How to deal with the losses??

Ok, i will post this in the rookie section, cause it was rookie thinking that got me to this point. I was doing good, was profitable for a few months, had a few good runs, and thought I coould do this easily, then it hit. I use a combo of an EA on a few pairs, with what I thought was low risk, to gather pocket change all day, while I wait for the better signals from a different method (DIBS). and this was working pretty well. I even took $$ out of my trading account to use for something else That is about the time it happened, Several pairs hit a strong trend, and the EA got caught, while I was still doing pretty good with DIBS (>500 pip on GBPUSD) it couldn't out weight the losses in the EA's. So now I am down 80% or so (small account only couple hundred US) What I think got me here was exposing my account to too many pairs, and too many open trades at once. And not paying attention to my manual trades, thinking I could just blindly open an order, and it would work out. I am not worried about the $$ like I said it was only a few hundred (I would spend more on a weekend skiing) But the roller coaster emotions are tough, one day i am up 20%, next day down 40%, then down 80% total. What does everyone tell themselves when they hot a loss like that ?? Do you take a few days/weeks ff, or just keep on trading? I WILL NOT give up, but I wont go broke trying either.

What does everyone do when they hit the "Wall"??

Rusty

I can't speak much for the other traders here, but honestly, huge losses don't affect me. Why? Because as soon as I double my account, I withdraw the deposit. The remaining money is market money.

I do not count any gains until they are in my bank account. That's probably what I do to combat this issue.

Sounds like you're having more down days than up days. Have you tried refining your system to improve expectancy (filter out some losses)?

You must be using some crazy money management, the only way to gain/lose 20% or 40% in one day is by taking huge risks using high leverage. You'll have to get real and start using conservative money management, otherwise you'll be saying good bye to your account in a matter of days.

yes, the pro's only risk 1% per trade.

personaly, i risk only 0.01% per trade so if losing a few trades, no big deal at all.

Early on I realized that trading is 90% mental, the other 10% is in your head. Cliche, I know, but never the less it is true. Time for you to re-read Mark Douglas. Maybe go through your mission statement and business plans. Review these and reacquaint yourself with what your trying to accomplish.

Maybe, its just a matter of refreshing the fundamentals. I think it was Vince Lombardi that started every new season by holding up a football in front of the team and exclaiming: 'This is a football." Go to babypips and do a refresh, graduate again before you put on another trade. Consider it a 'Exercise in Discipline'

But most of all stop kicking yourself. No one will ever kick you as hard as you can kick yourself. Pamper yourself a bit. Take a long hot bubble bath. Your not a newbie anymore, relax.

Ronald,
I took out about what I had initially put in the account, so if you look at that I am still about break even. However I did see a nice profit return to this 'break even point'. I am ont out any $$, and I still have enough equity in the account to keep opening trades, just the lot size is a lot smaller now. So in that way I am in the sam boat as you, playing with the markets money.

Ricardo,
The manual trades i take are no more then 1-2%. In this case it was my EAs that failed me, assuming I could add it to more pairs, and in this case 3 of the 4 pairs went on a trend in the wrond direction, usually they recover, but there were too many open orders and not enough margin to cover.

Rusty


on edit:

I am not here to cry about it, I just need to calm my emotions a little and like some have said, re-evaluate some things

My solution:

http://www.gearpatrol.com/images/jwbluekinggeorge.jpg

Here we have a saying: "If the dog is the Man's best friend, the scotch is the bottled dog"

I'm too young for that


Any alternatives?

Hi Rusty105,

As I'm sure you know, losses are unavoidable. Trust me, I know. If you don't believe me, look at my journal right now :-)

As traders we have to realize that the potential for losses is almost limitless, at least unto the point that we lose all our capital. If you understand this, then you must have measures in place to protect yourself from such an event. After reading your post, it appears to me you were surprised by the massive loss you suffered. Didn't you realize this was a possibility, and if you did, why didn't you take precautions to avoid it?

We can't avoid all losses, but we can manage our risk. The first thing you need to do is define your risk. One way to do this is simply by using a protective stop. Another way is to have a predefined number at which you will halt all trading if too much of your balance is lost. The point is, know what your risk is in advance and have a plan to deal with it before you find yourself in an unfortunate predicament.

I'm glad the account size is small and you didn't lose more than you could afford, but I hope you will learn from this experience so that when you do trade a larger account, you won't make the same mistakes.

lots and lots of strippers.

"I spent a lot of my money on booze, birds and fast cars. The rest I just squandered."

On a more serious note though I think the name of the game is staying in the game. As long as you have a system, you know, that works and good MM the rest is just a means to an end.

I'm 1 year older than you, it's good to break the rules once in a while

You knew you could lose your account before you entered your first trade. Losing streaks are to be expected, so there were no suprises.

Hi rusty 105,

One of the best things I can say is get back to basics, when you are not performing you will tend to find that you are not in the present (in my case I will tend to be over thinking the market), that is you will find yourself either thinking about past glories or failures which takes you away from the present, or you maybe thinking of all the money you will be making in the future and what you are going to do with it which also takes you away from the present.

You will need to find what gets you present (in the zone), it takes being able to be totally honest with yourself.

Another thing that you my find is a lot of traders go through a period where they need to be right because if they are not then they are wrong and people being people they tend to make this mean that they are a good/bad person and this comes about by being in the world of right and wrong which is a way of copping in the real world but if you bring it into the trading world it can make trading challenging, in the trading world you need to come from a space of probabilities where there is no right or wrong just a result.

Hope this helps

cheers

Shut down the EA.. ?

Did just that

Lol, one of the classic George Best quotes.

Use better money management

It goes beyond handling losses emotionally. Sounds like you are not one to give up, so analyse your trades very carefully, both winners and losers, come up with some statistics that will guide you towards maximum profits and minimum risk. You will need to come up with questions to ask yourself when doing this.

Assuming you understand your own methods well and can interpret a chart correctly, it should be a fairly easy to come up with meaningful conclusions which may improve your performance. Also consider is this type of trading suitable for you? Have you tried other styles?

Please read Brett Steenbarger's book Enhancing Trader Performance. It should be of some help.


Rgds,
Bob.