I got killed this week, what now?

[james_gsx 16]

This week I got absolutely killed day trading the YM. It was like a bloodbath for me, everything I touched turned around and went the other way. Then of course after the trade I saw exactly what I did every time, and I felt the emotion so I would leave for the day.

 

Today I decided to papertrade and stick to it. Well that was going well, everything seemed to be normal again, or so I thought. My first trade I thought was genius, it wasn't. It was a dumb trade that I made without looking at the big picture, I was caught up in the moment and strung with emotion. I immediately got out of my position for a loss. The next trade I screwed up entering it on tradestation, before I knew it I was in more contracts than usual and had no idea whether I was short or long - there goes 60 bucks. Again, I looked at the charts with a clear mind and realized there never was a trade to begin with.

 

Finally the good trade, I went in and it started going my way. I looked at the P&L and I was losing money Apparently on the Matrix I didn't click sell, I clicked buy :doh: There goes 50 bucks. Now I'm down for the week, my biggest loss being the one my dog caused. He ran around the house and I had to catch him, only to walk back to seeing my position down 50 points :crap:

 

So there are my excuses, but what really happened in those trades? They weren't the markets fault, it wasn't Trade Stations fault. In each trade this week I did the same thing all newbies make, I never planned the trade. I went into each trade blindly, without any direction and no plan to manage risk. I did not know where my stops or targets where. I had no idea why I was entering beside "this looks good". The trades didn't follow my plan, but they looked cool right? Wrong, it was my mistake and I deserved to lose the money.

 

I read SoulTraders article about the path of a successful trader. I realized that I'm a developing trader. I've poured so much of my life in the last 7 months into trading. It's easy to think I've gotten nothing back since I haven't made a killing. But what I fail to see is how far I've come along and how many steps I have taken. The first step isn't making a ton of money, it's losing a ton of money and realizing why. I am determined, and I've found new motivation. I realize now that I will need to push myself harder than ever before to get over the learning curve and find my edge. I can feel it, taste it, smell it, now I just have to get there. It's not a matter of if, but when, I start to become successful. I realized that paper trading really doesn't do me any good, I can't feel the emotion. The emotion tears me apart so I need to feel it so I can overcome it.

 

Seven months ago I was arrogant, I thought I was the best and I knew the markets. I was quickly proven wrong, and although I haven't made a million dollars I realize that is not the point. The market will give me my fortune when it's good and ready, but it will never let me have it unless I go through this painful learning curve. Losing money is part of the game, like an entrepreneur who loses money when he first starts up. A business is never successful the first night, but with practice and hard work it will all pay off.

 

I hope some of the newer traders can see this and learn from my mistakes. Remember to not only study your mistakes but your successes as well.

[TinGull 10]

James, this week wasn't just bad for you. It wasnt awful for me, but it seemed like every trade I put on that would normally work just fine wasn't doing it. I ended up down on the week...but the market will be there next week.

 

I found myself tons of times today thinking...yea, this looks good I should go for it. Once while I am writing this post. But, its not in my plan, so I can't do it. I ended up not even taking a trade today. The YM definitely wasn't as clear as it usually is with regards to the signals I take and when I saw one of the signals fail...I immediately became cautious of others. Since my setups are very volume dependent I get real freaked out when I see volume acting all sorts of weird per my setups.

 

So, don't be too hard on yourself. Definitely, be a little hard on yourself, but it'll all turn up OK in the end.

[AbeSmith 10]

Don't worry buddy. Things will work out.

[brownsfan019 17]

James,

The key right now is to learn. You've paid for this education, so do not put it to waste. You need to understand what happened, why it happened, when it happened, what caused this to happen, etc. so that you attempt to not repeat these events again.

 

And you need to document this stuff NOW. Not next week or later this weekend. Everything is fresh right NOW. You've started a little bit of it here, but the meat and potatoes of what really went on is still floating in your head. Get it on paper. Save it for later. When you need a wake up call, read it.

 

To be perfectly honest, I am shocked that after all the great analysis you do in our candlestick threads that you would wing it today on the YM. That doesn't add up to me. There's a reason you didn't trust your regular analysis and just kind of shot from the hip. It's one thing to just have a bad day or week after your following your plan as that will happen. But it's another thing to just kind of throw mud on the wall and see what sticks in real-time with real money.

 

Take some time now to document it.

[Minetoo 10]

Not to rub salt in but my dog took a trade for me too. Earlier this week I had just entered a position and my dog came in to say hello and stepped on the power bar switch. After black screens and an anxious boot up, login routine I found myself up $460. God I love my dog.

[Guest TRex]

James,

 

Welcome to the cruel world of trading and the demons (emotions, lack of a plan) that cause pain and suffering. I admire you for posting an honest diary of your experience and I'm certain if you're committed to becoming consistently successful, you'll learn much from it.

 

There are many ways to skin a cat and make money trading in virtually all instruments after you put in the time to really understand those markets, what makes them tick (no pun intended), the working angles and setups.

 

Personally, I'm no fan of the YM. I don't like the light volume and the preponderance of undercapitalzed players who dominate most of the activity. The lack of professional trading doesn't leave enough footprints for a robust arsenal of setups, in my opinion. I admit, however, I never spent a great deal of time trading it. I started trading YM exclusively as a newbie after reading John Carter's book and using his setup indicators. (The lure is the small spread and "bang for the buck" which I think is a hook for the novice trader.) Fortunately, it became obvious those indicators don't work, especially with a big stop as advocated by Carter.

 

Anyway, keep at it, don't get down, and don't let this experience define who you are as a trader. :thumbs up:

[Soultrader 12]

James,

 

We all make mistakes. My trading has been not about finding a system that guarantees 80% winning ratio.... 400% annual returns, etc.. BUT it has been about not repeating the same mistake twice, learning how to avoid it and what to do insteadnin the same situation, improving, finding your edge, understanding your strength vs weakness in trading, etc... Basically as Jesse Livermore pointed out, Once you learn what not to do, you start making money.

 

Make sure to thoroughly analyze your trades and why you lost. Is there a conflict with the style of trading you are applying in that current market situation? Reassess the markets... volatility? volume? In what type of market does your edge lie in? Need to adjust your stops due to volatility? Need to refrain from taking setups that you are used to due to certain market conditions?

 

Also, dont hesitate to post your losses and ask for feedback. Alot of helpful traders here that can offer you some insights that can help you improve. The journey is going to be lonely, frustrating at times, and even painful. But I see alot of determination in you through your posts. I am sure you will be able to overcome this.... good luck!

[james_gsx 16]

I know exactly what I did wrong, and it's something I've done before and I have to keep telling myself not to do it. Today while I was paper trading I clearly saw the trades setting up, everything was clear and it all made sense. After seeing this I wanted to get some real money into it. The mistake I kept making was simple, I was trying to make trades out of trades that weren't there. I knew the market at that moment was choppy, and I needed to wait for a clear trend to appear. I would have done the same paper trading, so why I made the mistake with real money I don't know.

 

I bought another 3 ring binder today and notebook so I can document my trades and take plenty of notes. I need to learn TradeStations platform a little better, but that will come with more experience. I'm glad this week happened, because it helped me realize some of the big problems standing in my way and what I need to do to overcome them.

 

I believe I'm at the point now where I need to start trading more often than anything. I can't work full time at Nordstrom anymore if I want to truly become serious with trading. The only problem is the financial aspect, I'm sure if I could bring forward a strong case my parents could help me out, but I'd hate to do that. But trading a few hours 3 days a week isn't cutting it.

[Tasuki 10]

James,

Reading over your original post, it seems that you might have been unfocussed at the time of your trading. For example, you said you made errors with the Tradestation matrix. Personally, I think it's poorly designed, and I rarely use it for that reason, but lots of people use it without mistakes. You need to concentrate on what you're doing when you push those buttons! In short, if you're not in the "Zone", don't trade real money. I have to say that it's easier for me to be in that Zone when I have an elegant trading platform, and I don't know of an easier or better one than the Infinity AT platform (I'm a customer, but I have no other financial relationship to the company). You might want to check it out--much easier to use mistake free.

Also, it appears that you are not taking your trading environment seriously enough. Dogs in the trading room? A complete non-starter.

Thirdly, you said wistfully that you lost sixty bucks here, fifty bucks there. Amigo, that's chicken feed. If you're sweating over such small losses, perhaps you're not sufficiently well capitalized to be trading at all? Just asking. The subject of proper capitalization has been covered eloquently by many people, and it is an issue that needs to be considered.

[feb2865 10]

This week I got absolutely killed day trading the YM. It was like a bloodbath for me, everything I touched turned around and went the other way. Then of course after the trade I saw exactly what I did every time, and I felt the emotion so I would leave for the day.

 

Today I decided to papertrade and stick to it. Well that was going well, everything seemed to be normal again, or so I thought. My first trade I thought was genius, it wasn't. It was a dumb trade that I made without looking at the big picture, I was caught up in the moment and strung with emotion. I immediately got out of my position for a loss. The next trade I screwed up entering it on tradestation, before I knew it I was in more contracts than usual and had no idea whether I was short or long - there goes 60 bucks. Again, I looked at the charts with a clear mind and realized there never was a trade to begin with.

 

Learn your platform to the core before going back to live trading

 

Euphoria is the WORST enemy of a trader - overconfidence. Stay humble.

 

Finally the good trade, I went in and it started going my way. I looked at the P&L and I was losing money Apparently on the Matrix I didn't click sell, I clicked buy :doh: There goes 50 bucks. Now I'm down for the week, my biggest loss being the one my dog caused. He ran around the house and I had to catch him, only to walk back to seeing my position down 50 points :crap:

 

OH MAN! where is that damm stop loss when you need one?

 

So there are my excuses, but what really happened in those trades? They weren't the markets fault, it wasn't Trade Stations fault. In each trade this week I did the same thing all newbies make, I never planned the trade. I went into each trade blindly, without any direction and no plan to manage risk. I did not know where my stops or targets where. I had no idea why I was entering beside "this looks good". The trades didn't follow my plan, but they looked cool right? Wrong, it was my mistake and I deserved to lose the money.

 

I read SoulTraders article about the path of a successful trader. I realized that I'm a developing trader. I've poured so much of my life in the last 7 months into trading. It's easy to think I've gotten nothing back since I haven't made a killing. But what I fail to see is how far I've come along and how many steps I have taken. The first step isn't making a ton of money, it's losing a ton of money and realizing why. I am determined, and I've found new motivation. I realize now that I will need to push myself harder than ever before to get over the learning curve and find my edge. I can feel it, taste it, smell it, now I just have to get there. It's not a matter of if, but when, I start to become successful. I realized that paper trading really doesn't do me any good, I can't feel the emotion. The emotion tears me apart so I need to feel it so I can overcome it.

 

Word of advice: do the contrary. Don't beat so hard on yourself. Don't push it that hard. Step back, look at the bigger picture. Go back and do baby steps again until you gain some confidence. Take it easy . This is a long-term commitment. I Agree with you on the paper trading. Demo doesn't account for reality, Remember, in order for your target to get executed, the market has to go to a better bid/ask than your target price .

 

Seven months ago I was arrogant, I thought I was the best and I knew the markets. I was quickly proven wrong, and although I haven't made a million dollars I realize that is not the point. The market will give me my fortune when it's good and ready, but it will never let me have it unless I go through this painful learning curve. Losing money is part of the game, like an entrepreneur who loses money when he first starts up. A business is never successful the first night, but with practice and hard work it will all pay off.

 

I hope some of the newer traders can see this and learn from my mistakes. Remember to not only study your mistakes but your successes as well.

 

I've said this to many people:

 

My job in the markets is not to make money but to preserve my capital.

 

As a reward for doing a good job, I recieve a compensation.

 

I don't know what strategy you use but here's an advice

 

Some traders place orders based on whatever they use and they forget that , in the market there's something called "key levels" which are monitored constan

 

constantly by professional and institutional traders.They pose as gatekeepers on these levels, to gun all the resting(stops) and market orders they can get. I know you have mentioned the emotional side and lack of discipline as your weakness, but I suggest to you to look at where is that you're placing your orders.

 

Also, need to check if you're taking into account the recent increase on volatility. Make sure you make adjustments on your money managent rules against the amount of leverage you're using. If necessary, lower your gear.

 

Fly low for a while. You have lost confidence. That's big. But it's ok, you'll get it back.

 

Cheers

[james_gsx 16]

Well the dog thing was kinda weird, I walked downstairs (trading area is upstairs) to get a glass of orange juice. My mom opened the door and the dog took off, hence why I chased him. I used to have my own office in the house closed off from everything, but it got way too hot in there. Maybe I'll move everything back in there since the weather is cooling down.

 

And you're right, I was not confused and I had no confidence at the time. I woke up late, I wasn't in the zone and I knew it. I'm not under capitalized. My futures account is rather small compared to the other portfolio(about a tenth of the size) I have but it's setup that way for a reason. That way if I screw up and blow it up, it won't be detrimental and we can easily move money back into it.

 

I usually do okay in volatilize markets, but today I was just being sloppy and trading in choppy areas I knew I shouldn't be.

 

Here is a chart that kind of outlines what went on. Thanks for everyones replies, I appreciate it.

[Minetoo 10]

James,

I have an elegant trading platform, and I don't know of an easier or better one than the Infinity AT platform (I'm a customer, but I have no other financial relationship to the company). You might want to check it out--much easier to use mistake free.

Dogs in the trading room? A complete non-starter.

I agree with your platform comments and might add that the Infinity AT is just a white label of the Transact AT, the originators of the platform and a very viable futures broker to consider. Regarding dogs in the trading room, I also agree - however, as Mark Twain said, "The more people I meet, the more I love my dog".

[Guest cooter]

I agree with your platform comments and might add that the Infinity AT is just a white label of the Transact AT, the originators of the platform and a very viable futures broker to consider.

Transact charges their customer to use the AT platform, according to their website here: http://www.transactfutures.com/LowCommissions.htm

 

Infinity,however,does not.

[Minetoo 10]

Actually, Transact platform is free if you do 360 rt per month. This represents about 18 rt per day. If you are trading more than 1 lot this is easily achievable. As with all brokers - the higher the volume the lower the commish.

[Guest cooter]

Actually, Transact platform is free if you do 360 rt per month. This represents about 18 rt per day. If you are trading more than 1 lot this is easily achievable. As with all brokers - the higher the volume the lower the commish.

 

Exactly. Why fool with "minimums". Go with Infinity if you want to use the AT platform and not worry about meeting these arbitrary trading thresholds.

[Dogpile 10]

james, if you are only 7 months into trading -- you still likely have many more months of frustration ahead of you. I know this from personal experience. It will be discouraging and frustrating -- expect that. it takes a long time to be a consistent trader - don't think you are somehow more special than everyone else -- it takes everyone a long time. the only thing I can say is that keep your contract size down until you become consistent. once you get over the hump (at least 12 months, likely a few more months than that), you make back all those little trades you lost rather quickly.

 

treat it like tuition and you want to pay as little tuition as possible -- the way to do this is to keep your contract size down. I know from experience and from speaking to other traders that devoted 100% of every day to trading -- it just takes a long time for most traders to learn how to do it -- I would say 15 months is a good number to look for. it is certainly possible to do it in less than 12 -- but I would definitely be conservative until at least 13-14 months.. I would recommend to anyone, no matter how much money they have, to trade no more than 2 contracts for the first year. you will 'think you are there' 10 times before you actually are... besides, a friend of mine made $140,000 trading just 2 contracts at a time before he increased his size. it is possible. he is an especially gifted trader and he is making many, many multiples of that number now -- but it goes to show that it is possible for some to do it with low contract size. your goal should just be to learn and don't get hurt until you have been at it 13-14 months -- then re-assess at that point -- and even then, only slowly bring up your size.

[Minetoo 10]

Exactly. Why fool with "minimums". Go with Infinity if you want to use the AT platform and not worry about meeting these arbitrary trading thresholds.

Infinity's version of 'free' involves a higher rt commission. I know, I have traded both.

[OAC 10]

Yeah, I totally agree with Dogpile, 15 months is the right number and

that is doing it full-time without a mentor. With a mentor ?

I don't know, I never had one:(

[james_gsx 16]

I sort of have mentors, but most of this has been on my own. My problems aren't seeing trades, but refraining from taking the ones that aren't there - even when I know they aren't there.

[Dogpile 10]

<<My problems aren't seeing trades, but refraining from taking the ones that aren't there>>

 

to some degree, the first set-up you find that consistently works is really just funding R&D on finding new set-ups. then your research pays off and you find a new one that makes you money -- but at the same time, the first one stops working. then you find another one and the second one stops working. repeat, repeat, repeat. then you finally have a nice library of set-ups and you find that your first one starts working again once you figured out some new twist on it... so now you have 2 set-ups working at the same time and now you become profitable. then the market dynamics change and you have to adjust again. you improve old things you have already used, scrap others and figure out new stuff. this process takes more than 12 months of intense study -- many people just never get there.

[james_gsx 16]

Hm, thats a very good thought Dogpile and it really goes into what Brownsfan said about about documenting everything NOW. I'm fixing my trading plan now to allow for some new setups that I've grown out of. I had a few setups, but frankly I just don't see them the same way I used to so they don't really work. I still have those setups saved so later on I can go back and view them and edit them. I just need to document more, and pay more attention to whats going on.

[brownsfan019 17]

WOW, dogpile nailed it on the head as far as I am concerned. That pretty much outlined my journey in trading.

 

Here's one thing that I did one day and have stuck with it (and wish I started it earlier) - I have a template in Word where I document whatever setup(s) I am playing at that moment in time. I've found that it's nice to have for future references instead of saying - geeze, this looks familiar but I'm not sure why... It can save a lot of time and hassle.

 

I've attached a screenshot of the general look and feel of what I use. It's nothing fancy, I just like having a reference sheet for whatever I've done in my trading. I use this ANY time there's ANY change - no matter how minor that change is. Again, I want to be able to look back and see what I was using and why I changed.

 

[james_gsx 16]

Thanks Brownsfan, I'm not going to trade tomorrow (I'm getting worse every hour and I don't know if I'll get out of bed tomorrow). But if I can make it out of bed then I am just going to watch, and take notes of setups I see.

 

I'm going to make it a rule that I wait for a candle to close before exiting a trade to prevent a lot of emotion.

[Dogpile 10]

here is what I did... i created a new individual folder on my hard drive with a name for each new set-up and saved screenshots with notes on them on a daily basis for as long as I was using the set-up. this takes a lot of work but it is the kind of work that imprints things on your brain.

 

for some, I created a blog as kind of a daily journal at blogspot.com (free blogsite). then you can go back and read your notes on a chronological basis as to what you learned about the set-up and its specifics.

[Nick1984 10]

I really like that idea Dogpile its very methodical and it will drill your mind into recognising setups automatically without having to go over your notes all the time. You will learn to spot variations on a theme that way so you can fine tune one set up for a change in market condition i.e cyclical v momentum trend.

 

Your last 2 posts have been really insightfull into the study required by someone learning this business but also it highlights that to be a successful trader you don't need 20 setups. A few well planned setups should be sufficient for you to be consistently profitable. Once you have your setups all planned out and you can recognise them and enter them confidently then as a trader the next step in the learning curve is managing your exits!