Tuesday, September 06, 2005

Blown out...again

I found this post on Trader’s Paradiese

On September 5th, 10.11pm Anonymous wrote:

xxx xxxx.
you have mislead me just because i'm a new trader. i have lost all my money following your cci trades and calls.

Sorry, that I have to say this to the trader who posted this above, but you deserve it. And I can only hope you have something set aside to start again.

(And  I have to say Sorry to Woodie! I just took him as example. You can replace his name with any other trader or chatroom moderator, it’s always the same)

Following someone else to make/decide about your trades is a common failure on your way to become a trader. Just that a lot of prospective traders never are able to take the next step, because they have blown their account and had nothing set aside to start fresh.

What failure you ask:

1. You take no responsibility for your actions. You take the trade, you have to bear the consequences. But you blame Woodie for your actions.

2. You have no trading system. You want to trade Woodies system, following his calls. Forget it. You can use his system to build your own. But as long as you just follow his system, you won’t make it.

3. You have no money management system. If you would, you would have taken measures to avoid blowing your account earlier.

What to do:

1. Say goodbye to all chatrooms.

2. Analyze your trading and make a list, what went wrong. Why did you take each single trade. Did you adhere to your Stops, were the Stops to small, too big for the trade setup you traded. Meaning, would a wider stop have led to a profitable trade or was it clear, that the trade was a loser already before your Stop was hit. Did you hold your profitable trades until at least 50% of the potential maximum profit was reached? What was the maximum attainable profit for your trades and what did you get? And so on…Use my Homework spreadsheet to see what I mean.

3. Make a trading plan and decide which Setups you want to trade.

4. Setup your charts adding only the indicators you need according to your trading plan

5. Decide about the timeframe you want to trade and Sim-trade your setup until you have the statistics to prove, that your setup is profitable, that it gives you the edge necessary to survive in this business.

6. Open 2 accounts and start small. You’r a novice, a learner. You’r losses are your tuition fee to be paid to learn this business. But make sure you have something set aside to start your business, once you have learned trading, once you have found YOUR edge in the market.

Do your homework

and never ever let someone else make a trade for you.