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I have lost most of my capital in the past 4 months after almost doubling the value (ouch). The US stock market small caps went south in Feb. I cant recall how I lost all that money. One trade was a loss but I brushed it off and went on to another trade etc etc. Ive decided that my positions have been too big for one thing. Now Im trying to overthink trades, look for the hidden exit signal I missed before. I use multiple moving averages, try to use a crossover as a signal. If a short term MA goes against the trend then followed by a longer term MA in the same (countertrend) direction I think I have a reason to enter in the new direction. It hasn't been working out well. Other recent trades were "stick it out, this will start going the other way" (corn, nat gas, 30 yr treasury futures). Losses in futures add up fast. Ouch. I am an educated person but cant seem to get it right with trading lately. Does anyone care to suggest a basic method I could consider as a starting point to reforming my dysfunctional ways?
re futures trades, is it better to wait for price to reach major resistance or support before making a trade or decide on the general direction and jump in, trading in the direction of the trend?
With moving averages The trend is your friend. Trading ranges will chop you to bits.
1. Question 1 Is the market trending or range bound. Trending then your moving average strategy will work. Range bound then you need to be playing reversals. That implies some sort of a band system (as in Bollinger, Keltner etc).
2. Watch the free daily videos for volume profile with price action (futurestrader71) and pure price action replay after the day is done with Mack (priceactiontradingsystems.com) so you can anticipate where and when your moving averages wil give you a signal.
3. After you can do that dump the moving averages, they ae just a crutch.
Hi Bel,
Forgive me for being a little harsh, but I believe it is for your own good.
If you are indeed looking to "reform your ways", I suggest you tackle the core issues, and not the superficial ones. The solution does not lie in the details of MA's or signals - your difficulties are much more fundemental.
Losing all your capital so quickly after a lucky streak (no, not skillful - lucky. just a quick reality check!) is a sign you lack a basic money management scheme (as you've noted yourself). The way you describe it happening points to trading psychology and behavioral habits that need a lot of work. Add to that the obvious lack of a clear and complete method - and the road downhill is quite obvious from here, if you don't make a fundemental change.
You are an educated person by your own words, so you obviously know that this is not the way a professional handles his profession, in any field - trading included (and anything less than treating trading as a professional endeavor won't ever get you to make any consistent money).
If you are serious about reforming your ways - start with an attitude change towards professionalism. Cut the unsystematic work and make sure you have a sound and complete method, one that you fully understand and trust. Add clear and sensible money management rules to keep your drawdowns small and limited. And top these with a lot of awareness and work on the mental side of your trading. Keep a log of ALL your trades (not just the good ones or the ones you are proud of - all the stupid and impulsive ones too), review it regularly and learn from it. Apply all of these on small-money trades (or sim if you prefer) until you are consistent, and then slowly scale up and remove any new kinks you encounter.
The long road, in this case, is the shortest path - be patient, diligent and professional and I wish you well in your endeavor.
it's all relative, your support is somebody else's resistant. What makes it a true support is plenty of buyers and a few of seller in sight (don't wait too long, they will show up eventually)
watch time and sales ( take a year or more) , more buyers -> direction is up and vice versa.
Hello Bel. I recently have gone through what you are experiencing now. I started trading futures and then lost a big portion of my account. I was able to get back to break even...and then some. That didn't last long. Haha! I then proceeded to purge another good sized chunk of my account and it was pretty demoralizing. But, I am doing a pretty good job recovering from that last draw down.
The first thing I had to do to start my recovery from my last, most demoralizing draw down, was I had to stop the bleeding. I decided to only trade my best setup. And I decided I would only take the trade if I thought it could reach a target that was a minimum of a 1.25 multiple of risk. This had the immediate effect of limiting the number of trades per session, which immediately stopped the bleeding.
The next thing I did was I started testing. I started to collect data on my best setup as well as a couple of others that I thought had promise. I culled out the setups that tested poorly and moved on to new ideas. I also collected data on different types of market phenomena that I was observing. This took me some time, alot of weekend work, was very tedious, sometimes not fun to do, but I found it very worthwhile. I am still doing it, but admittedly, not as much as I was doing before. .
I also started to look at my risk overlay. I realized I had nearly a 60% win rate and was unable to make money because of these massive, over-the-top blow up trades. I needed to stop those. I toyed with attempting to attain a higher win rate, but it wasn't really my style. I ultimately settled on a lower win rate. This meant smaller risk, but each winning trade is getting a higher multiple of risk. This is what I found works best for me, maybe not for everybody, and maybe not even for me at some point down the road. . In the end, I realized I simply need to cut my losers while they are small and get adequate returns on my winners.
The last thing I looked at during this last recovery was my trading psychology. I started a journal to explore the irrational behaviors that led to the last draw down. Toward the end of that drawdown, my trading psychology was completely shattered. I began wavering intermittently between a fear of losing and a fear of missing out. Trading with fear is pretty counter productive so I needed to fix that. I was able to flesh out the faulty reasoning behind those fears and the resultant irrational executions and trade management that those fears had caused. I was able to get a cleaner view of what good rational execution and management looks like as well.
This last big draw down was pretty scary. And I thought I had lost my mind...to be honest. Haha! I think you can't go wrong with rolling up the sleeves to find a setup(s) that you know the math is behind, crafting a risk overlay that works for you, and facing the irrational stuff behind poor execution and management. This has taken me alot of time and I'm still neck deep in it. But I can tell you with absolute certainty, I am a way better trader having gone through all of this.
Hi Bel, I read your thread and it prompted me to put some thoughts down. I hope this may help in some small way to give you some perspective and a way forward.
Hi Traders,
There is a thread elsewhere on FIO that I had an idea on to share some content. In short, this is my take on the path some of the new traders who get bit by the trading bug find themselves on. And also highlighting the ruin that can follow …
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. In the end, I realized I simply need to cut my losers while they are small and get adequate returns on my winners. 
