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Psychology and Money Management

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New to Futures, but Hitting the Wall

  #8 (permalink)

Los Angeles, CA /USA
Trading Experience: Master
Platform: Sierra, CQG, Gain, Transa
Favorite Futures: Crude Oil
CannonTrading's Avatar
Posts: 142 since Mar 2013
Thanks: 37 given, 100 received

Wizard3ootz View Post
So, itís probably my third week trading futures (day trading) and sadly, Iím not doing so well. Iíve gotten trapped a lot, with a great deal of false breakouts, making bad decisions, like chasing a breakout, and then putting in a limit order in way too high on the move, and then watching it pull back and getting f******. Mostly, though, itís perhaps overtrading, getting eaten up by commissions, and all of the tiny losses that are accumulating massively.

Iím feeling pretty defeated. I know I need to lower my position sizes. At this point, I had considered walking away, and taking my money off the table (Iím down about 1300)

Donít get me wrong. I have made some beautiful trades. I caught two gorgeous second entries this morning.

That being said, I really need to find some better direction. I was pretty damn successful in my stock trading, and I have never allowed myself to lose this much money in my life. However, Iím getting to the point where something has to change, otherwise, this is clearly a poor investment.

From you experienced/profitable traders out there, if you have any solid advice you might give, please feel free to pass it my way. I study/read about the market probably 25 hours a week, so I am in no way lacking dedication/motivation.

I think the MICROS can be a great product to go through the learning curve and make sure the tuition is not too expensive....what you will know in 3 months is MUCH more than where you at now and you need to make sure you have risk capital to trade with.
Been assisting and observing online clients for over 20 years and wrote this quick one a while ago - very relevant:

. I came up with the following personal observations after serving online traders worldwide for more than 15 years. The following steps are guides to progress, and are not necessarily in sequential order. Some of them are always required, but each trader is different and will relate to these stages in their own ways. While attempting to learn and progress, one must keep in mind that futures trading is risky and can involve significant losses.
1. Education
Hopefully if you are already trading you have completed your initial education: contract specs, trading hours, brokers, platforms, the opportunities as well as the risk and need to use risk capital in futures, and so on. Understanding this information is essential to trading. The second type of education is ongoing: learning about trading techniques, the evolution of markets, different trading tools, and more.
2. Find a System
I am definitely not advising you to go on the web and subscribe to a ďblack boxĒ system (using buy/sell triggers if you don't know why they are being generated). What I am advising is developing a trading technique: a general set of rules and a trading concept. As you progress, you may want to put the different rules and indicators into a computerized system, but the most important factor is to have a focus and a plan. Donít just wake up in the morning and trade ďblank.Ē
3. Survival
This is the key! Do what you need to do in order to survive this brutal business and give yourself the chance of being here down the road with more experience and a better chance of success. Survival is probably the biggest key for beginning traders. There is a saying in this business: ďlive to trade another day.Ē It is so true!
4. Money Management
While it is closely related to survival, money management can also stand alone. For your own survival, you must set trade/daily/weekly loss limits. Sound money

management is closely associated with knowing your risk-reward ratio (again, per trade and per time frame).
5. Goals
You should have a game plan and established goals which will function as a road map to measure your progress and improvement. Set per-trade goals, daily goals, weekly goals, etc. Many of you who are clients are familiar with these questions: What is your daily profit goal? Where do you see yourself in a week from now.? Six months from now? A year from now? How are you planning to get there? Break it down into small steps, and youíll always know whether or not youíre on the right track. And do not forget to continually reevaluate your financial situation as it pertains to risk capital.
6. Experience
If you made it to this stage youíre on the right track! Just like anything else in life, the more experience you have, the greater your success is likely to be. The key is to acquire the experience without devastating your risk capital. What good is experience without risk capital in your trading account?
7. Learn your Setups, Strengths, and Weaknesses
Teach yourself to recognize different set-ups that you feel comfortable and confident with. Then attack. You cannot get to this stage without going through the previous steps. If you did not survive, develop a trading system, set goals, etc., you may recognize the right setups but lack the confidence or the cash to take advantage. I sometimes compare being the ďproĒ to the lion who is waiting patiently for its prey and then attacks when the time is right!
8. Trading on a Consistent Basis
This means you will continue to evolve as a trader and go through these stages over the years again and again.
In Conclusion
Don't be discouraged by reading this. Succeeding in futures trading takes hard work and time.
Please be realistic, make sure you only try this with risk capital only and periodically check yourself and try to learn from your mistakes and successes.

PM with any questions about Cannon Trading (800) 454-9572 (310) 859-9572. Trading commodity futures, forex and options involves substantial risk of loss. The recommendations contained in this post are of opinion only and do not guarantee any profits. These are risky markets and only risk capital should be used. Past performance is not necessarily indicative of future results.
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