Friday, June 08, 2007

What Happened on my big loss


I was long, 18 contracts (equivalent to like 18,000 shares of IWM) with and avg. price of 837, exited 2 at 838 at my signal, but didn't have in a stop, then the drop happened. I never added to the position on the way down, I was long in the morning and didn't have a stop. I exited 10 at 828.5 because I had to leave for work. I never had in a stop. I left on another 6 contracts overnight and covered at 823.1. Today the high of the day was 837. OUCH! What happened. I had to leave for work, that's what happened. Just like today, I was long and had to leave for work. I ended up breakeven after making 1k in the morning. Work,,,Work, Work............I'm sure I will bounce back, the fact that I lost so much in one day is disturbing. I've read all the trading books, Trading in the zone included. This month was different then last month because I've been trying to use large size, but I can't trade the same way with large size, and as a result I have had some big losing days these last few weeks. So I need to switch up my style and go back to what I was doing before, becuase my trade management before never would have let a loss this big occur, because I was using stops before. It's going to be hard trading small size again, but it is the only way for me to get back on my feet.

12 comments:

omni2006 on 2:10 PM said...
This comment has been removed by the author.
bh_prop on 2:58 PM said...

You will find that your trading will improve with smaller size. Like you I struggle with discipline when trading larger size. Get it back in baby steps, don't seek revenge.

Just one question for you - why are you still trading the Jun contract? Yesterday was rollover day and Sep is the contract everyone is trading.

Anonymous said...

You can still trade June on Thu and Fri. Next week you should switch to Sept.

It sounds like you're doing the right thing by retracing your steps and trading small size until you get your mojo back.

Joe_5000 on 3:58 PM said...

Your trading style and blogging style must leave you breathless, and it seems that you don't have enough "boredom" time. A little boredom might give you perspective, and it might allow you to SWITCH GEARS and SLOW DOWN when necessary.

I've noticed that many good gamblers play like you trade. Their downfall is going on tilt when they are losing, usually getting even because of it, but sometimes taking a huge hit.

Maybe your stop-loss should be on the amount you're willing to lose in a day.

By the way, thank you so much for sharing your thoughts everyday, your writings are quite interesting, and your trading is quite the drama.

Anonymous said...

When you were making 1k a day consistently, was there always the possibility of a big losing day like this? I dont know the details of your trading so its difficult to know whats going on. You trade with stops then you don't? You take on an 18 contract position and let it go against you that badly....Concentrate on the reasons you are entering positions and make sure they are sound.

leon t on 11:12 AM said...

hi : greed, i suffer from the same tendency. you were making $2000-$3000 per day multiplied by 250 trading days, well, you do the math. after talking to some of the "market wizzards",one of the "gems" i've gathered is trade, just trade. i don't know your circumstances, but i'd hate to see someone who obviously has a successful approach fail.greed is psychological. why wait, do it today kind of thing. there's a very good book called "what i learned loosing a million dollars". probably beneath you but worth a read.
if you can find the time, could you explain how you set up your large trades indicator on your software. i'm considering using iq feed with sierra charts and perhaps, if you have the time you could explain in baby steps what you do. i'm challenged in the tech area.
bounce back. tks

leon t on 11:19 AM said...

by the way, i found you through dr brett, and although i can't say i'm a sold out fan of the good dr. he had an article a couple of days ago. in which he explained that when the big players move big size they do it on themes. interest rates vs equities, dollar vs gold etc. he also said he'd follow it up with another article for how the rest of us can use this concept. it may help when increasing size.

Anonymous said...

"I had to leave for work, that's what happened."

No, that's not what happened. You entered a position without an exit plan if it went against you, as you undoubtedly did most of the time before as well - at least that's the impression I got reading your blog during the last few weeks.

The loss was already there when you had to leave - having to realize it (which even then you only did partially) was only a minor bookkeeping matter and actually saved you a few more Kilodollars.

High Probability Trader on 6:26 PM said...

""""I had to leave for work, that's what happened."

No, that's not what happened. You entered a position without an exit plan if it went against you, as you undoubtedly did most of the time before as well"""

You are 100% correct.
I've been using too much leverage and no exit plan if the position goes against me.

I'm going back to the basics next week and putting in stops before my trade entries on every trade.


Leon,
Check my block trade setup link under how I trade, I filter block trades using 1-2 tick charts, the size can be adjusted to whatever you find works best.

Curtis on 7:58 PM said...

Enjoy your blog. I think yes you need to learn to relax more. I think this is everyone problem is they want instant success instead of working way up gradually. This is good lesson for me too. Adding 1 contract per month makes a lot more sense then adding a ton of contracts at one time. This should be a rule: work up gradually.

I'm very interested in using the block trades on the underlying indexes but I'm thinking that might show a lot of hedging activity.

PS: It is more useful to understand your losses if you write in percentage terms - ie the numbers don't mean anything.

Anonymous said...

I think your blog is one of the best out there. I can say this because you are posting this about your big loss which many would disregard and not post anything. By acknowledging you made a mistake and getting it out there you are already one step ahead of the others. Keep up the good work and your big days will continue.

Beaner

Dinosaur Trader on 8:19 AM said...

HPT,

Hey, all I can say is, I've been there. In fact, I lost 8gs in 2 days in March and that's why I even started my blog.

I think cutting your size is a great idea. But that doesn't mean you were wrong to increase when you did. As I recall, you were consistently making money every day for a long time. When that happens, adding to your positions just makes sense.

But something changed psychologically for you when you added your size. Did you stop following the rules you were previously?

Anyway, you may have a long road ahead of you. It took me a little while to get over my losses. I'm still plagued by confidence loss in my trading. Small consistent gains should help you regain that.

Good luck. I look forward to seeing you in the green again,

-DT

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