Trading Disasters and how to Prevent them - Psychology and Money Management | futures io social day trading
futures io futures trading


Trading Disasters and how to Prevent them
Updated: Views / Replies:587 / 2
Created: by lancelottrader Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

Trading Disasters and how to Prevent them

  #1 (permalink)
Elite Member
west palm beach florida usa
 
Futures Experience: Advanced
Platform: ninja trader
Broker/Data: Optimus Futures/ Rithmic
Favorite Futures: Cl, TF
 
Posts: 719 since Oct 2011
Thanks: 625 given, 2,445 received

Trading Disasters and how to Prevent them

Below is an article I wrote for a Trading Blog several months back. The Ironic thing about it is that the scenario I describe actually happened to me yesterday. I lost emotional control and took a big hit trading CL. It started with several losses in a row, then doubling, tripling quadrupling my position size..you can guess the rest.

Trading Disasters and How To Prevent Them

Your indicator has just given you a signal to enter long and you take the trade. You’re up a few ticks and then, without warning the price races down and hits your stop. You feel some irritation come over you as you wonder what made this strange move when every technical indicator on your chart showed the trend was clearly going up. Now as you watch, the price resumes it’s upward move and you believe you were right all along in it’s intended direction. Convinced the downward spike was merely an anomaly, you go long again, this time widening your stop to 20 ticks.

To your horror, the price begins to move down again. As the price is a mere 4 ticks from your stop, you rationalize that it’s just one more downward push triggered by the “Big Boys” who want to clear out the long position guys before they buy back in and send the price soaring in your favor. So you decide to move your stop back another 20 ticks because there’s just no way it’s going down that far..this time. But when you see the price is indeed about to hit your 40 tick stop, you feel a wave of nausea come over you. Your pulse begins to race and your head throbs. Out of control of your logical brain, you move the stop another 10 ticks. The merciless market takes out your stop and you sit there reeling from taking a 50 tick loss plus the 15 tick hit from earlier.

It doesn’t occur to you that something has caused a serious downward move in the markets. It somehow defies your technical analysis which said the trend was overwhelmingly bullish and that was the only direction to trade. Now, with your adrenaline flowing through you and your desire to win your money back no matter what, you make a terrible decision. You decide to trade 10 times more contracts than you normally do. All you figure you need to do is scalp 7 ticks and you can make up for the 65 you just lost. You see the first sign of a retracement and you go long with your huge position size. Unfortunately you’re wrong again and you feel the panic grip you as your stop is hit again. You now go to your bed and curl up in a fetal position and contemplate ending this nightmarish trading endeavor once and for all.

As dramatic as this sounds, a lot of traders have had very similar experiences. Obviously many of the mistakes made could have been prevented. Here are some of the lessons to be learned from this story.

Never have too much bias as to the direction of a market. At any given moment, price can make a dramatic change. One must always remain. flexible.

Don’t keep widening your stop loss. This is one of the main causes of trading disasters. Learn to take a small loss and move on or forget about being a trader.

Never double or triple up your position size to try to make up for a loss. If you’re wrong, the results could be catastrophic. Also, be aware of your emotions. If you feel excessive adrenaline and you have an overwhelming desire to instantly recoup your losses, walk away from the computer. Go for a walk or a bike ride. Just do anything but trade. Huge mistakes are made when you trade in the wrong frame of mind.

Hopefully this story will resonate with some and possibly cause them to think twice before having to experience a trading disaster.

Reply With Quote
The following 8 users say Thank You to lancelottrader for this post:
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
Live Your Bliss
Canary Islands, Spain
 
Futures Experience: Advanced
Platform: OA
Favorite Futures: What Moves
 
Anagami's Avatar
 
Posts: 701 since Dec 2010
Thanks: 474 given, 1,398 received


To prevent this from occurring, I have a set number of maximum trades I can take in a day and I am never allowed to increase the # of contracts during the day. These are hard rules to prevent tilt.

"...the degree to which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader." - Mark Douglas
Reply With Quote
The following user says Thank You to Anagami for this post:

Reply



futures io > > > Trading Disasters and how to Prevent them

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Linda Bradford Raschke: Reading The Tape

Elite only

Adam Grimes: TBA

Elite only

NinjaTrader: TBA

January

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Regulators Plan Safeguards to Prevent Another MF Global Quick Summary News and Current Events 0 February 23rd, 2012 08:30 AM
European Banks Scrambling To Prevent Default by Greece Quick Summary News and Current Events 0 June 24th, 2011 12:30 PM
Global Disasters Generate Loss for Berkshire Hathaway Quick Summary News and Current Events 0 April 30th, 2011 12:10 PM
Can Bank Regulators Prevent Another Global Credit Crisis? Quick Summary News and Current Events 0 January 11th, 2011 11:40 AM
Forget Stocks and Gold—Try Investing in Natural Disasters Quick Summary News and Current Events 0 January 7th, 2011 01:00 PM


All times are GMT -4. The time now is 10:22 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-12 in 0.10 seconds with 19 queries on phoenix via your IP 54.90.92.204