Lost 4 lakhs in trading and requesting for help in recovering it

#1
I have been in the market for a few years and have managed to blow away 4Lakhs so far.
Although thats not in 1 go, have managed to get wiped out many times. Net result - 4 lakhs loss

A few months back i took a break from market and made an analysis of the trades made.
After doing analysis and drawing conclusions, have learnt the lessons and would like to start afresh with a trading plan

I would request all the seniors on the forum to help me to learn, to improve myself and finally achieve the aim to not only make up the lossess but also to
start making profits :)

However first I would like to post my analysis of my trading activities so far:

Mistakes Made:
---------------

1) Traded based on tips
2) Traded in multiple segments at a given time, long term equities, short term, intraday, futures, options
3) Overtrading

Then started trading with Technical Analysis, traded every possible combination of indicators. That would work for a while and would eventually end in losses. The common mistakes made in all these were:
4) Trading with mental stop losses
5) Holding onto losing trades with the hope that it would reverse. Some did, most didnt, heavy losses
6) Cutting winning trades too soon, then cursing luck for not holding onto those :)
7) Over confidence - If a strategy gave winning streak for a while, then would trade without following rules.. just for once and that wud result is giving up all the gains made in the winning streak
8) Bending rules, throwing caution to wind and going for broke--- this was done more in options trading
9) Entering into trade early or too late
10) Even with trading using technical analysis, repeated mistakes 2 and 3


CONCLUSIONS:
-------------
After realising the above, have come to a few conclusions. It would be of great help from seniors to guide me if I have made the right conclusions and also if there is anything obvious that I havent yet realised

1) From the mistakes made using the TA approach, it was clear that the approach or the system was not at fault. The reasons none of the trading strategies worked are as follows:
a) Most important- No money management
b) Stop loss needs to be put into the system and should not be a mental stop loss
c) Bending/breaking rules--- Too many time traded with mindset" Lets break the rule.. just for once, no harm in taking one risk". This according to me was a major factor in the losses

2) Stress: I found that intraday trading either in equities or in F&O segment was very stressful. Well..., positional trading in F&O was much much more
stressful. I would spend the entire day in front of the terminal looking at each tick and with each tick
For the moment, it will be good for me to stay away from intraday in equities and entirely away from F&O.

3) Trading System: I dont need to have the most complicated trading system to be successful. Nor do I need to invent a new strategy or indicator. There are enough of these already
Every trading system has its positives and negatives. It is important to stick to a strategy with following the rules. Fine tuning a strategy based on analysis will help rather than switching a strategy.

4) Money management: A simple strategy will give give good results with proper money management. i.e protecting capital first and then trying to increase it. Every strategy will give losses. To be successful, net gains have to outweigh the net losses.

5) It is difficult to elmininate greed, fear, hope and anxiety from trading. However I need to learn how to control these to be successful


WHAT NEXT:
----------

After the above, here is my plan:

1) Start trading in equities with Rs 20k for short term trading.
2) Use some basic indicators such as EMA/MACDto set entry and exit rules. Focus more on money management i.e decide hw much to risk per trade.
3) When to exit will be a tricky. Focus on improving this.


Requesting all seniors for inputs
 

iyerboi

Active Member
#2
Friend, i may not be a senior to give u advice. but the stress part - think u shd be able to control by takin positions based on ur risk bearing ability - i.e dont take positions of size tat would cause u stress. Feel comfortable abt the amt u mighy lose in a trade. trade oly with ur risk capital i.e. money u can afford to lose.

A recent book i read asks to focus on consistent small profits rather than the elusive home run trade. The mistake all we novices make is to think of market as a get rich overnight scheme.

Imho dont keep thinkin of makin up the 4 lacs lost. its oly gonna contribute to yr stress levels. jo gaya woh gayan. dont treat this is as a revenge comeback. market is always stronger.

The above are not my wise words but wht ive seen/read and someth i can easoly relate to.

Goodluck with ur new stint :thumb:
 

FanaticTrader

Well-Known Member
#3
I have been in the market for a few years and have managed to blow away 4Lakhs so far.
Although thats not in 1 go, have managed to get wiped out many times. Net result - 4 lakhs loss

A few months back i took a break from market and made an analysis of the trades made.
After doing analysis and drawing conclusions, have learnt the lessons and would like to start afresh with a trading plan

I would request all the seniors on the forum to help me to learn, to improve myself and finally achieve the aim to not only make up the lossess but also to
start making profits :)

However first I would like to post my analysis of my trading activities so far:

Mistakes Made:
---------------

1) Traded based on tips
2) Traded in multiple segments at a given time, long term equities, short term, intraday, futures, options
3) Overtrading

Then started trading with Technical Analysis, traded every possible combination of indicators. That would work for a while and would eventually end in losses. The common mistakes made in all these were:
4) Trading with mental stop losses
5) Holding onto losing trades with the hope that it would reverse. Some did, most didnt, heavy losses
6) Cutting winning trades too soon, then cursing luck for not holding onto those :)
7) Over confidence - If a strategy gave winning streak for a while, then would trade without following rules.. just for once and that wud result is giving up all the gains made in the winning streak
8) Bending rules, throwing caution to wind and going for broke--- this was done more in options trading
9) Entering into trade early or too late
10) Even with trading using technical analysis, repeated mistakes 2 and 3


CONCLUSIONS:
-------------
After realising the above, have come to a few conclusions. It would be of great help from seniors to guide me if I have made the right conclusions and also if there is anything obvious that I havent yet realised

1) From the mistakes made using the TA approach, it was clear that the approach or the system was not at fault. The reasons none of the trading strategies worked are as follows:
a) Most important- No money management
b) Stop loss needs to be put into the system and should not be a mental stop loss
c) Bending/breaking rules--- Too many time traded with mindset" Lets break the rule.. just for once, no harm in taking one risk". This according to me was a major factor in the losses

2) Stress: I found that intraday trading either in equities or in F&O segment was very stressful. Well..., positional trading in F&O was much much more
stressful. I would spend the entire day in front of the terminal looking at each tick and with each tick
For the moment, it will be good for me to stay away from intraday in equities and entirely away from F&O.

3) Trading System: I dont need to have the most complicated trading system to be successful. Nor do I need to invent a new strategy or indicator. There are enough of these already
Every trading system has its positives and negatives. It is important to stick to a strategy with following the rules. Fine tuning a strategy based on analysis will help rather than switching a strategy.

4) Money management: A simple strategy will give give good results with proper money management. i.e protecting capital first and then trying to increase it. Every strategy will give losses. To be successful, net gains have to outweigh the net losses.

5) It is difficult to elmininate greed, fear, hope and anxiety from trading. However I need to learn how to control these to be successful


WHAT NEXT:
----------

After the above, here is my plan:

1) Start trading in equities with Rs 20k for short term trading.
2) Use some basic indicators such as EMA/MACDto set entry and exit rules. Focus more on money management i.e decide hw much to risk per trade.
3) When to exit will be a tricky. Focus on improving this.


Requesting all seniors for inputs
Well looks like you have had a good retrospection & I am sure with all the things in place you should be able to recover the losses. All I can say is If you ignore how much money you are making or losing on a trade and just focus on execution, the money will take care of itself. It's that simple.
 
#4
Trade small,dont risk more than 0.5 to 1 % of your capital on ant single trade,play great defence, try to be profitable every week if not every day....small profits fine but never a large loss you should have. Trade in one timeframe.....if you are daytrading, never say that if the trade fails, I will convert it into a swing trade....just get out of that trade.

In this business wealth is made by consistant returns...not by erratic drawdowns and ocasional big profit trades ( which may require taking large risks)

Best wishes for our success,

Smart_trade
 

iyerboi

Active Member
#5
Trade small,dont risk more than 0.5 to 1 % of your capital on ant single trade,play great defence, try to be profitable every week if not every day....small profits fine but never a large loss you should have. Trade in one timeframe.....if you are daytrading, never say that if the trade fails, I will convert it into a swing trade....just get out of that trade.

In this business wealth is made by consistant returns...not by erratic drawdowns and ocasional big profit trades ( which may require taking large risks)

Best wishes for our success,

Smart_trade
STji, how do u set ur stop losses? It really hurts when the trade kisses ur SL and then turns profitable. the thing is, once u r stopped out you lose confidence in the trade and are left a mere spectator.

Infact this is how ive been enticed into the big losses. A couple of straight losses, and im tempted to remove the sl. things go fine for a week and then comes the huge loss. :mad:
 

spiritunit

Well-Known Member
#7
Trading is playing like a chess game, every game (trade) is different. Once, it shows bad trade and the other it shows good one. There is no exact formula or method to be 100% successful trades or traders out there.

Trading is about mainly money management, mental testing, experimenting. I see people doing great with paper trading and starting to loose on real traders, as because, while on paper trading there is no mental testing and expecting the same result on real traders (as said above its chess game, it can be different next time)

Tips is easiest thing to give, so here it goes..
1. There is lots of TA tools, try to experiment with each of them and find the one that gives most success rate.
2. While on experiment, only invest 20% of the capital.
3. Before placing the buy order, decide yourself, how much can I loose in this trade 1%, 5%, 10% and when it happens close your positions (here comes the mental play). I suggest, since in experiment you should cut your losses at 1%
4. If you're planing for swing trading, try to hedge your positions. For ex, if you have positions in stocks, futures... hedge them with options.
 
#8
STji, how do u set ur stop losses? It really hurts when the trade kisses ur SL and then turns profitable. the thing is, once u r stopped out you lose confidence in the trade and are left a mere spectator.

Infact this is how ive been enticed into the big losses. A couple of straight losses, and im tempted to remove the sl. things go fine for a week and then comes the huge loss. :mad:
Keep your stoploss at important chart based levels such as swing high/lows and if these stops are hit, we take the loss and quit the trade. Getting stopped out on the lowest/highest tick of the day is very bad but it is essential to take that loss if one has to survive in this game for long . Every trader experiences these frustrating moments....but stop keeping the stoploss and it is guaranteed that one will blow up his account sooner than later.We must re-enter if the market starts going in the anticipated direction. If the stops are hit too regularly it either means that the market is too volatile and choppy.....or we are trading on noise and too close stoploss. In sideways markets also stops are hit..and it is better to stay away in sideways period and trade the trending phase. There are many proven ways of finding out when the markets are trending and in sideways phase.

Stoploss is absolutely necessary. I have yet not seen a trader who is successful with trading without stoplosses......so no choice my friend...:)

Smart_trade
 
#9
Keep your stoploss at important chart based levels such as swing high/lows and if these stops are hit, we take the loss and quit the trade. Getting stopped out on the lowest/highest tick of the day is very bad but it is essential to take that loss if one has to survive in this game for long . Every trader experiences these frustrating moments....but stop keeping the stoploss and it is guaranteed that one will blow up his account sooner than later.We must re-enter if the market starts going in the anticipated direction. If the stops are hit too regularly it either means that the market is too volatile and choppy.....or we are trading on noise and too close stoploss. In sideways markets also stops are hit..and it is better to stay away in sideways period and trade the trending phase. There are many proven ways of finding out when the markets are trending and in sideways phase.

Stoploss is absolutely necessary. I have yet not seen a trader who is successful with trading without stoplosses......so no choice my friend...:)

Smart_trade
Let me add to that..most people have no idea where to set the SL on charts.

you cannot set SL at some arbitrary position.

This is where the problem is. To set correct SL, you must have good understanding of Support and resistance.

if your SL is set just below or above a good S/R level and it gets taken out, then that trade was most likely not going to work, so back to the drawing board....

visit my thread on PA trading method with S/R,I have just the thing on trade management, maybe i can help you set proper SL's.. and yes it will take practice..Setting correct SL is not going to happen in a day.
 
#10
Hi All,

Thank you for all the suggestions and encouragement.
My apologies for not responding earlier, was occupied with work pressure.

Further, I have analysed my trades and have observed the following:

1) I tend to trade for a breakout(on either side). If this one hits the stop loss then I tend to trade for the range.
In most cases I have hit maximum stop losses in the above cases.

i.e I place a long order above R1 with target of R2 and SL as S1.
OR short order below S1 with target of S2 and SL of R1

In breakout cases I have had some success with this, but most cases I have hit the SL.

And more than 60% of my trades have been based on this.
Also I have observed that I have switched between methods to calculate support and resistances quite frequently.

So looks like I happen to do what TraderDude has mentioned in the comment #9.

Further, I have observed that the highest profit in a single trade has been around 10% of total capital, where as the maximum loss made has been around 15%

But on an average profits have been abt 1-3% of capital, where as losses have ranged between 2-6% and I have had a lot of just about breakeven trades.
So, looks like this is the core issue :) that needs to be addressed first.

Thanks once again all of you for the suggestions.
Hope to get more knowledge from you all and become a better trader
 

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