Trading limits and gamblers ruin

[joethepro]

Hi all,

After analysing my trading habits I have decided that, like many gamblers, my biggest pitfall is chasing losses. When confidence is high I often go on great runs, however,I frequently blow up and end up giving it all back after a painful loss.

I know that this is the nature of trading but I just think there should be better ways to control ones losses. I am thinking specifically of a daily limit set by the exchange, broker or spreadbetting firm which the trader cannot alter. I set myself daily limits of course but there is no use in them because in the heat of the moment i often disregard them.

On betfair i know you can set limits so that you can only lose a certain amount each week but frankly that doesnt cut it either. limits need to be daily and set at the amount you require.

Does anyone know of any firms where you can set your daily loss limit and if not, does anyone support the idea of getting this introduced into all types of spreadbetting and gambling. I think the number of problem gamblers would be greatly reduced if this was introduced and thinking big picture i think this would greatly benefit society as a whole.

what does everyone think?

 

[joethepro]

any thoughts?

 

[Paul71]

Hi all,

After analysing my trading habits I have decided that, like many gamblers, my biggest pitfall is chasing losses. When confidence is high I often go on great runs, however,I frequently blow up and end up giving it all back after a painful loss.

I know that this is the nature of trading but I just think there should be better ways to control ones losses. I am thinking specifically of a daily limit set by the exchange, broker or spreadbetting firm which the trader cannot alter. I set myself daily limits of course but there is no use in them because in the heat of the moment i often disregard them.

On betfair i know you can set limits so that you can only lose a certain amount each week but frankly that doesnt cut it either. limits need to be daily and set at the amount you require.

Does anyone know of any firms where you can set your daily loss limit and if not, does anyone support the idea of getting this introduced into all types of spreadbetting and gambling. I think the number of problem gamblers would be greatly reduced if this was introduced and thinking big picture i think this would greatly benefit society as a whole.

what does everyone think?

"..Money isn't won or lost, it's simply transferred from one perception to another.."

You need to be accountable for your actions, Joe. I don't really like your idea, it's seems more of a politically correct gimmick for thrill seekers and gambling fiends rather than a useful trading tool. I don't think it will take off mate.

 

[Shakone]

I think you just have to learn to accept losses. You're chasing it because you want to make that money back and irrationally making trading decisions that aren't related to your plan.

Learning to accept losses is not easy I know. I don't know any place that would take your money and then stop you using it. I think that is your own responsibility. The only place I can imagine doing something similar is a bank for example, where you are not trading your own money. Then it is in their interest for you to not overtrade. In any case, I wouldn't use such a place, since you could take some losses on a day, reach your daily loss limit, then see a great trading opportunity and want to take a trade, and watch as it flies by without you, making thousands. That would be infuriating, so I don't think it is a good idea.

You say "limits need to be set daily and at the amount required". Then set them. If you can't do that yourself, then take a step back, walk away from the comp, and have a think about it. You can always try to make that money back in 5 mins or 10 mins if you're that keen, but a timeout works wonders for me. It helps to focus back on good trading and not retaliatory trading.

 

[Claudia123]

'I think the number of problem gamblers would be greatly reduced if this was introduced '

The spread bet firms like problem gamblers thats where they make their money. When ya gambling ya playing against the house - be it spread betting currency or playing roulette. Rest assured they are happy if you lose. Start to win they dont like that.

 

[mel_pub]

I know that clickoptions does limit every trader's loss to 50,000€ each year, but there's no daily limit

Impulsive trading, once you'll get rid of it will be your best friend, I mean you'll make big trades on the impulsiveness of the others...

 

[joethepro]

I appreciate your comments. claudia you are right when you say spreadbetting firms dont care whether you win or lose - my argument is that these firms should have greater responsibility and i think governments should introduce this rule to protect peoples capital.

to paul71 and shakeone - In essence a daily limit is the same as a stop loss order on a trade but just using a longer timescale. and i think everyone here would agree stops are essential for profitable trading - so i see no difference at all between a stop and a daily limit. so why not have this option to use it if you so desire? i am sure it would help many traders and gamblers alike

 

[InReality]

I'm trying a few things to help myself with this same problem/practise.
1)
one is to transfer any profit out of my account the next day.
then i'm starting with my capital only every day so I trade a bit more carefully.
2)
is to see how low i can an amount of capital i can keep in my account , but still trade well.
i'm still playing around with this.

 

[joethepro]

I'm trying a few things to help myself with this same problem/practise.
1)
one is to transfer any profit out of my account the next day.
then i'm starting with my capital only every day so I trade a bit more carefully.
2)
is to see how low i can an amount of capital i can keep in my account , but still trade well.
i'm still playing around with this.

that sounds like a good idea