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MadMarketScientist

I'm An Idiot

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Yes, it's confession time.

 

I normally pride myself on being a pretty good trader. I don't make many errors, and have learned to stick to my trade plan - thick or thin. And it has rewarded me nicely.

 

Today I really swung - and missed. Idiotic.

 

For some reason I had it in my skull that the FOMC meeting announcement was yesterday. Why? I actually have a good reason why my brain farted that thought out -- trust me in there is a reason.

 

However, how dumb for me to be cavalier and not check the economic calendar:

 

http://www.traderslaboratory.com/forums/calendar/

 

Duh. Right there in just a few seconds I would have corrected my idiocy. But, no, instead I ended up trading THROUGH the announcement. Something I would never in my right mind do.

 

Well, was trading Crude Oil and going about my business having a pretty good day so I was pressing my luck anyway trading in the afternoon (I thought I said I follow my trade plan :) and I was long and then the announcement hit and it dropped like a rock through my stop. Which happened to be a reversal I set up -- which happened to have slippage of epic proportions.

 

By the time I realized what happened I was down significantly - as in wiping out a weeks worth of profits. Thousands gone bye bye in seconds.

 

Then, my idiocy continued. I was mad. So I figured I'm going to be a bigger idiot and start trading it actively while the market was still freaking out because maybe I'd get lucky and catch a big runner. Let's see, within another 90 seconds I was down about two weeks worth of profits.

 

So by the time the dust settled I was down big on the day. Probably my single worst one day loss certainly since I became an experienced trader.

 

Do I know I'll comeback? Yes. My earnings are somewhat reliable but I know it will take me 2 weeks without forcing things with bigger position size. And, hopefully I'm over my idiot disease and won't do that.

 

Lesson? Check the damn news - you've heard it a million times I know. But, check the damn news.

 

MMS

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Yes, it's confession time.

 

...

 

For some reason I had it in my skull that the FOMC meeting announcement was yesterday. ...

...

MMS

 

sorry dude, I usually post a reminder in the morning... but didn't bother today.

 

next time....

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Good Post MMS.

 

Two bits of idiocy there and for new traders the second bit is more important that the first because so many do it. The revenge trade.

 

When we experience emotional pain; out of the market depression; disgust at our error generated loss; we desperately want to get in and get it back.

 

Even when we don't feel the emotions imprinting from earlier trades will cause it to happen. This is my greatest error ... turning a small loss into one two or three times bigger. It's so big for me that I have written software to take me off line after a losing trade. I have the discipline then to stay off line for a cool down period but if I keep watching the market I have an uncanny ability to clearly see the next obvious trade ... only to find a loser three times out of four.

 

In the old days, before I constructed my emotion detecting and despising headmistress, I used to get some spectacular recovery winners. But they are the worst because they reinforce a bad habit. And, warmed by those recoveries I would do it a few more times over the next days until I had lost far more in reentries than I had won. If you have this conditioned response then you must stop it! :)

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MMS

 

Please consider to have a scrolling calendar for the current day on the front page of thy website. Further you can consider to expand or pop it if you hold your cursor over it for couple of seconds.

 

Ta Minoo

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Good suggestion on the top news being on the frontpage. I'll look into it -- and then I'll actually need to look at it :crap:

 

Kiwi, you nailed it on the revenge trade. It is a battle -- it has taken me years to not do that 'most' of the time -- let's say 95%+. However sometimes all the training and discipline in the world gets thrown out the window. And, I can't tell you how many times that approach fails. But human nature reaches for and holds onto the few times it works. If it never worked it would be easy - the pain would always be there. Unfortunately it works on occasion. Like going to Vegas and winning a bunch on one sitdown at the tables -- and suddenly you think you can earn a living because you're such a card shark. Holy crap moment comes thereafter.

 

Tomorrow starts day 1 of the recovery. Just gotta check the news AND avoid temptation to "expedite" my recovery.

 

MMS

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Just a suggestion: Since I am on PST time, and unfortunately most news releases around 5 am PST, I found it very helpful to print out economic calendar, where I highlight news times and which reminds me when next day's news are at the close of my work day.

 

tradethenews is my fav..kept me out of trouble quite few times due to instant, not delayed news release.

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MMS,

Sorry to hear. It pains more especially when loss is due to something in retrospect could have been avoided.One thing that helps me as quick aid psychologically is to think/write what would I say to a good friend of mine who is currently in my situation.

 

I try to side step news issue a bit differently. May be dumb rule but simple and so far worked for me - Daily I take a 5 minute break from 6.59 AM PST - 7.04 AM PST . (Note: My trading hours are 5.35AM PST - 8.00 AM PST).

 

Who knows it might happen you recuperate the loss faster than you thought with an added benefit of more stronger resolve.

 

Good Luck.

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Wow I hear ya MMS, I too had a pretty horrible day. My biggest losers, have both been fomc days. Every month, I tell myself not to trade them, but still do. Even if I make a little, easily lose 10 times that on the bad trade. Anyway, I guess I'm getting to the point that, lessons, are often very expensive (financially, mentally, emotionally, and even physically), but they need to be learned. I jus wish I could learn them a bit faster, and not be a donkey. Like you, I'll make back my losses, and then some. I'm in this for the long haul.

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My rule on FOMC days is I like the movement but it's not tradeable right at announcement time - and it's usually downright awful the hours leading up to it. So, I wait a minimum of 10 minutes after that announcement, sometimes up to 15 minutes and then I start to trade -- it usually moves great on multiple markets after that time and you actually can get standard fills.

 

My rule on other important reports tends to be 5 minutes - that's usually more than enough time for things to settle down -- and I have a rule to NEVER trade right at the announcement or just before since you're no better than flipping a coin then.

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The good news from this story is since the debacle yes, I have paid attention to the news -- let's say with a renewed motivation!

 

Last few days much better for trading as a result of not breaking the plan. Can't say Friday trade in CL was the greatest -- after the first 90 minutes of spiraling nowhere, it finally did let loose a little and recovered to positive for the day. Today has been fine, also trading some natural gas which just has moved better last few days than Crude. They tend to go in and out of favor so I keep an eye on both if I'm trading energies.

 

Which of course means other reports/news I need to be aware of!

 

MMS

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