how much they need to begin trading. They want to be able to withstand a drawdown, a temporary drop in the account equity. They expect to lose a large amount of money before making any! They sound like an engineer who plans to build several bridges that collapse before erecting this masterpiece. Would a surgeon plan on killing several patients while becoming an expert at taking out an appendix?"
Now here is a paragraph I like from Trading For a Living by Alexander Elder, which by the way is a greatt book
"Traders often ask me how much they need to begin trading. They want to be able to withstand a drawdown, a temporary drop in the account equity. They expect to lose a large amount of money before making any! They sound like an engineer who plans to build several bridges that collapse before erecting this masterpiece. Would a surgeon plan on killing several patients while becoming an expert at taking out an appendix?"
littlebopip
Junior member
- Messages
- 28
- Likes
- 1
Yeah, I agree, losing is a part of trading. It's how you manage your risk that determines whether your account will be able to survive those losses in the long run. Good luck!
Part of being a trader is having the ability to accept your losses and move on. Simple
Also if you have prepared before you trade you should already know what risk you have and already come to terms with it before you place the trade. Comes in time though.
Also if you have prepared before you trade you should already know what risk you have and already come to terms with it before you place the trade. Comes in time though.
Last edited by a moderator:
being an economist by training, i lean toward our default position of 'yes and no'
no, with proper limits, hedging and stop losses, you do not need to take large losses from trading before you start to see profits.
yes, it is very common to not lose because of the trade, but because of getting margin called. for example, if you have an options strategy and you suddenly get assigned on one of your options, that can change your margin requirement completely and put you in margin call.
i would recommend that for any strategy requiring margin, especially with options. that you start small for awhile to minimize the risk of bad surprises. i've seen it happen to very smart people.
no, with proper limits, hedging and stop losses, you do not need to take large losses from trading before you start to see profits.
yes, it is very common to not lose because of the trade, but because of getting margin called. for example, if you have an options strategy and you suddenly get assigned on one of your options, that can change your margin requirement completely and put you in margin call.
i would recommend that for any strategy requiring margin, especially with options. that you start small for awhile to minimize the risk of bad surprises. i've seen it happen to very smart people.
Aspen Trading Group
Well-known member
- Messages
- 427
- Likes
- 1
Huge losses are TOTALLY avoidable - absent a gap through your stop-loss.
Set your stop at a level that you feel is either technically relevant or represents a price that invalidates your thesis.
Risk 1-2% max per trade and you stand a far better chance at surviving. Even with wide stops, adjusting your lot size will keep risk at the 1-2% level or whatever level you feel is appropriate.
Set your stop at a level that you feel is either technically relevant or represents a price that invalidates your thesis.
Risk 1-2% max per trade and you stand a far better chance at surviving. Even with wide stops, adjusting your lot size will keep risk at the 1-2% level or whatever level you feel is appropriate.
CityMasterTrader
Member
- Messages
- 77
- Likes
- 2
Don't go for big one if you're new in trading. For God sake it's your money. Don't give your heart to rules over your head. Make sure you do research before you do live trading. The market can goes up as well as down. You can make money in falling marketing. So, open your eyes.
montmorencyt2w
Senior member
- Messages
- 2,619
- Likes
- 294
Big losses in the beginning are preferable to big wins in the beginning, because the latter will delude you into thinking it was your great skill and not luck.
Get burned a few times, and you may learn to be more careful in future.
Get burned a few times, and you may learn to be more careful in future.
AvantEdgeFX
Junior member
- Messages
- 48
- Likes
- 4
No losses are not a requirement… but they will become the prerequisite if you're using any out of the box technical studies. So user beware, 99% are historically lagging and don't tell you where the prices are going.. only where they have been. What makes it tougher is that because of this lag your losses aren't cut short until many many pips in drawdown.
When I place an entry, I don't use a stop loss that's absurdly far away from the market… you can't expect a 50 pip spike in your direction if your timing is off so why use a 25 pip or heck.. a 10 pip stop?
My stops are 2 to 5 pips and are only hit 6% of the time. But then again.. I use no historical indicators… get rid of macs, stochastics, even fibonacci numbers are junk here.. Get into real time and sweat less.
When I place an entry, I don't use a stop loss that's absurdly far away from the market… you can't expect a 50 pip spike in your direction if your timing is off so why use a 25 pip or heck.. a 10 pip stop?
My stops are 2 to 5 pips and are only hit 6% of the time. But then again.. I use no historical indicators… get rid of macs, stochastics, even fibonacci numbers are junk here.. Get into real time and sweat less.
Similar threads
- Article
