Day Trading Newbie Lessons learnt

[MrDavid]

Hi Guys & Girls,

I just thought i would introduce my self and share some of my first experiences to day trading.

I started getting a big interest in the stock market a few years ago and started swing trading with a demo account and about six months ago i got hard core into CFD's and day trading using Plus 500.

After creating a strategy and and trying it for a few months and being quite successful pulling an average 10-15 pips a day on the ASX200 and UK100.

So i put about $7500 into my trading account..... bad move.

I lost about 4.5k that first night, i didn't stick to my strategy and let my emotions run out of control. the rest of that week it dwindled down to almost nothing due to making more emotional trades and being highly depressed.

Bag biggest money lesson of my life, that was about to weeks ago and after my big loss i found my self blaming everything apart from my self for a few days after. Then i had a major brain wave and started looking back at what i did wrong and why, now i realise my greed was one of the biggest factors in loosing so bad.

My challenge now is using small amounts of money and playing Forex rather than the indices while maintain control of my emotions and documenting every trade to get a clear idea if the direction i am going in.

I find it a lot easier when trading with someone as i have to justify my moves to them it explains more to my self what i am aim for.

Is there any day traders in here on the Gold Coast?

Dave

 

[tech/a]

Hmm
10 Pound a tick
$25 a tick and you lost $4500 in a night.
From a strategy that was pulling 10-15 ticks a night.
So that's 10x your average gain.

You lost it all without margin call?
You believe its only an emotional issue?
More than that.

Oh Nice story!
Plus 500 you say---wow.

 

[MichaelD]

biggest money lesson of my life

The market is a very powerful teacher.

7 years ago - came up with a "sure-fire" strategy for overnight trading breakout stocks. Tested it out on paper - all looked pretty good.
Day 1 trading the plan - lost $4,000 in 10 minutes.

Got up, licked my wounds, and learnt risk and money management.

Tried again, this time with much less dramatic but steady returns.


2 years ago dabbled with CFD index mini futures with $20,000 of money that I could afford to lose. Devised a "sure fire" strategy with one flaw which I dismissed with "the market will never do that".

$20,000 -> $50,000 in 3 weeks. Fantastic!
$50,000 -> $0 in 1 hour when the market did "that". Quite impressive in hindsight - managed to blow $50,000 with a short trade in a falling market. (Dead cat bounce - position size too big & overconfident).

Admitting this to my wife was very humbling.

Got up, licked my wounds, and spent a lot of time and effort properly developing a trading plan for the index. Rule 1 of the trading plan was "DON'T BLOW UP, NO MATTER WHAT".

Been trading that now for 18 months with very pleasing results and over the last 6 months have transitioned out of my previous job and now trade full-time.

Have had a few minor trade surprises over the 18 months which have resulted in minor tweaks around the edges of the trading plan, but nothing even remotely dangerous to my core trading capital. Rule 1 still stands as sacrosanct.

I find it a lot easier when trading with someone as i have to justify my moves to them it explains more to my self what i am aim for.

You have shown great insight into the cause of your blow-up, but I strongly disagree with this. This will lead to you blaming someone else for your next failure.


Tech - a bit harsh, mate. MrDavid has at least had the insight that the problem lies within himself, which is better than pretty much everyone else that blows up.

 

[cynic]

Hmm
10 Pound a tick
$25 a tick and you lost $4500 in a night.
From a strategy that was pulling 10-15 ticks a night.
So that's 10x your average gain.

You lost it all without margin call?
You believe its only an emotional issue?
More than that.

Oh Nice story!
Plus 500 you say---wow.

One of the interesting things about OTC CFD providers is that many of them only offer margin calls at their sole discretion.

However, given that we're confronted with a new poster that makes mention of a specific CFD provider and the Gold Coast, I can readily understand why one might choose to greet this account with a degree of scepticism.

Many have had experience of trading both CFD and demo accounts and then noticed a pronounced change in price action when real money comes into contention. The likely causes may not be limited to the emotional reaction to losses of real money. Those whom take the time to read and understand the relevant PDS and client agreement documentation will recognise other counterparty related factors that could account for the variance in performance between live and demo trading with OTC CFD providers.

The trader is of course still fully responsible for his/her trading decisions including (choice of FSP/Broker) and as such is fully accountable for his/her trading outcomes.

However, the true cause of the trader's failings may not necessarily be what the trader believes them to be!

In my experience, an ill-informed decision regarding choice of trading product (and/or provider of same), without giving due consideration to associated counterparty risks, can result in a trader having an (at best) confused impression of the true nature and cause for poor trading performance.

 

[beachlife]

Hi Guys & Girls,

I started getting a big interest in the stock market a few years ago and started swing trading with a demo account

So i put about $7500 into my trading account..... bad move.

I lost about 4.5k that first night, i didn't stick to my strategy and let my emotions run out of control. the rest of that week it dwindled down to almost nothing due to making more emotional trades and being highly depressed.

This is exaclty why I say SIM trading is the worst thing a newbie can do...it doesnt prepare your head space for the emotions that come when the money is real.

Take a week off to clear your head, then try again with a much smaller risk per trade (find a level that wont do your head in) and slowly scale up.

 

[MrDavid]

Hmm
10 Pound a tick
$25 a tick and you lost $4500 in a night.
From a strategy that was pulling 10-15 ticks a night.
So that's 10x your average gain.

You lost it all without margin call?
You believe its only an emotional issue?
More than that.

Oh Nice story!
Plus 500 you say---wow.

Hi Tech,

The problem i had was i didn't stick to my strategy, i kept on making excuses and took more risk than i should have.

I lost it mostly due to not sticking by my stops that i can do fine with fake money but with real money i seem to let my greed and optimism take control.

I know Plus500 is not the ideal platform but it is easy to use and i seem to do well in the demo environment, i been using CMC too and that seems a little bit quicker on the transaction level but they give a little to much leverage on some items. i been using metatrader to get more realistic market values.

I still feel like i have a **** load to learn as my trade win/loss ratio goes between 45% and 50% but i have been running pretty tight stops and that seems to help a lot. I would like to get up to 60% and be able to know when to let my wins run.

 

[MrDavid]

The market is a very powerful teacher.

7 years ago - came up with a "sure-fire" strategy for overnight trading breakout stocks. Tested it out on paper - all looked pretty good.
Day 1 trading the plan - lost $4,000 in 10 minutes.

Got up, licked my wounds, and learnt risk and money management.

Tried again, this time with much less dramatic but steady returns.


2 years ago dabbled with CFD index mini futures with $20,000 of money that I could afford to lose. Devised a "sure fire" strategy with one flaw which I dismissed with "the market will never do that".

$20,000 -> $50,000 in 3 weeks. Fantastic!
$50,000 -> $0 in 1 hour when the market did "that". Quite impressive in hindsight - managed to blow $50,000 with a short trade in a falling market. (Dead cat bounce - position size too big & overconfident).

Admitting this to my wife was very humbling.

Got up, licked my wounds, and spent a lot of time and effort properly developing a trading plan for the index. Rule 1 of the trading plan was "DON'T BLOW UP, NO MATTER WHAT".

Been trading that now for 18 months with very pleasing results and over the last 6 months have transitioned out of my previous job and now trade full-time.

Have had a few minor trade surprises over the 18 months which have resulted in minor tweaks around the edges of the trading plan, but nothing even remotely dangerous to my core trading capital. Rule 1 still stands as sacrosanct.



You have shown great insight into the cause of your blow-up, but I strongly disagree with this. This will lead to you blaming someone else for your next failure.


Tech - a bit harsh, mate. MrDavid has at least had the insight that the problem lies within himself, which is better than pretty much everyone else that blows up.

Good to hear that there is light at the end of the tunnel Michael, i really only had my self to blame for my account clean out.

I guess as far as working with others i haven't yet ran into them issues yet but i can see that ultimately you need the strength to do it by your self... i think i am still finding things out about my self atm

 

[MrDavid]

One of the interesting things about OTC CFD providers is that many of them only offer margin calls at their sole discretion.

However, given that we're confronted with a new poster that makes mention of a specific CFD provider and the Gold Coast, I can readily understand why one might choose to greet this account with a degree of scepticism.

Many have had experience of trading both CFD and demo accounts and then noticed a pronounced change in price action when real money comes into contention. The likely causes may not be limited to the emotional reaction to losses of real money. Those whom take the time to read and understand the relevant PDS and client agreement documentation will recognise other counterparty related factors that could account for the variance in performance between live and demo trading with OTC CFD providers.

The trader is of course still fully responsible for his/her trading decisions including (choice of FSP/Broker) and as such is fully accountable for his/her trading outcomes.

However, the true cause of the trader's failings may not necessarily be what the trader believes them to be!

In my experience, an ill-informed decision regarding choice of trading product (and/or provider of same), without giving due consideration to associated counterparty risks, can result in a trader having an (at best) confused impression of the true nature and cause for poor trading performance.

Its interesting you say this cause i have noticed small differences between the cfd spreads and the real market, like they sometimes skip major movement and hold onto price up to 5 seconds and other times its instant.. i guess its just being aware of price manipulation is the key. i dont think i can blame my blow out on the broker as after it happened it was pretty apparent to me it was my stuff up, i should have just stepped away from the machine when i blew my 4% of capital daily limit i had set in my trading plan... but no i had to try and chase the loss

 

[skc]

Many have had experience of trading both CFD and demo accounts and then noticed a pronounced change in price action when real money comes into contention. The likely causes may not be limited to the emotional reaction to losses of real money. Those whom take the time to read and understand the relevant PDS and client agreement documentation will recognise other counterparty related factors that could account for the variance in performance between live and demo trading with OTC CFD providers.

The trader is of course still fully responsible for his/her trading decisions including (choice of FSP/Broker) and as such is fully accountable for his/her trading outcomes.

Anyone trading an OTC product without looking at the real underlying is just plain ignorant. That included myself in my first 6 months of trading :

 

[TheUnknown]

A little off topic but Rivkin Global gives out CFD/FOREX signals, they seem to be doing good considering how risky cfd/forex is some people are trading that platform with over 1mil in cash

It all comes down to how much draw down you can handle 15%-20% drawdown is big.

They returned something like 27% from april to dec 2013.

 

[cynic]

Anyone trading an OTC product without looking at the real underlying is just plain ignorant. That included myself in my first 6 months of trading :

Yes! Many of us have been there and done that!

I am continually amazed by the number of people whom accept the verbal sales pitch as gospel whilst at the same time refusing to believe the written content of the PDS.

 

[>Apocalypto<]

Hi Guys & Girls,

I just thought i would introduce my self and share some of my first experiences to day trading.


Dave

hey Dave,

Sorry to hear you have learned by baptisim of fire. it's never nice. Congrats on sticking with it. Most would call it a day after that.

I trade tiny accs atm and have been through the ringer a few times also made some excelent profits. had a few 20-30k accs dusted a 9k acc once. (felt great)

FOREX, hard as it comes on anytime frame even harder on shorter ones. advice don't try to trade under 1 hour. try to foucs on one pair one time frame. I spent a lot of time on the 1 min 5 min. TBH never made anyting, cuz if the counter moves dont get you the ranges will. Most of the time its the ranges in FX that do the most damage as you swing from trade to trade.

keep us posted on your travels.

 

[Valued]

Anyone trading an OTC product without looking at the real underlying is just plain ignorant. That included myself in my first 6 months of trading :

I have found IG to directly reflect the underlying on stocks. They say their spread is the underlying spread in the PDS (on stocks, obviously not on things that have no commission just a spread). I even had Iress open today beside my CFD account since I wanted a tick chart and it represented the buying price for two different stocks exactly. The data they use is the ASX level 1 data too for market maker.

I have heard bad things about CMC though.

Question: Why do people say forex is so difficult? Is it because it tends to lend itself to day trading/very short term trading? If you trade for big moves I don't see how the technical analysis is any different than with a stock. I haven't traded forex before though but I have an order in to short a currency pairing right now and I am trading it on the same basis I would trade anything else that has a chart. Getting tick volume data is a pain though since I don't want to pay for it lol. I don't day trade though. I like to sleep on a decision so I trade mostly the daily/weekly charts.

 

[CanOz]

Question: Why do people say forex is so difficult? Is it because it tends to lend itself to day trading/very short term trading? If you trade for big moves I don't see how the technical analysis is any different than with a stock. I haven't traded forex before though but I have an order in to short a currency pairing right now and I am trading it on the same basis I would trade anything else that has a chart. Getting tick volume data is a pain though since I don't want to pay for it lol. I don't day trade though. I like to sleep on a decision so I trade mostly the daily/weekly charts.

Intraday forex is a tough gigg i reckon. I've seen Nick Radge trade forex and futures the same as stocks EOD. He just uses his Power Setups on them, basically pattern trading.

Intra-day there are many other factors such as stop running, smack downs, open swings, lulls during lunch....price getting stuck in value and chopping you to bits as you try and jump on a non-existent breakout....

I find Index futures easier to spot the same plays over and over....but i don't watch the FX market that much.

 

[Valued]

Intraday forex is a tough gigg i reckon. I've seen Nick Radge trade forex and futures the same as stocks EOD. He just uses his Power Setups on them, basically pattern trading.

Intra-day there are many other factors such as stop running, smack downs, open swings, lulls during lunch....price getting stuck in value and chopping you to bits as you try and jump on a non-existent breakout....

I find Index futures easier to spot the same plays over and over....but i don't watch the FX market that much.

Yea, intra day trading isn't really for me. I have been surprised by the power of up-thrusts that occur during the day. I had to widen my stops in the US markets since I underestimated how volatile it gets. If you set your stop the same way you set it on the ASX, you get stopped out on early morning trade. The price thrusts up and comes crashing back down. I have gone to bed and been close to getting stopped out only to finish in profit. That sort of thing is why I hate to watch the markets during the day. It would just be an emotional roller coaster. I like to set my trade and walk away. I also like to spend time looking at the charts and calculating risk. To do all that intra day very quickly I would consider to be quite difficult. Good on any person who day trades and profits from it and enjoys it. Trading that way certainly is not for everyone.

 

[CanOz]

It would just be an emotional roller coaster.... To do all that intra day very quickly I would consider to be quite difficult. Good on any person who day trades and profits from it and enjoys it. Trading that way certainly is not for everyone.

Yes, there are only a very unique few (two or three) on this forum that can and have done it well...professionally, day in and day out with Other Peoples Money for more than a few years.

 

[MrDavid]

hey Dave,

Sorry to hear you have learned by baptisim of fire. it's never nice. Congrats on sticking with it. Most would call it a day after that.

I trade tiny accs atm and have been through the ringer a few times also made some excelent profits. had a few 20-30k accs dusted a 9k acc once. (felt great)

FOREX, hard as it comes on anytime frame even harder on shorter ones. advice don't try to trade under 1 hour. try to foucs on one pair one time frame. I spent a lot of time on the 1 min 5 min. TBH never made anyting, cuz if the counter moves dont get you the ranges will. Most of the time its the ranges in FX that do the most damage as you swing from trade to trade.

keep us posted on your travels.

Thanks for the advise mate, i still got so much learning to grip this... but i enjoy it so much more than my drafting day job.

 

[Trembling Hand]

Intra-day there are many other factors such as stop running, smack downs, open swings, lulls during lunch....price getting stuck in value and chopping you to bits as you try and jump on a non-existent breakout....

I find Index futures easier to spot the same plays over and over....but i don't watch the FX market that much.

I think Forex market go through greater Regime change than other markets. Stocks are more volatile when you look at the daily % moves but the rate of change of the change of Fx is far greater. If that makes sense?!!

You have to be constantly adjusting your expectations of each bars possible range from the last 10-20 bars to the next bunch. That is why day trading in general is so hard. People think 'how hard could it be, it can only go up or down'. I often think it can go any of 7 ways (or maybe 7 dimensions is a bet way of explaining it.....) Actually maybe I'll explain that one day.....

 

[CanOz]

I think Forex market go through greater Regime change than other markets. Stocks are more volatile when you look at the daily % moves but the rate of change of the change of Fx is far greater. If that makes sense?!!

You have to be constantly adjusting your expectations of each bars possible range from the last 10-20 bars to the next bunch. That is why day trading in general is so hard. People think 'how hard could it be, it can only go up or down'. I often think it can go any of 7 ways (or maybe 7 dimensions is a bet way of explaining it.....) Actually maybe I'll explain that one day.....

This describes it better than i can, the regime changes are what make it look so chaotic to me....thats why its difficult to explain why its a tough market to trade. The guys i have heard to that are successful emplot longer times frames which i guess, would get over some of that....perhaps?

 

[MrDavid]

I think Forex market go through greater Regime change than other markets. Stocks are more volatile when you look at the daily % moves but the rate of change of the change of Fx is far greater. If that makes sense?!!

You have to be constantly adjusting your expectations of each bars possible range from the last 10-20 bars to the next bunch. That is why day trading in general is so hard. People think 'how hard could it be, it can only go up or down'. I often think it can go any of 7 ways (or maybe 7 dimensions is a bet way of explaining it.....) Actually maybe I'll explain that one day.....

Minute Trading does seem pretty hard, i found i was getting much better chances of returns when i was swing trading but i had to set my trailing at a much looser rate to not be stopped out all the time.

I kind of like the excitement of training short periods, at the moment i spend about 3 hours every night of the week trading and the more i do it the more i seem to be able to make better choices... but damn the EUR/AUD is a moving awesomely at the moment.