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I should have said it before but I'm trading DAX CFD. So I may use mini-contract on it. I could have a 50US stop loss with 30 ticks for example. I usually take volatility in mind and I never use fixed stop loss.
What makes me upset is the fact I couldn't accept a loosing serie. I have to increase my positin size otherwise I wouldn't be able to trade seriously ever. I think you guys are traidng futures market so you're really in the game from the begining.
But for my concern I took trades with less than 0.3% of my capital and I would like to reach the 1% size before end of 2015.
I think I got angry not because I was losing more money than I've made (since my risk increased) but because I was scary to have a methodology which didn't work any more (but I got about 300 trades history so I should have be confident).
1) I know every method has a drawdown, a loosing streak.
2) methodoloy is not the main part of a succesful trading
But I failed despite knowing those 2 facts. Psychology is sth very interesting.
Yes me too. Even sometimes I think market is about to break the support but I still wanna trade so I take a long position on it. But as I am systematic (manual) trader, I don't do that kind of mistakes very often.
But I realize that there are no superheros on the market. I thought that being successful trader means making money on almost every trade but it's more about following the rules and money managment strictly.
After having realized my big loss, I flipped a coin 400 times and I wrote the result (tail or head) on a paper each time. I got 46% tail after 400 flips. I understood that a system could have a "statistical anomaly" even with hundreds of trade. That's why I will keep trading and following my rules no matter what.
ScalpingTrader's excellent Montecarlo analysis shows why it's suicide to be increasing size as you're in a losing streak, especially a statically random one.
Looking at your P&L graph, I suspect you might well have been up 25-35% overall if the risk management system sized smaller instead of larger during a losing streak.
So if the issue is just one that is psych driven instead of math driven, think about it this way. A) For sure, if you're only managing your own money, you''ll never hit it big without the power of compounded returns on your side, and losing money is an absolute sin for the gospel of compounded returns. B) The risk management you just deployed will either get you fired at a prop firm or have your investors yank capital out of a fund. However, if you approached friends and family with a stead curve, even on a small account, you'd probably be able to get funded over time. Good traders are extremely rare and easily hired by prop firms or investors. So focus on the track record, and worry about absolute profits later.
But I didn't increase my risk because I was loosing money. I increased because I have to increase it every 2 weeks in order to get closer of my goal.
Increasing risk is totally independent of the performance and it has to be. When I started the week with the new risk I didn't know I'm gonna take a drawdown. The reason of my failure is I was scary that my system doesn't work anymore and not really the money.
I had (still have) a misconception about being profitable : In my mind it means you're killer and you make money every week. Now I (have to) understand I'm gonna experience drawdown, difficult market conditions, etc. even if I have a good trading system.
Increasing your size after loses is exactly opposite of what the Kelly Criterion tells us to do.
I think that is a pretty typical mistake because cutting size after loses is not intuitive, feels wrong but it is absolutely correct.
It's all perspective.....step away and see the bigger picture. Assuming your trading is sound and you're managing risk well, over time you'll see the trends of your own trading and get used to 'just another drawdown period" and also catch yourself when you're about to trade crappy.