The reality of not taking stops

[Hlm 10]

Apparently this individual went long 10 ER2 contracts at the close on Friday. For any new traders out there, this is an excellent example of what NOT to do. Yes, to the outsider looking in it appears so obvious that it was a stupid decision. However, without a solid system that includes stops (and discipline to take them) it’s very easy to find yourself in a similar situation.

 

Blog: http://highprobability.blogspot.com/

 

Blowup Video: http://www.youtube.com/watch?v=rCtQL5b_rCM

 

In one of his other videos he gets a sell signal when he is down approximately $7,500. Hindsight is going to haunt this trader for a long time.

[Sparrow 10]

He had one blow up day shortly before that one and his biggest ever day followed it. That's when I though he was getting careless although, saying that in hindsight is easy and I refrained from leaving such a comment on his blog.

 

I dunno what got into him that day, he used to racks up some nice profits all the time.

 

Hope he'll get it back.

Edited January 21, 2008 by Sparrow

[MrPaul 10]

I feel for the guy, who would have thought we would sell off that much...Gotta take the lesson and move forward.

 

I had to lol at this though...

 

"....While searching for random links with the search term "I HATE MY LIFE" and "I SUCK AT TRADING" I found an interesting website which showed what people want most out of life."

 

that's pretty funny :o

 

P.S

 

Shouldn't that last video be entitled "The *Futures* Market ruined my life?

[MC 10]

OMFG. WOW.

 

Just wow.

[brownsfan019 17]

There's a quick lesson in risk management.

 

:o

[MrPaul 10]

It's kinda like...

[james_gsx 16]

Those of you who were in the chat with me last week watched me take a 100ym loss in 15 minutes. Kind of sucks when the market opens below your stop. Goes to show, unless you can afford the draw down and have proper risk management don't hold anything over night in this type of a market.

[Soultrader 12]

  james_gsx said:

Those of you who were in the chat with me last week watched me take a 100ym loss in 15 minutes. Kind of sucks when the market opens below your stop. Goes to show, unless you can afford the draw down and have proper risk management don't hold anything over night in this type of a market.

 

I have talked to several fund managers and head of trading for investment banks. They have told me that in Japan at least many hedge funds are going flat at the close because they are getting killed holding overnight positions.

[torero 10]

Wow!!!! He went from 7k to 32k?!!!! First loss is the best loss.

[brownsfan019 17]

I guess the high probability part was a high probability of losing money.

 

:embarassed:

[torero 10]

These are days that remind me why I stopped holding overnight positions. This is also the reason I stopped trading stocks or overnight holds, but weekends are even worst. But 10 contracts, what was his total equity? 100K? That should have been the minimum had he understood and used risk management rules. He may not have seemed like a newbie but he did make a newbie mistake: overloaded his position size.

[james_gsx 16]

  torero said:

These are days that remind me why I stopped holding overnight positions. This is also the reason I stopped trading stocks or overnight holds, but weekends are even worst. But 10 contracts, what was his total equity? 100K? That should have been the minimum had he understood and used risk management rules. He may not have seemed like a newbie but he did make a newbie mistake: overloaded his position size.

 

I've seen/heard plenty of people who start with a small amount of capital and look like trading Gods because they make a ton of money in a short amount of time. Then it ALWAYS takes one single trade and their entire account gets blown out.

 

I'm sure there were several people in the same boat as him. For some reason leverage attracts idiots.

[torero 10]

Greed is behind the reason he had a following, tons of money streaming with little capital to start with. Easy money, people just love short cuts... well they do get cut short. But I think that's how everyone get started in this business, I myself included. The lure of easy money. Once it gets going, it's hard to put down. The reality just hits one day and they have to make a choice: stick with it and go the long route without cutting corners or quit. Most just come back and try again with the same idea, quick easy money, then get blown again. Others just dig in and get determined not to be defeated and determined to become successful.

[james_gsx 16]

I posted this last week, I'm curious to see how much money he lost over the weekend. This guy really needs a lesson on risk management, he's not just going to lose some cash but his entire house.

 

http://boltar1.blogspot.com/