Lost my account... 14 lessons to learn from!

Beginner Questions
1

You know what they say about learning from others mistakes to avoid your own? Just wanted to share how I lost [U]200 pips[/U] overnight on EUR/USD almost clearing my account and what I learned from it. You can see how the 1 hour chart reversed today on me trying to short on the 3 hour downtrend. I am keeping a thought log so I know why I get into or avoid a trade and what lessons I learned from my actions. Here are the lessons I took down.

[B][U]Lessons I learned:[/U][/B]

[B]1. [/B]Stick with my strategy if it looked right, if I need to get out, get out at ANY profit or minimize loss (which I had a chance.) Don’t panic and just sell to get back in the other direction.

[B]2. [/B]Can’t rely on the BB touching/bouncing, other indicators must be looked at.

[B]3. [/B]If I’m a day trader then I need to make in and out trades not hold positions till they come to my favor. If I do then I’m not a scalper or day trader.

[B]4. [/B]Pay attention to the 1minute trade chart when to get in even if it’s on certain trend for the 15minute

[B]5. [/B]Stick to your system, don’t get scared or change it based on short term changes.

[B]6. [/B]I can always get back in. Secure my win of 20 pips if I am scalping.

[B]7. [/B]As a scalper, I can’t rely on the facement of BB only, If RSI, SCH and EMA’s are trending up, good chances to scalp long.

[B]8. [/B]When scalping, it’s useful to scalp the direction of the trend with you.

[B]9. [/B]Price doesn’t always bounce back to center if on the bottom or near BB.

[B]10. [/B]Don’t have to ride up against trend to scalp, just monitor if you did right it up then get in the trade to scalp down. Scalps moves in waves.

[B]11. [/B]Since price jumps, it might be more profitable to put a take profit command above the 20 pip mark just incase it jumps for a second up.

[B]12. [/B]MACD is laggy but can help in the 15 minute and long term charts in determining the direction of the trend.

[B]13. [/B]Becareful trading the news! Also when BB open up and RSI/SCH/MACD are trending up in 15min chart, chances are it’s going up for a run.

[B]14. [/B]Trend can reverse, indicators are more important to follow than trend direction. Stop loss of 100 pips will save account from wiping.

[B]15. [/B]Create your own system but make sure the foundation of it is from a already winning system that you like instead of trying to build one from scratch.

[B]16. [/B]Cramming in all the indicators that exist to form a system isn’t focused and can confuse you. Systems need to be specialized and focused.

[B]If anyone can point me to try a scalping/day trading system that’s good please let me know thanks![/B]

2

Hi eclipz3…I know just the one…

http://forums.babypips.com/show-me-money-daytrading/16021-never-lose-again.html

…and you can join us in TRO’s “Two Percent Club” chatroom on Paltalk.com…but read the whole thread first…:wink:

Hope to chat with you there :slight_smile:

3

I think you tried to do everything you could do it, but you cant do everything at once. You have to do step by step, there is not pressure to do that all in one day. I know everybody want to be millionaire in one hour, but lets be realistic! There is no way to do it.

4

I did all this in one day because I know there is a learning curve full of mistakes. If i didn’t do what I did, the lessons in here would have taken longer. I’m just speeding up the process by putting more time and effort like I would do in my previous gamer life. “You don’t hit lv99 overnight but the more you play the quicker you get there!” :smiley:

5

Ignore the get-rich quick schemes.
Read and learn from the trading masters.
Day trading is trading "noise"
Stress and overwork will kill you and your account.

Over the Christmas holiday I had a “feel” that the GBP/JPY was undervalued
in a panic reaction to the UK economy so I went long early yesterday and gained in excess of 400 pips by the end of trading today. All this while I was back at work!

Read the markets, not wavy lines, and wait for your trade to develop and produce profits, or get out as soon as you are losing.

Day-trading is for dreamers!

6

Props to your win and I agree with everything you say but it’s not truth to say that day-trading is for dreamers. It depends what kind of trader you want to be and there are successful people in each and every style of trading. Also in the School of Pipsology, it did not mention which one is better or that day-trading isn’t a good strategy. That would be like saying one sport is better than another.

7

“Day trading is trading “noise””

Marvellous and funny. Paul, open your eyes.

Eclipz, money management is the key lesson from this if you nearly got wiped out by 200 pips. Good trading to you, and keep it up :slight_smile:

8

Thanks Triphop, I realize that I have no system therefore no money management which is why this happened aka “gambling.” I stopped trading for now and will get my system and strategy set then get back in the demo game.

9

Why didn’t anyone tell me that day trading was only noise!

Umm. What is noise anyways? Noob question, I know…

Damn. If I only knew what noise was I would have to stop day trading right?

Oh wait, I found it at investopdeia:

Market noise is simply all of the price data that distorts the picture of the underlying trend.

If only one could make money off all the corrections and retracements. Sigh, maybe I’ll get this right some day…

EUR/GBP Long - 8:33am - 2 lots
Open 0.9076
Lot 1 closed @ 0.9096
Lot 2 closed @ 0.9095
Total: 39 pips

USD/CAD Short - 11:11am - 2 lots
Open 1.1868
Lot 1 closed @ 1.1848
Lot 2 closed @ 1.1835
Total: 53 pips

Daily total: 92 pips

In between 9am and 11am I had my winter tires put on, lunch after 11:30am, and now I’m off to work.

I really will have to find something better than day trading. :slight_smile:

eclipz3 - Focus on winning. Don’t worry about the money. If you win, the money will follow.

10

What some call noise others call occillation. People who trade longer time frames and don’t like scalping usually call the smaller time frames noise.

Even if you trade a longer time frame and stay in trades longer, it does not mean the trade will only go in one direction. There will still be occillation, it’s just that you will have a higher TP & SL and breathing room. So, don’t be fooled into thinking longer time frames make for easier trades, they might not form patterns on the charts as quick but they will spike and do the exact oppsite of what you had hoped just as quickly. A long term trade you thought might go positive 300 pips can retrace a 200 pips and make you think it would be good idea to exit and then hit your TP anyways.

Generally, candles, indicators and setups have more meaning and a better probability of being correct on longer time frames if your analysis is decent.

You can see this by first watching an hourly chart with an indicator of your choice and predicting where it may go. Maybe a stoch crossing at oversold or overbought. You’ll see that on the hour it will usually reverse at least a little after a cross. Use the same stochastic on a 1M chart and then it might reverse, but it would be so quick that you’d have be quickdraw mcgraw and extremely lucky to be able to scalp it, and the pip movement would often be insignifcant.

P.S. why are you trading two lots on the same pair? You are effectively doubling your risk if you havn’t spread your risk percentage between both trades. Wouldn’t it be easier just to trade one lot that was bigger and close it?

11

Thanks everyone. Some interesting responses to my post. Yes, we are all different and it all boils down to individual psychology and trading style.

I merely speak through experience, some quite costly, in that my greatest trading successes have come from “reading the big picture” and trying to “tune in” to market action. For me, market perception has proved more reliable than EMA’s, oscillators, neural networks or the phase of the moon!

Having said that, [I]money management [/I]and[I] risk management[/I] are by far the most important skills to master before trading any [I]real[/I] money in the markets!

A professional trader I knew in the city (London) a few years ago advised me that a lot of trading systems were little better than tossing a coin!

For further convincing, read some books written by great traders, past and present.

Good luck!

12

Don�t you think the error is trying to scalp? Don�t you think is that your error, if you don�t want to lose you can think to change the strategy, so, think about it.

13

What the trader you met in london was getting at was that you have to have an edge. An edge means that you have a trading stategy that when you put on a trade by following all your paramaters, it’s more probable than not, that the trade will win.

This is where many traders give up. They get frustrated trying to find a way to win most of the time or all of the time. They jump from trading style to trading style trying to find the holy grail. Doesn’t happen, you just need an edge that wins more than it loses and your losers don’t cancel out your profits.

As a trader you need to learn to think in probabilities. Even the best traders and systems lose, and the ratio of losses may be surprising to some. This is where money managment and not letting your losses cancel out your wins come in. Money management and risk managment won’t do you any good if you don’t have some sort of edge. You’ll just lose your account slower.

14

Sorry, no that’s not it. There are plenty of traders who scalp successfully. I did it as a noob for two weeks profitably. I don’t like it myself as it can frazzle the nerves very quickly.

And everyone loses it’s part of trading. If you tottally change your trading after every loss you will never get anywhere.

15

P.S. why are you trading two lots on the same pair? You are effectively doubling your risk if you havn’t spread your risk percentage between both trades. Wouldn’t it be easier just to trade one lot that was bigger and close it?

This is one of the reasons I tend to read more than write. I seem to have a poor time communicating effectively, as I see here I hadn’t given enough information.

I am trying a new addition to my trading strategy (and I hope I can explain it clearly enough for people to understand it :o ).

I was reading in a senior members post (and I’m sorry I can’t remember who) he suggested that you split your trade into two. If you were going to buy a $2 lot you instead buy two $1 lots. One lot has a set TP (in my case 20 pips). The other lot has a trailing TP of 15 pips. I’m pretty sure that the logic here is that if you hit your first goal, no matter what happens to the trade you will have made a profit. If the market continues to rise then your reward is greater with your second lot. Also both have the same SL levels, so you are not actually risking losing more because two halves make a whole (20 pips @ $2 = $40 or 40 pips @ $1 = $40).

One of the things that I love about the forex market is that there is such a variety of strategies and methods. Personally, I have no idea how someone makes a month to month investment, but I have seen it done successfully to the tune of over 2000 pips. I trade on technicals on the 5 minute charts. I’m not looking for the 1-5 pip gains, I aim for a 20 pip minimum.

But thats just me. And this is why I love this place!

Thanks to all for your advise and guidance!

16

Phoenix, how long have you been trading?

17

P.S. why are you trading two lots on the same pair? You are effectively doubling your risk if you havn’t spread your risk percentage between both trades. Wouldn’t it be easier just to trade one lot that was bigger and close it?

He is simply securing profit, I imagine when he closes the first lot, the second is moved to b/e. This is exactly what i do. I would assume that proper MM allows the 2 lot position size, and by closing the first lot, there is definate profit, and then allowing the second lot to run till it either hits TP or manual close or s/l.

Try it!

18

Wouldn’t it be easier just to start a trade double the size and close half it’s value and let the other half run? Is there an execution reason you’d want to do this with two lots?

19

Hi cdawg and all,

infact i want to ask this question in the position sizing thread.
Is what you using another money management for position sizing.
It is such that with the two position size lots that you open. That two lots
add up to the same risk.

Lets say your risk is $80. You can open two position lots or maybe even 3 position lots. As long when your stoploss is hit. All add up to $80.

Q1)Is that what you mean?

Q2)Is it true that people who implore such management is due to the large stoploss?

Q3)Does that put us at a slight disadvantage as we are paying the spread a few more times?

Dont have to be cdawg. If anyone know can also elaborate.

Regards
vincent

20

I don’t think that my platform allows me to close only half my lot. If it does I just haven’t figured it out yet (lol noob eh?). So that’s why I adopted the two lot method.

How does that expression go? Six of one, half dozen of the other.