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rxs0005

When Does One Start to Make Money

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Hi all,

 

i am in the stage of my trading history where i am Not losing money big time , i would say i have graduated from losing money recklessly by not sticking to my sell stop , being greedy , gambling , being impatient all the bad stuff.

 

I have eliminated all that of course with a cost! and now i am consistently not losing money i am about break even on my trades.

 

I am sure all your seasoned traders have gone through what i am going through my Q is when do i start to make money or rather how do i get into the realm of profitability since i have stopped the bleeding now what do i need to do to get on the green side of the curve from your opinion and experience

 

thanks y'all

 

rxs0005

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in general terms,

if you can survive not bleeding for one business cycle... you will be ok.

 

 

otherwise the simplistic lessons you have learned in the down cycle will

get you into the same naive trouble in the up cycle... etc.,

because the up cycle will behave slightly differently than the down cycle, etc.,

 

just my 2c

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Trade real money, and trade small until you get the feel of it.

 

Scaling up requires emotional capital as well, so you'd better know what you're doing before you even go there.

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One way of stopping loosing money is by closing too soon (this has the side effect of stopping you winning money). I know I have been there. Are you following your plan or are you closing winners early?

 

examples.

 

Price is 7 ticks against me, comes back to 2 ticks profit, phew I 'll close for a small profit.

 

Last trade was a looser this one is up by the same amount, I don't want another looser, I'll close now.

 

etc.

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This might sound kind of corny, but for me, I need to be solid as to 'why I am trading in the first place.' In my view, there is only one legit reason to trade and that is 'to make money.' Once I struggled for a good long while, I had to come full circle to see if my results might be due to having a different reason for trading then just, to make money.

 

IMO, if you are truly trading just to make money, then the next logical question should be, 'What do I need to do to achieve that objective?' Again, IMO, you need to have a system that gives you a statistical edge in the market. Then you trade the edge of your system. Trades will win and lose but the edge of your system will make you money over time if you keep your risk at the proper levels. Then you will make money and achieve the reason for trading in the first place.

 

I hope this doesn't sound too abstract or hokus pokus but it really does work if you have the confidence (and capital) to stay with your system and trade it accurately. If you don't have the confidence, go back to the initial question, why are you trading? No confidence = no money = 'you better stop trading' because you won't achieve your objective. To get confidence, again IMO, you have to backtest, backtest, backtest, so that you have enough vision to understand the EDGE of your system. Just like the casino, if you have an edge, than you have the 'house' odds on your side and that's where you will make your money and achieve the reason for trading.

 

Rememer, we have no control over whether any trade will win or lose. All we have control over is the ability to put the odds in our favor on every trade, control our risk so that we don't blow out our account, and take the next trade as per our backtested tradeplan. As traders, what more can we do?

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rxs0005, in my opinion, if your system is earning money in backtest and you're not earning money in real trading (although not losing), you simply have to find out why - what you do differently in your backtest than in real trading. And if you find this reason, work on it. That's all.

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Hi all,

 

i am in the stage of my trading history where i am Not losing money big time , i would say i have graduated from losing money recklessly by not sticking to my sell stop , being greedy , gambling , being impatient all the bad stuff.

 

I have eliminated all that of course with a cost! and now i am consistently not losing money i am about break even on my trades.

 

I am sure all your seasoned traders have gone through what i am going through my Q is when do i start to make money or rather how do i get into the realm of profitability since i have stopped the bleeding now what do i need to do to get on the green side of the curve from your opinion and experience

 

thanks y'all

 

rxs0005

 

Whats stopping you?

 

Either:

a/ you hang on too long letting the good ones turn bad or scratch.

b/ Your wins dont cover your losses, because you get out too soon.

c/ Your win rate (timing) needs improving as your risk is the same as your target.

 

In my opinion, not losing money is the most important part. If you have realised how to stop this, the other bit should follow soon.

 

Just my :2c:

 

Good luck

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One way of stopping loosing money is by closing too soon (this has the side effect of stopping you winning money). I know I have been there. Are you following your plan or are you closing winners early?

 

examples.

 

Price is 7 ticks against me, comes back to 2 ticks profit, phew I 'll close for a small profit.

 

Last trade was a looser this one is up by the same amount, I don't want another looser, I'll close now.

 

etc.

 

Blow,

You hit one of the nails on the head! I have seen this and done this soooo many times. Trading is probably one of the hardest jobs or things to do! It is so unnatural. To stick to a plan, to take heat well, to over ride your emotions when you are in a trade or to ignore your gut feeling that the market will come back as you move your stop further and further, or add another position.

Now, back to not losing money and at the break even stage. You have crossed the first stage. Now, stick to your plan and if your system, that you backtested and know you have the edge, will start to bring in the money. Again, stick to the plan. Journal, every day and make sure you are not making mistakes or breaking the rules. If you do. Penalize yourself, by not trading the next day. Focus on your trade plan and your emotions. Then you will come out ahead more often than not.

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Hello. You are in the middle zone in your trading life. A good thing.

 

Regarding the next level up you will have to hone your method and then your belief in your method. In that order.

 

Failing that you will need mentoring. Much like the reason a student attends a formal school environment. Yes, one can learn an entire high school curriculum one ones own but why not have some highly experienced help to guide you through the tight spots and blind sides that you are bound to encounter along the way.

 

My trading epiphanies (2) occurred within the framework of two different trading rooms. Previous to that I was trading and learning on my own and doing what I believed was not so bad. A near IMMEDIATE difference was noted shortly after attending one of the many paid trading rooms out there. This clarity was further extended upon finding another room when the learning resources of the first room were all absorbed, digested and applied.

 

In my opinion one usually gets what one pays for. Unless one is exceptionally intelligent and gifted. However that I am not (gifted). Bottom line, why go through the lengthy time and Hell your mentor went through when you can piggyback training wheels and all to where you want to be in your trading world? It really is worth it. In the end it's your time which is more valuable than your money. Think about this carefully.

 

I hope this opens some major channels for you.

 

Take care. Trade the good trade and make the day!

 

TS.

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Really great advice from everyone. This is why I love this site! I'm a fairly experienced trader but I always learn new things here or at least, find reaffirmation about very important trader wisdom. Most of it is common sense but as humans, we often forget common sense. One of the first things I learned in business what that you have to learn how to not lose money before you can learn how to make money. Same with trading. Losing a trade does't lead to losing money. In fact, it's the opposite. You have to trade through losses to get to your winners. What's important is to trade your plan accurately and make your money as the edge of your system works for you over time. Imagine if you are one of the lucky ones who has a trade method that wins 62% of the time. You have learned enough to know that you must control your risk appropriately. You should be able to be very successful with that formula. But, be at peace with the other side of the equation. You can't divorce yourself from the 38% of the trades that you are losing, or you will not get the 62% winners. They are integrally related. Joined at the hip! By losing the 38% of your trades side of the equation, in this scenario, you are making a fortune with the 12% edge your system is giving you as you trade it, day after day. That is common sense but it is too easy to forget when you are in the midst of your 3rd loss in a row, which by the way, is very, very common in this winning strategy's day to day routine.

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Really great advice from everyone. This is why I love this site! I'm a fairly experienced trader but I always learn new things here or at least, find reaffirmation about very important trader wisdom. Most of it is common sense but as humans, we often forget common sense. One of the first things I learned in business what that you have to learn how to not lose money before you can learn how to make money. Same with trading. Losing a trade does't lead to losing money. In fact, it's the opposite. You have to trade through losses to get to your winners. What's important is to trade your plan accurately and make your money as the edge of your system works for you over time. Imagine if you are one of the lucky ones who has a trade method that wins 62% of the time. You have learned enough to know that you must control your risk appropriately. You should be able to be very successful with that formula. But, be at peace with the other side of the equation. You can't divorce yourself from the 38% of the trades that you are losing, or you will not get the 62% winners. They are integrally related. Joined at the hip! By losing the 38% of your trades side of the equation, in this scenario, you are making a fortune with the 12% edge your system is giving you as you trade it, day after day. That is common sense but it is too easy to forget when you are in the midst of your 3rd loss in a row, which by the way, is very, very common in this winning strategy's day to day routine.

 

That's an excellent dissection of the numbers.

 

Once you know as a trader what your win/loss rate is, then you have an idea of what to expect over time. For example, I know that if I can win just 34% of the time, I can break-even. Why do I love knowing that? Bc it doesn't take much just to break-even and everything over that is profit. I can go 40% in a day and come out ahead - even though I lost 60% of the time. Obviously the goal is to win as much as possible, but it's also important to know your numbers as a trader.

 

As you gather your numbers and know what they are averaging, it makes it a little easier when you take a few losses in a row. It's not easy mentally when you take a couple shots and lose to take that 3rd or 4th shot, but if the numbers back you, it's a little easier to fire that bullet.

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AmCan1, seems like you know most of which you need to do to do what you want to do.

 

Now, do you know what to actually do to get to where you want to go? Can you and will you do that effectively or will you continue to do what you've been doing, expecting different results?

 

These are things you will have to honestly consider. If you believe you will improve doing the same old, well...

 

You will have to do something which you have not done yet to get that jolt and thrust you into the next realm.

 

I did more or less the same old for years and kept expecting better/different results. It does not work. It's delusional.

 

My jolt was the live paid room which gave me the horse power to realize the potency of that room/idea. Knowing this I searched for a better room after the first one was exhausted. In the past I was very adverse to paying for a trading room. That was a naive and stupid notion. I wish I was not so financially closed minded in retrospect. The fact I was paying a monthly fee seemed to wake me up to what was being taught there, the visible results of that and hence the eventual epiphany. That room within a few months saved me years of the same old and its associated losses/frustrations that kind of thinking and activity brings.

 

Different things/activities/angles really do bring different results.

 

Think about what you are not doing and then try that.

 

Good luck in your quest.

 

TS

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Bottom line, why go through the lengthy time and Hell your mentor went through when you can piggyback training wheels and all to where you want to be in your trading world?

 

One additional note, finding that person/room can take some work, so ignore the amount of effort and inevitable frustration it takes to uncover that pearl of great price.

 

Also, you will find many mentors lack bedside manor. If this offends you, you will miss a lot of what you are paying for. If their trading style seems very different to you, give the osmosis process a while to work; not forever, but long enough to decide. Google the heck out of them before handing over money.

 

The very best learning experience is a very small group of folks, focused (major point!!) and passionate about trading success. My own Skype group is a huge help to me, none are professionals, but we are all avid readers of market literature, and bring a lot of trader experience to the session every day. We have all had a stint or two in mentoring programs, and now just try to put it into practice.

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Hey InGodsfavour,

 

I'm always looking for a good traderoom to check out. Do you mind sharing info on the traderoom you speak of? I'm new to TL and hope that it is ok to share such info if a member asks, unsolicited. I think traderooms can help you if they're good but like anything else, you need to fully understand what they are doing. I don't mean just the trades they are calling but actually having some broader vision as to the edge that their trade system has over time. That is where the money is made, traderoom or not.

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In order to make money, you need to not be afraid to lose it.

 

What do I mean by this? Simply that you have a money management plan where you can calculate the number of shares to buy/sell in relation to your entry price and stop loss so that the amount you risk losing is fixed...every time.

 

For example, I have a trading account of $200,000. I tell myself I cannot lose more than 2% of that capital per trade, which is about $3800 per trade. What I do then is subtract my entry price from my stop price, then divide $3800 by that, which gives me the number of shares I can purchase.

 

So, If DIA is trading at $100.00 and my trading setup indicates a stop loss at $99.50 is needed, I then subtract $100.00-$99.50 = $0.50. Dividing $3800 by 50 cents then gives me 7600 shares, which is how many shares I can buy that will result in a stop loss of $3800 if my stop is hit. (Not including commissions, of course.)

 

If you do this for every trade you take (assuming your setup is a throughly robust and backtested system), you in essence 'fix' your loss per trade at a known number, which in my case is a meager 2% of my trading account (I would have to lose 52 trades in a row to lose all my trading capital, which is impossible with a good system!) This enables you to have the courage to take the trades you are required to by your system.

 

Remember, money management is a key thing to keep from going broke, but again, you need a thoroughly backtested and robust system where the percentage winners and losers, as well as the win/loss ratio of the system all need to be accounted for in order to successfully trade. Once you have all these things coupled with flawless execution of your plan, you will begin to make money on a constant basis.

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If you are consistent and using a system you should be able to pinpoint problem areas to take you to your next step. I would work just on one area at a time.. like improve your entry or work on a more dynamic way of setting stops or figure out how to exit better.. if you incrementally improve these areas one at a time you should move to the next level.

- RLT

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