1: Do not walk away
2:Though it is difficult but think that market did not like what you did. Close your eyes and concentrate on the system/method you are supposed to trade with. (If you did follow your system, it should be a minor loss. If it is not then you have to get desciplined or go back to the drawing board and make changes to your indicators/ methods.
3:Ask yourself what the market did not like about your tradng. Close your eyes and concentrate. Once you do that you will find your answer is right there.Listen to the market talk to you and make corrections in your entry.
3:Remember to ignore counter trend trades after the first loss for the rest of the day even if you see a winner or two in counter trend direction.This is very very important
4:Forget or try to put the very first loss of the day on the shelf and try to show the market that you are not entering because you have lost the first trade but you are a competent technical trader, who is going to enter on a certain criteria and wants to prove the technical skills that he/she has acquired.Only think and watch technicals/ fundamentals that market likes to see.ONLY TECHNICAL/FUNDAMENTAL ENTERIES. PERIOD.
5:Be patient for those eneries.If you loose two more trades after desciplining your enteries , think that the market is unhappy with your trading metod/system and you must change it.Thanks
The following 4 users say Thank You to masood for this post:
If at first you don't succeed - try and try again.
It's all about discipline, patience and good money management. Taking a loss is part and parcel of the game. If you can not limit your losses to a small amount or contained amount, then you should not trade. Sooner or later you will take a loss.
manage your stops properly... i once took 10 stop outs in a row, but with the right money management this did not hurt me as much as it could have - also i would suggest diversification - so that you don't rely on one particular outcome...
The absolute best thing you can do is read "Trading In The Zone" by Mark Douglas. In this book he explains that there can be NO expectations in the market. You are not right and you are not wrong. The market does what the market does. You simply have an edge
Favorite Futures: CL & 6e, looking at ES, ZB and AU again.
Posts: 2,100 since Nov 2009
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Entry points with compensated planned loss in initial position
I used to be a researcher, hence the tongue-in-cheek title. Seems that it is best to plan for what can happen rather that trying to have your Model of the World Verified. So, After Reading Zondor's comment on my Journal I started thinking. Which scenario is right? WHO CARES! Mark Douglas talks about being in the now moment, and you don't have to be right all the time to make money. So, why not plan a few different trades based on how the market presents itself. Allow the scenario to reveal itself and identify it as having a high probability of success. Do this in real time, then make the trade.
The best thing I learned last week that if you plan accordingly, even a first losing trade can be the entry point for a winning one and a whole lot of small losses are covered by a well executed and managed winner.
My first sim trade Friday Morning planned for either market movement. The barrier to making that trade was taking the risk. So, I identified the risk as a point on the chart, notice I do not say price, cause it could be anything that has worked before, a trendline in this case.
By doing T&S watching, following the DOM (Can't save this yet that is why the line is flat on the chart), finally looking at how these will effect the chart I had a gut feeling - that just means that you can't quite codify it with hard logic or a system, but fuzzy logic is screaming MAKE the Trade. Once you learn not to fight these intuitions more trades with small losses will be made and also more (but less of an increase than the #of losing ones) of winning ones. Random Luck is 50%, but figure a trader can be be right only 33% and still make consistent profits.
The chart below shows the market was in a triangle bound by 2 trend lines, and had just bounced off a moving average. Gut was saying something is going to happed! But what? & how to plan for it? 1st accept you don't know which way it is going to go. Just once it does there is a high probability - identified by what ever you use to make trading decisions - that a profitable move is developing. So the trade will have an initial loss 50% of the time if truly random, 67% if you are a trader who is right only 33% of the time.
The trade: Went long @1141.75 with a stop and reversal @ 1040.50. Why? Felt it was a critical point and if 1040.50 did not hold the market would at least test 1137.25. So, initial loss was taken but a profitable trade and made. If I had followed my $ management rules the down trendline would be the exit stop, which on this chart was 1134. For a net of 5.75 points.
Bottom-Line: You gotta be in it to win it. Taking Loses are part of that.
Hey Masood , I was wondering what you think of the replies so far ? I think you ask a great question concerning coping with the 1st trade 1st loss scenario . Ztrade mentions " trading in the zone " in his reply , the " now moment " is achieved if you can focus completely and deeply on your strategy / approach without hesitating . Your approach has to have a statistical edge so that when you squeeze the trigger you know with every cell in your body that you are at an advantage ( the CASINO ) .
The reason is that over a series of trades you can then determine if your edge works for you and there wont be a first trade only the next trade in a sample size .
IF you dont trust your edge every time it presents itself and you dont trust every time that it has your best interests in mind and you cant focus on one edge consistently through a sample series I suggest tackling that issue first . I also suggest if you do need to find an edge to trust always that you create your own and dont follow someone elses edge . The reason is because if you develop your own edge from the ground up you will trust every aspect of it and you take advantage of one of the few things about trading you can control .
I can say that " Trading in the zone " is something you should read if the 1st trade 1st loss scenario sends you into a tailspin . I was in that position for a long time and this book ( and others ) helped me to see the market less as an advesary but more of a never ending opportunity to take money for myself . It made me start to think of trading like a professional poker player thinks of a poker game . If they lose one hand they dont panic and reconsider there approach because they know there edge is valid ,they simply see it as one hand of many and know that a losing hand indicates a winning hand is that much closer .
The following user says Thank You to Eric j for this post:
On January 15, 2010, I lost my first trade of the day by 8:33 a.m. cst in emini sp and did not know that a trend day was going to unfold.I realized that my previuos winners had made me carefree of paying attention to detail such as not to enter the market in the first 7 to 10 minutes even though how sexy or enticing the market may look. I went back to the trenches , put all the guards on and missed the next 6 tick winning trade by waiting too long to enter. I had a loss for the day early in the morning and had missed a winning trade, but I said to myself win or lose, just go by the technicals no matter how enticing the enteries may be( it was difficult to do).I went on to win next three trades .Thanks
Hi Ericj. Thanks for your comments. I have found that yours and every one elses response on this subject has been very valueable, to the core (of the troubling spot) and very very professional.It encourages and gives me and several other traders of humble skills trading confidence. I am proud to be in the company of so much knowledge and experience.Iwill definitely read Trading in the Zone book.Right now I am struggling with Al Brooks book.Thanks
I use the ADM method. Accept that a trade went against you, to have trades go against us is part of the trading busuness. Deal with it, analyze the trade and see what you could have done differently. Move on, there will always be another trade so be prepared.
Keep things as simple as possible, but no simplier. Albert Einstein
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