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Reeling from the effects of the last 2 months

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Not applicable
Have to confess I have had to do some serious introspection and dig up the ol' trading in the zone manual again. Was nicely in profit at hte beginning of the year, didn't sell. Got nervous at the market bottom, and exited most of my positions (those I wasn't stopped out of). The result, I am selling low when I am nervous, and buying when I am confident, the two situations I have taken years to condition myself not to do. in fact, I have learn't over the years to do exactcly the oposite of those feelings. OK, buying when nervous is easy enough (except that I have chosen to take a back seat lately), but selling when confident is still very very difficult.
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21 REPLIES 21
Super Contributor
I am not sure what your trading style is but have you considered trying a litle intra day trading? I found myself really struggling with end of day trading over the last couple of months due to market volatility. As such I have been applying my technical trading system to a shorter time frame in order to minimse my risk. This gives me much much closer stops and much shorter trade time. Of course you are banking smaller mounts more often but it allows you to enter smaller shorter positions, to regain confidence and make some money. All your cash earned is either $ or Pound based and commisions are non existent with 2 pip spreads. Your costs are lower, your risk is lower, your profit potential remains the same.
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Super Contributor
I will be honest if a little direct, but with the best intentions. The problem is you have no system to trade off so your decisions are based on emotion and you will fail. Chart pattern ect is all invalid, you need a safe system such as a daily ema cross such as long when price above the 50 ema and short below, with the stop the 50 ema plus 1/2 atr updated daily, that will make you money and if your wrong well next trade please without a system and stop you will hold your losses and sell your profits and you will give away your cash You have to enter each setup with a stop loss whic h you dont fiddle with you're right or wrong, your position size is also important relative to your available capital you should never risk more than 5% of your capital pref 2% in any one trade Good luck
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Valued Contributor
intra day trading as an answer is crazy, notwithstanding your expereince .. and not sure how you can sar costs and risks are lower ?? if anything you trade more frequently so higher costs and higher risk due to spreads to cross and slippage ??
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Super Contributor
I think its been quite difficult to trade this market and one tends to look for a trade rather than wait for the market to come to you.Then tend to enter prematurely and pay the cost results in loss of confidence and nervousness. Making profits should be boring not edge of the seat stuff. Maybe best to pull out re look at notes and what you did right in the passed then enter when comfortable again.I think its very NB to keep notes of all decisions and thoughts leading to decisions for each trade
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Super Contributor
Simon, I am trading the Dow, Ftse indexes and EUR/Dollar FX....there is no cost per trade, no slippage as trade is completed immediaetly on the 5 min chart and your spread is one pip in and 1 pip out. If your system gives you 6 to 7 profitable trades out of 10 you are in the money. The cost structure of these instruments is a fraction of the cost of a CFD on OST. The shorter your time frame the lower the risk. The principle of trading is a numbers game....I don't know if this particular trade will work out, but I know that my system gives me 6 out of 10 winners......number of trades become irrelevant....in fact a high number of smaller trades gives you a consistent return with limited risk. A smaller number of large trades could easily hurt your account when one of them moves against you, even with a tight stop as you are still paying 0.7% on the exposure of a CFD excluding all other costs.
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Not applicable
Venice, firstly, I am a discretionary trader, not a system trader. I challenge anyone out there to show me a system that they have backtested that consistently generates profits, year on year. Secondly, your entry is probably your least important aspect of a trading system. Systems hardly ever tell you when to sell - which is by far the most important component (position sizing and risk management apart). Thirdly, there are very few traders out there that understand the importance of share selection , which trading systems like the one you describe don't take into account. Most of hte tradable top40 shares are trading above EMA 50 - but which do you think is likely to give you better returns - AEG or ARM?
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Super Contributor
skaaptjop - thanks for being big enough to tell us you're having a hard time, even if briefly. Most of the time I'd keep that to myself - too much ego involved, which is ridiculous. Everyone gets so hit up that their system represents themselves and must therefore be the 'best' way. We're here to learn and to make more cashola. If admitting something makes that more likely, then you'll win while the rest of us continue to protect our egos at the cost of our earnings.
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Super Contributor
Also felt the effects of a sideways moving market in Feb, so can't help you but misery loves company.. To find an answer to your question, I suspect you might have to become someone's lamb chop and practise prison trash talk.
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Valued Contributor
i never back tested, but since jan 2005 my lazy system has made money every year ..
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Valued Contributor
trust me, there is a cost per trade .. you just don't see it ..
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Frequent Contributor
I had knock of R168K during the past 2 months (Trading Warrants). What a Great Lesson indeed!!I guess I really needed this lesson and I can safely say that I am on the "Right" path again. Trading Tips: Avoid overtrading Never " Double up" to Catch up (my mistake!!) I should have followed the above basic principles.....BUT am in a way very happy that I learned this valuable lesson. Still Love Trading with a Passion!! Slowly but Surely recovering my Losses. Cheers.
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Not applicable
OK, my thread seems to have sidetracked a bit, my original topic was going to be around trading psychology. I remember last year or the year before, chartist started a thread about dealing with losses - and his fear that he was going to have to do so at some point. Well, until the last 2 months, I have not had that problem, in fact I have not had losses for 3 years now (although the crash didn't count because i sat it out) - I have had to deal with lost potential profits, but not losses. This is the first time i have had to take a big loss - i.e. all my positions closed out at a loss - with about 5% of total portfolio, and it has affected me quite noticably. Actually, the loss was worse, because I had entered trades in December, had made my 1*risk, but didn't move up my stoplosses, so I lost my 5% profit, and then had my 5% stoploss kick in - so my actual loss was around 10%. I now recognise that I had around 6 or 7 screaming buy opportunities that I would normally have snapped up in a second shoot past me, but oh well, so it goes.
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Valued Contributor
ya, an then back to your orginal comment .. back to trading in the zone .. way better then fighting it etc ..
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Super Contributor
Simon, not sure what you mean....I can clearly see the cost of trading CFD's on OST and I can clearly see the lack of cost when trading the $, Euro, Pound or Dow/FTSE on IG Index. Please explain where these hidden costs are as I can only see the spread as my cost. Trading in the Zone is my trading guide - you cannot know the outcome of the next trade however you can with some certainty say that out of the next 10 trades x will be winners depending on your edge. Based on that, number of trades is irrelevant as you will win on x% and with low spreads and no costs you will build capital slowly and become more and more confident in your system as you trade it often, test and refine it. Large infrequent trades with crippling costs in a volatile market keeping positions open overnight and hoping the Dow doesn't change it's mind while you are asleep can be very very dangerous. 1000 NPN CFD's will cost me 0.7% on nearly R300,000...if I trade the Euro I get exposure to hundreds of thousands of Rands worth of Euro's however all I pay is the 2 pip in out spread - no commision, the costs seem incomparable and the risk much lower and liquidity much higher. Am I missing something?
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Super Contributor
See what I mean about the retails investors infinite appitite for risk..
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Frequent Contributor
One must always refer to Warren Buffet who says " be greedy when others are fearful and be fearful when others are greedy". Do your fundamental analysis thoroughly and then apply some savy as to what the market is doing then you will be in good shape. If not, find another hobby or career!
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Super Contributor
This is all a bit silly. You have had the opportunity of a lifetime. Eastplats was on sale for less than her cash in bank value. Companies like Astrapak and Transpaco were on forward PE's of 2. Even some of the larger companies were smashed - Pioneer Foods on 4 x Cash generation? Why on earth would you trade (?) - there was 300% up for grabs by just pocketing the stocks.
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Super Contributor
Reminds me why I dont post here anymore, those that need advice cant hear it.
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Valued Contributor
you trade Euro and get in at say 1.3675 .. but they actually by at 1.36?? .. the difference is their profit .. in a sense it is simple, how can they offer a service without fees ??
remember currency and most index futures via 'platforms' are hedging in the OTC market, so you atually have no idea what they pay vs. what you pay .. even if you have a reuters D3000 for live currency prices, you still don't know what they paid for your hedge ..
trading in the zone comment I agree, it's about edge/expectancy .. sure ..
as for risk, how can a huge currency position be less risk then a smaller stock position ?? sure exit quick, 24/7 .. but a black swan is a black swan and the larger the exposure the larger the hurt .. an sure the answer is you can exit quick if a black swan happens, well maybe ..

that all said there are an infinate number of different and successful ways to trade, no single one is way better, if it was the others would have disappeared .. but risks etc. are different, and as humans we tend to view risk poorly ..
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