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Emotional Trading
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hkheredia

Member Since Mar 21, 2011  3 posts hkheredia Mar 28 2011 at 16:49
I just wrecked my portfolio tonight and lost the spirit of trading currencies. Any tips on how to recover from this very expensive learning experience? I'm humbled by what the market did to me and I think I overtraded. I was trading the EUR/USD, going long and short multiple times and I think I was trading a trend I could not even read.

James_Bond

Member Since Jan 14, 2010  556 posts James_Bond Mar 28 2011 at 16:57 (edited Mar 28 2011 at 16:57 )
hkheredia posted:
    I just wrecked my portfolio tonight and lost the spirit of trading currencies. Any tips on how to recover from this very expensive learning experience? I'm humbled by what the market did to me and I think I overtraded. I was trading the EUR/USD, going long and short multiple times and I think I was trading a trend I could not even read.


Sorry to hear about it.

First of all, take a deep breath.

Secondly, try to figure out how did you end up in that situation and how to prevent it from happening again.
Major points to consider:
- Do you have a trading plan with exact entry and exit rules?
- Have you followed your trading plan accordingly?
- Are you using correct money management rules and not risking too much per each trade?

On top of that, how long did you demo trade before trading a real account? Has your trading appeared to be profitable with demo?

hkheredia

Member Since Mar 21, 2011  3 posts hkheredia Mar 28 2011 at 17:00
I'm a technical trader that uses major trend lines and triangles for a setup with RSI, MACD, and the tick volume to confirm. I honestly have been following my strategy for the first 3 trades I had this day and when a majour trend I thought emerged at my charts I tried to trade it. Worse, I averaged down and bailed out when it broke the trend line. Then all hell broke loose when I pulled the trigger like a cowboy.

James_Bond

Member Since Jan 14, 2010  556 posts James_Bond Mar 28 2011 at 17:04

hkheredia posted:
    I'm a technical trader that uses major trend lines and triangles for a setup with RSI, MACD, and the tick volume to confirm. I honestly have been following my strategy for the first 3 trades I had this day and when a majour trend I thought emerged at my charts I tried to trade it. Worse, I averaged down and bailed out when it broke the trend line. Then all hell broke loose when I pulled the trigger like a cowboy.


What was the reason for 'pulling the trigger like a cowboy'? Were you frustrated with your trading result? Were you in need to get back the market?

That is an excellent example of how psychology plays a big role on non-automated systems with inexperienced traders. I've been in the same situation myself, and honestly, the best thing to do is learn from it and move forward with your trading.

hkheredia

Member Since Mar 21, 2011  3 posts hkheredia Mar 28 2011 at 17:08
Is it still possible to slowly recuperate my account to previous levels despite losing half of it's value without injecting more funds? Forex should only involve risk capital and I don't want to risk anything more as of the moment.

I think 'pulling the trigger like a cowboy' was a result of my desperation to recuperate losses. I did relearn my lesson that this is a business with systems in place not a gambling spree in vegas.

James_Bond

Member Since Jan 14, 2010  556 posts James_Bond Mar 28 2011 at 17:15 (edited Mar 28 2011 at 17:16 )
hkheredia posted:
    Is it still possible to slowly recuperate my account to previous levels despite losing half of it's value without injecting more funds? Forex should only involve risk capital and I don't want to risk anything more as of the moment.

I think 'pulling the trigger like a cowboy' was a result of my desperation to recuperate losses. I did relearn my lesson that this is a business with systems in place not a gambling spree in vegas.


First step is recognizing your error - since you're already aware of it, that's great progress.

I don't want to make you feel any worse, but it would be hard to get back to the starting point. In order to make back the 50% back, you would have to make 100% with your current capital. However, that is certainly possible and will take a lot of patience and a good trading system.

First rule of trading is 'do not risk what you cannot afford to lose'. Since you do not wish to lose anymore funds, I do not suggest adding anymore in, not at least until you're trading successfully and have a working trading system to reason the addition of funds.

bwizard

Member Since Feb 15, 2010  54 posts bwizard (bwizard) Mar 28 2011 at 22:24
never add to a losing position why add insult to injury run tight stops if your frustrated by a loss stop trading until you figure out your problem

You will never go broke by taking profits
James_Bond

Member Since Jan 14, 2010  556 posts James_Bond Mar 29 2011 at 07:34

bwizard posted:
    never add to a losing position why add insult to injury run tight stops if your frustrated by a loss stop trading until you figure out your problem


I don't think tight stop losses would be of any use, if the system isn't profitable. I think you should focus on trading the system on a demo to determine the if it's worth trading, and what risk should you take with each position, in order to stay in your comfort zone.

bwizard

Member Since Feb 15, 2010  54 posts bwizard (bwizard) Mar 29 2011 at 14:12
tight stops are totally useful your either wrong or right i prefer to give it 30p to find out. if im right the tight stop is not a problem if im wrong at that current time the tight stop saves my acct. you may hit more stops lose more times but as recent example i hit two stops shorting gu last week cost me 60 pips total on the third time i got short at 1.6380 and still holding at the time of this writing im up 410 pips i was right however early. now the 60p i spent was well worth the 410p profit im currently sitting on.

You will never go broke by taking profits
James_Bond

Member Since Jan 14, 2010  556 posts James_Bond Mar 30 2011 at 16:01

bwizard posted:
    tight stops are totally useful your either wrong or right i prefer to give it 30p to find out. if im right the tight stop is not a problem if im wrong at that current time the tight stop saves my acct. you may hit more stops lose more times but as recent example i hit two stops shorting gu last week cost me 60 pips total on the third time i got short at 1.6380 and still holding at the time of this writing im up 410 pips i was right however early. now the 60p i spent was well worth the 410p profit im currently sitting on.


Well, id does slow things down if you're going down hill, however it won't turn a losing trading system into a winning one.

All I'm saying that you first need a good working trading system, with proper money management scheme.

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