Losing fast, losing big
From: Naturus admin <admin@naturus.com>
To: J
Subject: Need any help with Nat’s room?
Date: Mon, 14 Mar 2011 10:49:23 -0400 (EDT)
Hi J;
Now that you’ve had a few days in the room, I just want to check and make sure you are settling in ok. Are you? Please let me know if you need help with anything.
From: J
Sent: Wednesday, March 16, 2011 4:19 PM
To: admin@naturus.com
Subject: Re: Need any help with Nat’s room?
No : all not well. Monday Nat say in chat : “[11:33 am] Naturus -: 1281.25 is Feb month low
[11:33 am] Naturus -: fail to hold it, waterfall (In fact 81.25 did hold — admin)
[11:35 am] Naturus -: no buyers in this market so far”
I go short, market ends up for loss
Tues: “[08:00 am] Naturus -: we can go lots downside
[08:00 am] webster123456 -: k
[08:00 am] Naturus -: market is panic right now
I short.Market up all day. Lose $4000 in 2 days.
Nat say: [03:18 pm] Naturus -: 90% oversold again
[03:18 pm] Naturus -: bounce up 1 or 2 days and resume declining again
I get out all 40 puts prior close Tuesday.
Wednesday all day down I have no more trade capital. Me: CURSED BIG LOSER. not do well and feel muy muy mal. Does that explain how I am settling in?
From: admin@naturus.com
To: J.
Date: Thu, 17 Mar 2011 06:13:47 -0400 (EDT)
J, I am very sympathetic. Been there, done that. It feels awful. I know the subject is painful, but if you want to send me the details of your trades, I’ll go over them and try to help you figure out what went wrong. What is your trading background? Do you have much experience trading?
One thing I notice right away is that you seem to be trading large size for a new member. We advise everyone to use a simulation account to practice for the first couple of weeks until they get used to the way the room operates, and then start slow and small. 40 options is a fairly large position to trade right at the beginning.
One thing that might be helpful for you is to take a look at lessons 1 and 2 in the training course. Click the link in the main menu to access.Read through the first 2 lessons. Should help you.
Almost every trader has had the same experience at some point, so everybody knows how it feels. Doesn’t make it feel any better however.
From: J
Sent: Thursday, March 17, 2011 10:53 AM
BD: i have been trading (and losing) since 2000. It seems I hang onto (losing) trades for days / weeks only to exit DAY BEFORE they become winner. I do overtrade for my account size. $5K. This last trade was initiated to get back some quick $. eheh (sarcastically).
What bothered me most to the core is that I listened to Nat say “lots downside” early AM missing her prior comment that Tuesday would probably be upside. So I went short w/ puts because I cant financially short several es minis. I also misunderstood her meaning when she said “scalping short ….”. I took this to mean that predominant intraday trend was down, not up. To mean short on the way down, then exit as price temporarily breathed (stabilized) and go up before trending down. Therefore, on Tuesday, I was buying more puts all day as the market went up, and account down. Then Nat say: “Probably 1-2 day bounce” (being Wed,. / Thursday) before more moving down on third day (Friday). So I exited all puts and bought calls and got killed Wed.
Over 10 years: lost $.25M I have developed many poor habits which require unlearning. It’s not that I am new and can learn proper technique first. First I have to be debriefed,cleaned out, exorcised from trading demons. I watched the trend rise for months shorting and losing. When it occur (gravy trade) I was out.
I think when I re-enter her service, the chat room will be silenced, and I will pay heed only to her “Announcements”. The talking, chatting, opinions of others (who I take to be making $) are taken at face value and I am very easily swayed in any direction. I must turn off the background chatter and stay focused.
Sorry to cry to you. I am an engineer / surveyor by profession / schooling, and enjoy the numbers game. I just want to learn to be successful at it.
From: admin@naturus.com
To: J.
Date: Thu, 17 Mar 2011
Well J, when it happened to me, I cried out loud to everyone who would listen, so I understand the urge to lament in public.
As you say, you have *MANY* bad habits in there. You know what they are so I won’t go into detail. Just 2 quick observations:
1. I don’t think you have the fundamental concept that trading is a continuous process, not One Big Score. It certainly is not “bet everything on red and hope for the best.”
You need to be in the frame of mind where you understand that there are a couple of trades today and a couple more tomorrow and a couple more the day after that. You succeed (at least initially) by a succession of small wins and smaller losses. The first and most important part of this is risk control: limit the size of your losers.
2. Any emotion — any: joy, fear, anger, greed, the lust for revenge, despair, irrational exuberance — will ruin your ability to trade. Success at trading depends on being able to make good judgments, which requires rational decisions. When you act from emotion, which is to say irrationally, you may win sometimes, but it is blind bullshit luck. Sooner or later you will lose, and lose big.
So far as cleansing you of bad habits is concerned, the process is pretty simple: you replace bad habits by good ones, which means you have to learn to recognize what you are doing wrong as it is happening, and develop mechanisms to interrupt the old patterns of behaviour and replace them w new ones.
The process requires conscious thought — i.e. you have to be aware of what you are doing when the ugly behaviour begins by, for example, learning to recognize the triggers that precede it. But there is nothing mysterious about it; the steps are the same as those required to correct any self-destructive behaviour.
It is no accident that the first and best student of the psychological factors behind trading failure was a psychiatrist who was treating alcoholics.
You should read Dr. Alexander Elder, Trading for a Living (be sure to get the workbook and do the exercises) and you should google Brett Steinbarger, a psychologist who has written a couple of books on the subject, and who ran a blog (now closed, but you can still find the old posts) that was just a gold mine of information on improving your trading.
Hope that helps. Write if you need more. I think I will remove any identifying material and post this in the training section as well … lots of people have the same issues.
good luck
nat admin