How do you recover from a £25,000 loss....

mrfigure said:
Thanks for the advice split. Id rather think big and learn big, taking hits along the way than place £10 per point here and there. Its a big loss but the learning curve is tenfold than just learning from a £250 loss. I'll be back, and il get my money back
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Good for you, mate, keep it up! :D
 
I always thought SB companies pull their prices out of their ar*e. But like any casino, they don't force you to bet. From what the OP's is saying, when he's winning, it's all down to his trading skillz. When he's losing, it's all the casino's fault.
 
mrfigure said:
pboyles, i have made an enquiry regarding that but arnt expecting any substantial reply. It was peculiar tho in my view. Im sorry but i cant agree with the comment that sb firms dont move price. Time and time again you hear of people who continuously get frustrated at getting their stops hit all the time, which is why i dont use them. Sb firms themselves open positions in markets to hedge against potential losses, that in itself influences prices. This may sound a bit daft, but iv never really wanted for anything expensive in life, flashy cars, big houses, holidays every few months etc, and only ever saw the account reading '£25,000'. It was just a figure - i had no rush to want to withdraw it and 'realise' the profits because i have always been comfortable living within my means. Im a little frustrated at the term 'gambling' as a couple have mentioned, as i have actually done considerable study before i started trading. I suppose trading without a stop loss is exactly that tho, gambling ! This was a one off trade that went wrong and cost me, but its a lesson learnt. This particular trade did go where my study indicated it would, I take a lot from that, but I failed to recognise the pace of the move, and didnt allow for a 'breather' during strength in the market. People have lost a lot more than this, which is pennies in the real world. I also think excitement played more of a role in the trade than what it should have, due to the confidence i had in the trade, but again a lesson learnt. Good to hear some feedback tho and some fair points taken on the chin !
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This is why people gamble...for the excitement of a big win. I think this was poorly planned and most like a gamble that until then had paid off. But you were playing Russian Roulette. Only one bullet in the chamber will do you in,....even if 5 out of 6 times you WIN!! You have everything at risk on that last pull of the trigger.

This is also how you lose alot of money. You need to think about trading like a business.
Dr. Van Tharpe writes about thinking about it like a fruit stand business. If someone gives you a good deal on oranges do you back up the truck and buy a warehouse full? Probably NOT,...because they eventually will spoil or you may not sell the entire load,...either way you lose money. You only buy what you could stand to lose so that if no customers buy the oranges you are only out a calculated amount. You dont risk your entire Business's capital on these oranges. Most people will say to risk NO MORE than 2% of your capital on any one trade and NO MORE than 6% of your capital should be at risk at any one time on ALL trades combined. For what it's worth I usually use a 0.5%-0.75% capital at risk per trade and usually I run out of capital (between 6-8 trades on at the same time) before I ever risk the entire 6% "allowable" risk. Also if you lose 10% in ONE MONTH then another common rule is that you are DONE TRADING for that month. ALL positions should be closed out and you pack up and go home and reevaluate and start again next month.

I think all of us have been to the same place you are in now but to lesser or possibly greater degrees depending on everyone's trading capital. In any event it will be a life lesson and hopefully you will learn from it. Consider it tuition to the Trading University. It's up to you to learn enough to get your degree and earn it back and then some. But it wont happen as fast as you lost it...that much is certain.

Good Luck
 
Yes its like manipulation is fine until its not in the dirrection of your trade :)
 
Masquerade said:
I keep seeing this, but what's so special about 2%?
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This very well explained in Dr. Van Tharp's "Trade your way to Financial Freedom" and Dr. Elder's "Trading for a Living". It keeps the losses more like paper cuts rather than shark bites. You can survive a thousand papercut but one shark bite could do you in for good.
 
Joe, just to remind you, this was about one trade. So 'when hes winning when hes losing' etc does really fit in. This topic hasnt really gone into anyones trading 'skillz' either.
 
Guys above thanks for the comments, one of those things, i am gutted but i know i will learn from it.
 
mrfigure said:
This topic hasnt really gone into anyones trading 'skillz' either.
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Well it takes quite a bit of skillz to go down with the ship, which is what risking the whole account on a single trade is all about. Instinct would have prevented most from doing so.
 
Masquerade said:
:LOL: Aren't you a smart monkey. It's funny how someone can't make a thread without it being brought back as an insult. You don't even know what's happened the last 2 months and you think you can use that against me. Don't worry, I was fully prepared for someone to try take the higher ground with that. :rolleyes:

Go back to your 2%/trade, 2:1 R:R crap and see where that gets you :lol:
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WOW,...heated discussion.

What people are trying to get you and others to understand is that your CAPITAL in a trade is NOT THE SAME as CAPITAL AT RISK in a trade.

Lets say you have a $100,000 acct. You do not risk $10K on 10 trades and call it equal risk because risk is based on the VOLATILITY of the trading vehicle, number of shares chosen, and the STOP LOSS you put in. For example $10,000 to buy 100 shares of a $100 stock with a stop loss at $99 means that you could lose $1/share...or $100 MAXIMUM. Therefore, simple math gives the following : ($100 AT RISK/TRADE)/($100,000 TRADING CAPITAL) = 0.1% of your capital at risk on THIS trade despite using 10% of your capital on the trade.

NOW, lets say you wanted to buy a 3x ETF of Financials (FAS) and bought $10,000 worth at $14.50 with a stop at $11 becuase it is more volatile. You now have $3.50 at RISK/SHARE. Since (AS YOU SEEM TO RECOMMEND) you bought $10,000 worth that is $10,000/($14/share) = 714 shares. If your stop loss is hit you lose 714 shares * $3.50/share = $2499, or ~ 2.5% of trading capital.

That should clarify how VOLATILITY, STOP LOSS, and NUMBER of SHARES effect your capital at risk. You should calculate the stop loss distance from the buy price (say for example $1) and % of capital you want to risk per trade (say for example 1% which is $1000 in a $100K acct) and then divide the capital at risk ($1000) by the stop loss ($1)to give the numbe of shares to buy (1000 shares). THIS IS HOW POSITION SIZING IS DETERMINED and RISK IS LIMITED!!! Anyone not familiar with this concept should read Dr. Van Tharp's books ASAP!!

Good Luck.
 
Theres a number of things to take from this but il be going back to the drawing board. Clearly risk management being one of them !
 
mrfigure said:
Joe, just to remind you, this was about one trade. So 'when hes winning when hes losing' etc does really fit in. This topic hasnt really gone into anyones trading 'skillz' either.
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Trading skills are a personal way of trading and all of us are different, There is no-one who can criticise another's methods,really, although we all enjoy ourselves trying! There are so many timeframes, patterns, etc. Even fibs, which I do not use, are all different and everyone has opinions on which is the right place to put them.

This is quite different from managing one's account. My beef at you was not how you should have played your trade on Aug 23, but the manner in which you staked everything on a high stake play. You must always make sure that you can trade several times, in case you lose. Everyone loses, BTW. Where would we all be if we traded like you?
 
Splitlink said:
Trading skills are a personal way of trading and all of us are different, There is no-one who can criticise another's methods,really, although we all enjoy ourselves trying! There are so many timeframes, patterns, etc. Even fibs, which I do not use, are all different and everyone has opinions on which is the right place to put them.

This is quite different from managing one's account. My beef at you was not how you should have played your trade on Aug 23, but the manner in which you staked everything on a high stake play. You must always make sure that you can trade several times, in case you lose. Everyone loses, BTW. Where would we all be if we traded like you?
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AGREED....+1000(y)
 
eegozi said:
NOW, lets say you wanted to buy a 3x ETF of Financials (FAS) and bought $10,000 worth at $14.50 with a stop at $11 becuase it is more volatile. You now have $3.50 at RISK/SHARE. Since (AS YOU SEEM TO RECOMMEND) you bought $10,000 worth that is $10,000/($14/share) = 714 shares. If your stop loss is hit you lose 714 shares * $3.50/share = $2499, or ~ 2.5% of trading capital.

That should clarify how VOLATILITY, STOP LOSS, and NUMBER of SHARES effect your capital at risk. You should calculate the stop loss distance from the buy price (say for example $1) and % of capital you want to risk per trade (say for example 1% which is $1000 in a $100K acct) and then divide the capital at risk ($1000) by the stop loss ($1)to give the numbe of shares to buy (1000 shares). THIS IS HOW POSITION SIZING IS DETERMINED and RISK IS LIMITED!!! Anyone not familiar with this concept should read Dr. Van Tharp's books ASAP!!
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Just bolded 2 things.

1.) I said nothing of the sort. I posed a question about which trade is more risky when I gave some % figures. At no point did I specify what our actual risk on the trades would be and at no point did anyone ask.

2. ) Van Tharp?!? :LOL: Get real.....the guy's not even a trader. He makes his money packing people into conference centres and selling books about trading!
 
Masquerade said:
Just bolded 2 things.

1.) I said nothing of the sort. I posed a question about which trade is more risky when I gave some % figures. At no point did I specify what our actual risk on the trades would be and at no point did anyone ask.

2. ) Van Tharp?!? :LOL: Get real.....the guy's not even a trader. He makes his money packing people into conference centres and selling books about trading!
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This may be true about him not being a trader but I dont need to be surgeon to teach anatomy. This is basic stuff that ANYONE trading should comprehend.

As for which trade has more risk it depends,...YOU did not give enough information. You need to give the stop loss, and either purchase price or number of shares bought, for me to know. I assume the 2% and 10% you referred to were trading capital. I would be happy to give you the answer. I just think it's comical that you stand so proudly as if you know what you are talking about and refuse to provide all the information needed to come up with the answer to your own question.

Provide the stop loss and number of shares and your answer will be obvious. We will assume you have $100K acct. to make the math easier. That would mean $2000 in one trade and $10,000 in another. Now give the stop loss and number of shares purchased or purchase price and it is a 2 step process to give your answer that you think is so elusive...:cheesy:
 
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