I am a rookie and most of the lessons that I have learned the hard way are related to stops.
Some of the lessons learned were the result of my bravado (ignorance
Some were actually the result of following my rules. (discipline
Now I am learning to manage fear and desire (psychology
FIrst live trade eve
r. 9:30 a.m. opening bell. market moves up. I click BUY (market). 1 contract
. ES. Naked. No stops
. ...Or so I thought....
In mere seconds I see profits rise to $62.50 then back to $50. I exit. $38.50 profit minus brokers fee.
! I am going to be good at this" My adrenailine is pupming. Must have cigarrette.
GO outside. Smoke. Come back..."Whats this?? I am in a trade!?!? (didn't realize my platform had preset stops
and the stop
became a working order after i sold out of my long)
Luckily I am now up $100. Good ,but..."I'm not supposed to be in this trade!" Cancel. EXit. Get me out!
"WOW, I can do this."5 minutes of trading and I am up $100 dollars!
Leave my proverbial desk to go run errands. Return home. 2pm. Yellen speaks. Market rises. Once again, I break my initial rules. CLick BUY. (Market). Now up $185. "Yay!! I am awesome. I am going to quit my job. I should turn off my machine for the day!!(Take what the market gave me
)" NOPE. I jumped back in. No set stops
. Market reverses with a fury. I am using mental stops.
I have a small account. THe pain is too much. I exit down $185 for the day. All this happens in a couple of minutes. "WTF
Lesson for small account trader.....Thats me. Use stops you big dummy
. The market has the potential to move faster than you can make descisions!
Lesson 2. Today I will recover my losses
Non farm payroll. 8:30am EST
. Market rises sharply. CLick BUY Order is filled a second later but 8 points
above intended entry. watch profits flash to $125 and then down to -$200. All of this in seconds. Lesson learned. Don't place market orders immediatley after a news release and USE STOPS!
Especaillly with a small account!! Note: While sitting there scratching
my head wondering WTF I watched the market move back in to what would have been profitable territory had i stayed in the trade. Salt on the wound.
Now these 2 days were complete rookie mistakes. But the thing is , I knew not to violate these rules. I read them. I took notes on them. THey were in my lists of rules. I had read a lot about managing risk. THe 2% rule. The 5% rule, always use STOPS
. Guess all those lessons didn't register.
Needed a wallop against my head to realize them.
I began to set my stops
Result: Getting stopped out
that would have been good trades except for my shallow STOP LOSS.
Lesson Learned: If using shallow stops
. Precise entry is crucial. Also in a fast moving market, like those after news releases, a STOP LIMIT
can get jumped and a STOP MARKET
can result in massive sllipage exceeding ones determined risk.
SO while I have learned lessons about using stops
, and the need for precsicion while trading a small account, my new endeavor is getting a hold of my emotions and not being afraid to get back in after being stopped
out when my initial idea turns out to be correct. But that is for another thread....
While I submit this for the experienced to laugh and reminence at (but I don't mind because in retro spect I think its funny also! LESSON: Don't be attached to my convictions when trading, accept that sometimes I will be wrong. My preset stop losses will determine this so i don't have to. And be able to laugh at my own follies)
I also submit it for the rookies to learn from. Risk management is vital and STOPS are a huge part of RISk management.
Luckily I have not blown up my account...YET!I have been sitting on the sidelines and watching more than not..... I take the occasional scalp
. I occasionally win and I occasionally lose. But most importantly I take trades at times when the risk of stop jumping
is low and I always use preset stops
. I intend to start a jounal on this forum whence I began to actively trade again so that I can be critiqued, and when warranted, lambasted, and get the occasional pat on the cyber back from the many seasoned and highly intelligent entities on this forum. ( Seriously, SOmetimes I have no idea what they are talking about LOL. Just goes right over my head)
But seriously, THis forum is awesome. Reading the members journals and experiences have been invaluable to my learning! Thanks BM's!!
Last rule: THE MARKET WILL ALWAYS BE THERE. IF you don't believe that, your trading account will not.