My First Week Trading, LIVE!

Beginner Questions
1

By Akeakamai’s request. On a side note my questions are directed at those following the Wilder system as per Dale, I’ll try to remember to cut those out when I cut and paste from 301 Moved Permanently. Not that I think your opinions are no good. Just that they know the ins and outs of this type of system and comparing apples and oranges is a waste of time. My weekly trading journal:

AAARRRGGGG!!!

  What a WEEK! OH, what a week! You know that when I was demo trading I used to tell my wife: "The cool thing about this business is that you can make money anywhere, so while we're on vacation I can still be making money, just bring my laptop and trade in the hotel or on the beach" EF THAT! When I go on vacation I'm going to relax!

Anyways for those that don’t know this is was my first week trading live. And the story goes…So sunday night comes and I am EXITED! Finally after all the long months of learning and trading fake money the time had arrived. Computer, check, account funded, check, exited, OH YEAH, check. Systems a go. I set my trades, yippy time to become a gazillionaire! My first trade was placed and boy was it a great one, not . I set up the rest of my trades and monitored them every few hours through the night. My first trade decided to take a dive early on down to -5%. I immediately grabbed my book “trading in the zone” for moral support and stuck it out.And it reversed to a measely 1% profit. After all how the hell am I gonna become a gazzillionaire with only 1% profit! Later I realized that I’d entered short at the bottom of the wave. It hit HBOP and swung between there and S1 the whole week. So I kept it all week each time thinking as it got to zero that it would go on to big fat profits. Stupid me I had a few times that I could have closed out at 1% profit on it but I held on for more(greed).

Monday I was introduced to my other b*tch of a position, damn thing would go into huge negative then to zero, I held this one too throughout the week. Most of my positions were in the red about -7% total. Tuesday, about damn time I see some nice green, closed out 2%. Wednesday, I close out 4%,(still have those two loosing trades , man I wish I’d taken the1% on each). Thursday (midday) I was up 5%. Duh duh dah(erie music in background), here is where things started to go down hill and in nerd dialect I get wtfpwned!

I looked at each trade and said to myself heck if I just add a few more positions and each one goes to XX level I’d make another 15%(greed), pretty smart idea right, WRONG! Half of those positions were USD/XXX or XXX/USD, and for those of you that weren’t trading thurs-fri the USD had a HUGE rally, well huge cause I had doubled a few of my USD positions. EUR/USD sunk like a rock and as it did my heart started beating harder, the palms of my hands started to sweat, my face got red, AND I PANICKED(FEAR)! I was tripled up on EUR/USD boy did that hurt! So 5 minutes later and MINUS 10% realized loss, mostly EUR/USD, PLUS -8% unrealized loss, I was broken, bah, it wasn’t that bad, I’m just exagerating, kinda. Oh, and by the way my two pet money sucking trades in NZD from monday and tuesday decided to flare up as the USD soared to new gut wrenching heights and go from -2% to -6%.

So I got up, walked away in disgust, and layed in bed for awhile staring at the ceiling thinking about what I’d done wrong, by this time I think it was around 4 am. I started going over the week and what had worked and what had not. During the week I’ve not had a single trade no matter how bad that didn’t eventually come back for a 1% or more profit. I’d had some nice rational trades triggered during the rally that I’d closed in panic, EUR/USD was now at a very very low support level, and I needed to do damage control, not revenge. So I got up went back to the computer and re-setup my trades(all within MM rules and according to my system). All with reasonable targets. I then closed out my deltastock platform and went to sleep for 4 hours. I didn’t sleep much this week. I got up this morning and 80% of my trade targets had been hit I made my money back minus my gains for the week and my NZD trades were back to there regular -2% and I closed them out.

After all was said and done I ended up with a 2 % gain for the week. I made alot of mistakes but they could have been much much worse if I’d let them get to that point. I LOVE the RT system. It’s so reliable. Out of my 20 someodd trades, every single RTS trade showed profit of 1%+ at one point or another. As I was lying there thinking after all the mess. I thought to myself how different the week would have ended if I’d not bent MM rules thurs-fri and set my profit target at 1% if my S1/B1 were not hit during the night, or at break even if the trade went against me, shoot, even those trades that went against me, only 2, both showed 1% gains at times. I feel like I had a great week. I learned a ton and I’m sure its only gonna get better. I know there will be times when the SHTF but it’s how you handle it that matters and sticking to your trading plan.

-Just thought I’d clarify. My actual P/L was positive most of the week after closing out quite a few trades. In no time during the week except at the end when I double and trippled up on a few USD positions had I hit my mental stops. My big losses were completely due to greed and fear. Money management is a must and not following it is what got me.

Update-My trades(USD pairs) that I panicked on and exited at losses reversed for nice profits.

2

I just read in the systems section too on Dale’s thread.

Sounds just like my first week live.:smiley:

And just like someone told me when I posted, “It should only get better from here”.

Keep us posted.:slight_smile:

3

  1. Stops? I didn’t even see the word once. How are you controlling your risk without stops?? Stops will save your account when you are sleeping, and also when you are frozen with fear as your position starts nosediving on you. You will be especially vulnernable if you go from a winning position to a large losing position fast, that’s when it’s hardest to let go! Just remember to protect your account, because without it, you have no tools to make any money.

  2. You lucked out in that your positions bounced back to about even. It’s common that you can get into a short-term trade, and then start losing because you have actually gone against the long-term trend, and the longer you hold it, the more it can take out from you. It sounds like you had no intention of exiting any trade. Were you waiting for a margin call?

  3. If a position gets to +1% and fell 6% before that point, then that means it sucked 6 times more than it profited. If you used stops, you’d never find a reward:risk ratio of 0.166 (should be closer to 2) acceptable, let alone part of a “reliable” system.

It’s called tough love, I really hope you do well but despite the luck you had in the end of week recovery, there are some serious issues I hope you resolve before you trade again. I’m up every night (morning?) trading the Euro session, so I can give you latenight advice if you are ever upat those hours too!

4

I really appreciate the advice. I’ve been thinking about putting stops too. Damn though you can’t argue with results. Dales living proof of what Wilders systems can do.
http://forums.babypips.com/free-forex-trading-systems/10766-trading-systems-new-concepts-technical-trading-systems-j-welles-wilder.html

5

Just remember that profits are always a function of risk. A trader earning 2% while risking 1% is doing far better than a trader earning 10% while risking 10%. I think it is easy to discount risk when us “small-time” traders get into this game because our accounts are small. A 10% loss might only be $300 and that’s fairly reasonable for us to swallow even though it SHOULDNT be. Just think in the future when your account is over 100k, and a 10% loss is $10,000+. Also, drawdowns hurt your profit potential (even with an equivalent % gain) for the trades in the future. And for that reason, cutting down your risk is as good, if not BETTER than increasing your profits!

6

Some concepts are over valued in my view.
One of them is stop/loss.

I never use stop/loss. Never have; either
in stock options or in currency trading.

And the reason people always get in trouble
with margin calls is that they trade way too
much, too often, and too many pairs at once.

7

That brings up a dumb question that I have. Then you guys please get back to the topic.

How is there such a thing as a stop in options?

Being a non options trader but curious about them, I assumed you just bought them. Then they would be either in the money or out of the money and worthless.

How is there a stop with that?

8

But then how are you controlling your risk? If you are short term trading, then you’d need to watch every tick without a stop loss. If you are long term trading, then I’m guessing you’d be assuming that the volatility would be contained within a certain area, but you are still open to unlimited risk potentially.

I don’t think stops are the culprit, its the MISUSE of stops. There has to be some point, some price, that you would say “this trade is definitely not playing out as I planned” and that’s where your stop should be.

But be careful…If you think price might move up 100pips, but also think that it could likely dip 200pips before it gets to 100, does that mean you set your stop about 200pips below? No! It means that the reward:risk ratio is very poor and you should not take the trade at current prices in the first place.

9

I couldn’t disagree more about arguing with results! The very worst possible thing that can happen to a trader is making a bad trade and it working out for them. This just teaches you a bad habit, so now instead of you just losing this time and learning your lesson, you will have to loose 10 times later to realize that you were doing something wrong all along. Its called negative reinforcement.

Not saying your stupid but take this for example:

Q. Why do stupid people get stupider and stupider?

A. Because every once in a while - being stupid works.

10

Ya, I agree we should not be discussing
stock options concepts here.

But to put it simply; you can put stop losses and limits
on your option positions as well though the concept
and execution is a bit different than FX market trading.

11

Uh… ok… Thanks.

That answer just brings up my original question, unanswered. How?

I don’t think people would mind too much if we get a little off topic of the thread. They can learn something new from you too.:slight_smile:

12

I notice way too many hyperactive traders among
all types of traders in the market be it stocks, futures,
fx, or whatever.

I limit my risk not with stop/loss but with limited trading.
I execute no more than 2-3 trades per day. And I do
not stare at the computer screen for more than 5-10
minutes at a time for no longer than and 2 hours per day.
I have been following this developed method for 5 years.

Most people do not trade like I do, they watch and agonize
over every single tick. I don’t. I have no trouble letting any
position, stock options & currency, go down 500 points or
more. I am also anti-hedge as well. I don’t stress and I
know the price will bounce back. And they always do.
Most people just never get to experience it bounce back
because their stop/loss put them out and consequently
hit a loss.

But no stop/loss trading is not everyone’s cup of tea.
Most people are just too easily stressed and too
hyperactive. But admittedly, it helps and is easier
to trade my manner if you have a sizeable balance.
To me, drawdowns are a key component to my trading
risk/reward mindset. Again, this type of trading style
is not for everyone.

PS - There are people in here who have trading
experience in all areas of trading and they can tell you
in all honesty that trading does NOT have unlimited
risks. It is not unlimited, boundless risk. It has a
ceiling and has clear bounds. You just have to choose
to look for it and change your mindset. It is not
UNLIMITED RISK even in currency trading. Stocks
are a bit different because it is based on success
of companies but even then, there is no such thing
as unlimited risk in trading unless you are trading
blindly and with blinders on. So, in my experience,
it is counterproductive and counterprofitable to use
stop/loss in any trade executions.

13

I was just asking how to use stops in options… nothing else.:smiley:

Randont,
Congratulations on your first week live. If you were trading a certain way on demo successfully using the methods on Dale’s thread, then don’t change anything. That’s the problem going live, you then want to change everything.

That’s the best advice I can give because I don’t know how you guys trade on that thread. All the acronyms you guys use are beyond my intelligence factor for a dumb hick like myself.

You need to ask Dale what he thinks. He will have the best advice out of all of us. He is the Wilder guru of those systems. He has been there, done that.

If you do change just one little quirk, then it’s time to go back to demo to test it.:slight_smile:

14

[QUOTE=GBLilleyUSMC;52908]I couldn’t disagree more about arguing with results!QUOTE]

I’m talking about Dales results with this system. I haven’t proven anything. Consistency is something shown out after months and months.

15

Here’s an 11 page ebook on how Rob Booker (who?) feels about stoplosses…

Don’t know if it will help but he does have a point or two.

Stop_Losses_Are_For_Sissies.pdf (353 KB)

16

Everyone - everyone - except those who become comatose or simply forget about their brokerage account trades with some kind of loss-limiting mechanism, whether it be method-led and perfunctory (a hard stop order), method-led and dynamic (a soft stop region) or off-the-cuff/knee-jerk extemporaneous (“oh crap, the trade’s going against me, sellsellsell!!!”).

Stops (and limits) are about moving away from willy-nilly, seat-of-the-pants trading toward planning, discipline and order. Setting them is an “art”, as is often repeated: an intuitive process that varies from pair to pair and then depends on market context for each pair. Gaining an affinity for setting stops comes with time and a discerning eye. Once a trader begins getting a feel for the volatility on whatever pair, stops and limits become effective for reversing trade direction and limiting losses on trades that do not always swing back in your direction (or perhaps they do, but only if you’re content with digging yourself into a buy-and-hold approach).

And anyone with experience will tell you there is the capacity for unlimited loss if a pair trends long off to infinity (really, until you’re called) while you are short the pair (naked short, anyone?), while a long has limited capacity for loss: until you kill your account. That’s straight from the Options basics section on the Series 7.

To each their own, but trading without stops, at least for beginners and also for many advanced traders, is courting disaster. And again, if you aren’t trading with a stop order on-hand, there is still something there that says “if it goes past this point, I’m out”, even if you make that decision in the moment rather than pre-plan it prior to your entry.

17

Great book. I’m going to right up my trading plan today. According to him I was using mental stops and thats ok. :smiley:

18

:eek: Did you actually just type that???

Let me ask you this, would you let someone trade your money that told you that he “doesn’t stress about 500 point losses”, and [B]knows[/B] that the price will bounce back. You’d think with 5 years of experience, you’d understand that nothing can be known about future price movements.

If you say you are doing well, I’m willing to believe you. That said, I’m amazed you haven’t crashed and burned yet. If your trade goes 500pips down from where you bought it, then you made a bad trade. You bought high, thinking you were buying low, and if you can’t accept that it’s okay to be wrong sometime, then you don’t understand the nature of trading.

Even IF you knew that the market would bounce back, why would you allow your capital to be tied up like that? Your capital is your tool to make money and if it’s buried in some super-loser trade that you are waiting to bounce back, then how are you going to make money on the next opportunity? You could open a new trade, but then you are just adding to your open risk.

And lastly, you are using stops. Your stop loss is your margin call.

19

Of course there’s nothing wrong with mental stops, it’s just about pre-defining your risk. However, mental stops are useless when you aren’t watching the market, and are very susceptible to get “moved” in your mind.

Don’t take it personally, but I don’t think you have the mental fortitude (from reading your story of your 1st week) to handle mental stops. One day I’m sure you will, but I bet by that time you’ll prefer hard stops anyways. Don’t use mental stops as a defense mechanism against “being wrong”. Please tell yourself that it is okay to be wrong! That is the best advice I can give you. Because once you’ve admitted you are wrong, it is very easy to get out of a losing trade, at which point you are fresh and new to hit up the next opportunity!

20

-akeakamai

I think you’re comparing apples and oranges here. A 500pip loss when you’re trading 10 different currency pairs at the same time isn’t anywhere as big a deal as a 500pip loss when you’re trading 1 pair. His trading style and mine incorporate much smaller lot sizes but more currency pairs. And when you see that kind of a loss over a night while you’re sleeping, I guarantee there will be a retracement of some sort, maybe not anywhere near 500pips but something(barring major fundamental news). Of course unless your system and indicators show you otherwise.

Let me put it this way. When I started trading Last week I had a pair lose 250pips, it was 5% of my account, but I had a couple % in positive trades too. Sure I was sweating it but I stuck with my trading plan and It retraced to a minor profit. You might call that luck but that is what my indicators were telling me. I don’t really believe in luck in this business. There’s sticking to your plan and succeeding or not. Sure there are bad systems but I know through personal experience and that of others that I’ve got one of the best out there.

For example its been awhile but if I remember correctly. I used to trade with roughly 10 lots on a different system, using 1 pair, always traded with a S/L. I now use 1 lot per trade, but I do 5-8 trades at a time, mental S/L used now. Alerts placed on negative trades incase they move against me even more.