Oil trade gone very wrong - any advice on damage limitation?

Trading Discussion
41

@Xanel, you set your opposing position at the same level you would have set your stop loss, at what ever level your risk appetite allows.

All you are doing with this strategy is improving the percentages of each losing trade… SL set at a 2% loss is a guaranteed 2% loss. Opposing position will improve this to a 50/50 opportunity… same locked in loss (no matter how far price moves against you) or a smaller loss or potential profit from constant price action whipsawing reversals.

Demo the strategy a few times and just see how often price comes back in your favour.

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42

@Xanel

From what you’ve said I think your biggest error was getting in on some bullish notion without strict entry exit criteria.

Such things are ok in stocks that have zero leverage, but when trading on margin it’s easy to get sucked into emotional trading.

Prior to the trade you were confident but as soon as the position is placed all sorts of things go off in the mind.

If you were so bullish on oil you should have waited for a legit set up - and if one didn’t come so be it.

We always need strict entry exit rules when trading on margin.

Taking a long term view with leverage is fraught with danger.

We overestimate the emotional control we have when price moves against us become to large.

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43

I know this post is 9days old now but I still wanted to give a bit of advice that may help in the future. What you’re doing is revenge trading. You may think the logical thing to do is to place more trades that could make up for the loss you made but the one thing to note is that sometimes you really need to cut your losses and move on. Revenge trading is solely fuelled by emotions. Emotion in trading= BADDD

You may be decent at trading or bad i don’t know but I don’t think you know how to separate emotions from trading. Holding onto trades in the hopes that things will go according to your plan is something a lot of bad traders do. You need to plan out things beforehand and stick with your plan… Letting emotions impulsively place trades will very quickly go wrong and you will definitely regret it.
Taking a loss and moving on is hard to get used to but as long as you know what went wrong and try not to make the same mistake, you will become a great trader!

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44

I understand - It was quite basic things which I screwed up here, due to being overly confident.

Thank you.

45

@Xanel

A simple trick I use is to be cautiously PESEMISTIC on every trade.

While that might sound negative it actually stops me from removing protective stops or trading too large.

46

Hope this turned out well for you in the end…

47

Yes I take your point here. I think I read somewhere that we should place trades almost with the expectation that they will lose.

48

You always need to have a precise plan and put your trades according to that. Keep your emotions aside and have patience.

49

It’s difficult to expect that oil will plunge again, OPEC does everything to control supply and maintain favourable price. Oil is clearly biased to the upside now because of recovery process as well as better understanding and cooperation between producers. Try to close them and don’t hedge your orders with opposite ones (called position lock). It’s not a kind pf proper money management.