Thursday, February 20, 2014

Temporary Interuption: Day 10,11, 12, and 13


 Results For The Duration of the Interruption

Trades: 6
Total Contracts: 8
Winners: 5
Scratch: 0
Losers: 1
Profit: $10.30 after commission
Gross: $46.72

Temporary Interruption

This was definitely not my week. Two weeks ago, Friday, TDAmeritrade's Platform ThinkOrSwim crashed on my a minute or two after I entered a trade. I logged back in pretty quick. I look and realized that price hasn't moved, and think to myself that I'm glad it didn't go against me. A minute or two later I realize I'm not getting tick data. After some investigating, I realized that I'm actually down $500 bucks. I closed the trade -$300 bucks lower then my max stop should have been.

Basically, I got caught in a short trap right on pit open. I actually use an automatic trigger system that automatically places my stops as soon as I get into a trade.  I am also looking for a new broker.  I didn't have stable data all of Friday.  It would keep freezing after working for 5-10 minutes, and it made it impossible to trade.

I ended up having to work a lot of overtime all of the week during prime trading hours.  I didn't really get to trade until Tuesday, Wednesday, and Thursday this week.  It took all of those three days to make back the $500 buck loss.

Recipe: How To Blow Out Your Account

A lot of other brokers offer $500 dollar ES trades per contract.  This lets you over leverage your account very quickly.  TDameritrade requires about $5,000 per ES contract, and it makes it very hard to blow out your account in a single day.

One common mistake new traders make is applying the martingale betting strategy.  When a trade goes against them they try and average their costs down.  The problem is that this works great on range days, as the trade usually comes back to where they got trapped.  This method fails very quickly on trending days, and you combine it with $500 dollar per ES contract brokers then you get a recipe for disaster.  A trade can keep trying to pick tops only to keep loosing more and more money, until they run out of money.

Always stick with your stops! If I took my $200 dollar loss, I would be up $300 dollars right now.  It's very easy to make up a $200 dollar loss, but takes a bit longer to make up a $500 dollar loss.  There's a psychological component that effects your trading when you are trying to make up a loss that is going to take longer then a day to make up.  I found myself trying to take greater risks, and I had to step away more then once to get myself back in the mindset.

I ended up transferring $400 dollars back to my trading account (I made $100 back at this point) from my bank account. Since I was able to visually see $10,000 dollars in my account, it took some of the pressure off!

No comments:

Post a Comment