Taking Losses in Week 8
January 23, 2006 by Trader Rich
Week 8 did no start as I had planned. The majors pushed the USD through support and resistance levels from the onset of trading Sunday evening. I started trading 2 lots this week also so my losses are magnified. As this week enters its second day of trading, I’m down 214 pips and $1782.00. I don’t consider these failed trades though. I had a plan, stuck to it, and just happened to be on the wrong side. One great improvement from previous weeks is that I did not let emotion get in the way. I didn’t trade just for the sake of trading to try to recoup my losses.
I am still optimistic about the prospects of still having a profitable week and also feel like the lessons I’m learning from the losses are as valuable as any.
Someone said to me once that you shouldn’t consider a losing trade a "loser" if you had an entry setup, a stop and a limit. I quote a fellow visitor, Blackday now:
You haven’t actually made a mistake at all. What you have done is made a successful trade!
Your trade consisted of an entry, a profit objective and a stop. Of the two price levels you were watching, the stop was hit. This prevents any further losses and in this respect, the trade can be considered a success.
Popularity: 2%
Loading ...
8 years trading for a living …. and I still stand by what i said.
I’m sorry to hear about your loss … it happens to me too regularly even though I have what I would consider now as considerable experience of markets movements but I am beyond the stage of looking at trades as winners or losers. The trading platform functions available to all traders are such that at no time should a trader allow themselves to consider any trade a loser, after all we have the ability to take control of the ‘possiblities’ and limit potential disaster.
The turning point at which trading became successful for me begain when I placed my stop and target an equal distance spread from the spot price. I bought the risers and sold the sinkers … I have never once looked back.
8 years trading for a living …. and I still stand by what i said.
I’m sorry to hear about your loss … it happens to me too regularly even though I have what I would consider now as considerable experience of markets movements but I am beyond the stage of looking at trades as winners or losers. The trading platform functions available to all traders are such that at no time should a trader allow themselves to consider any trade a loser, after all we have the ability to take control of the ‘possiblities’ and limit potential disaster.
The turning point at which trading became successful for me begain when I placed my stop and target an equal distance spread from the spot price. I bought the risers and sold the sinkers … I have never once looked back.
I was interested to learn how you would make out jumping from 1 to 2 lot trades. Was your loss the result of one trade or several? If one, how many pips away was your stop loss? I’ve lost $1700 more times than I can count. One day a light bulb went off and I changed my entry strategy. Rather than commit the whole of however many lots I plan to trade all at once, these days I’ll usually start out trading a fraction of that, 10k or 20k. I did this with my EURO trade late yesterday afternoon. Then after it became evident the trend was going up (somewhat later EURO really took off), I committed two lots, placing my stop loss at the entry point of my initial 10k.
I was interested to learn how you would make out jumping from 1 to 2 lot trades. Was your loss the result of one trade or several? If one, how many pips away was your stop loss? I’ve lost $1700 more times than I can count. One day a light bulb went off and I changed my entry strategy. Rather than commit the whole of however many lots I plan to trade all at once, these days I’ll usually start out trading a fraction of that, 10k or 20k. I did this with my EURO trade late yesterday afternoon. Then after it became evident the trend was going up (somewhat later EURO really took off), I committed two lots, placing my stop loss at the entry point of my initial 10k.
I’ve kept my stop losses rather tight, a couple of pips where support or resistance was. You can check out my trades http://www.forexproject.com/My_Trade_History/
and see that I made multiple trades last night. Days like this really bring me down to Earth… My goal to trade full-time will not come to fruition trading 1 lot at a time. My thought process tells me that I’m up almost $5000 (actually now only $3300 after 8 weeks. If I would have traded multiple lots, I’d be up almost double. Either way, both of your advice and experiences make it easier to take the loss….
I’ve kept my stop losses rather tight, a couple of pips where support or resistance was. You can check out my trades http://www.forexproject.com/My_Trade_History/
and see that I made multiple trades last night. Days like this really bring me down to Earth… My goal to trade full-time will not come to fruition trading 1 lot at a time. My thought process tells me that I’m up almost $5000 (actually now only $3300 after 8 weeks. If I would have traded multiple lots, I’d be up almost double. Either way, both of your advice and experiences make it easier to take the loss….
Blackday, this was a post from Greg… I was curious so I posted it here to make sure you received:
Hi Blackday. Good post. I’m familiar with the stop loss/target stategy you use. What you also do with your decision-making is consider risk to reward ratio very carefully. Agree?
Blackday, this was a post from Greg… I was curious so I posted it here to make sure you received:
Hi Blackday. Good post. I’m familiar with the stop loss/target stategy you use. What you also do with your decision-making is consider risk to reward ratio very carefully. Agree?
In reality, risk and reward are equal measures for it is a wizard that would be able to tell you with absolute certainty where the market will end up. By placing a target and stop loss an equal distance away, we are then left with the decision on our preferred direction.
Let us all for one moment forget about why the market is moving today and instead concentrate on where the market is heading. How can we find this out? First we must look at the historical price action on our choosen time frame right up to the current spot price, for it is here that we find the strongest clue for our entry. Then we must pick up the trend and run with it. For clarity, remove all chart studies and indicators from the screen save Fibonacci levels and trendlines, keep watching price action. Make your entry and note the price formation as it takes shape (higher highs + lower lows for longs, lower lows + lower highs for shorts), look to previous tops and bottoms and use them as intermediate targets if they appear before your own target level and use them to adjust your stop loss.
Now we can switch our attention to why the market is moving and continue to monitor if matters have changed. Read the the news as it flows (I use AFX, 4Cast and UBS for this purpose), concentrating on limiting a possible loss until such time as you are comfortable with what it could bring ie: stop to break even. There we have it - a fighting chance - a jolly good one at that.
In reality, risk and reward are equal measures for it is a wizard that would be able to tell you with absolute certainty where the market will end up. By placing a target and stop loss an equal distance away, we are then left with the decision on our preferred direction.
Let us all for one moment forget about why the market is moving today and instead concentrate on where the market is heading. How can we find this out? First we must look at the historical price action on our choosen time frame right up to the current spot price, for it is here that we find the strongest clue for our entry. Then we must pick up the trend and run with it. For clarity, remove all chart studies and indicators from the screen save Fibonacci levels and trendlines, keep watching price action. Make your entry and note the price formation as it takes shape (higher highs + lower lows for longs, lower lows + lower highs for shorts), look to previous tops and bottoms and use them as intermediate targets if they appear before your own target level and use them to adjust your stop loss.
Now we can switch our attention to why the market is moving and continue to monitor if matters have changed. Read the the news as it flows (I use AFX, 4Cast and UBS for this purpose), concentrating on limiting a possible loss until such time as you are comfortable with what it could bring ie: stop to break even. There we have it - a fighting chance - a jolly good one at that.