Sunday, October 7, 2012

Fat8023 Week 7

Following 2 more bad trades, trader start questioning his own strategy.  Confidence is shaken, no doubt. Despite having performed well in the past one year trading his own mini account, trader just have a certain mental block trading a friends account, extra careful and fear set in.

Of course, he understood my concern over averaging on bad trades, thus he was unable to execute his strategy. From those trades he had taken, there was a tendency to pick top and bottom based on short term indicators for day trading. His stop was too far away and he didn't ride the profit far enough on those good trades. I told him that's a recipe for disaster.



Fat88Trader said...

And to Coconut, this is the Cantonese Beatles I heard in my young days.

KAW said...

Trader could be going through performance anxiety. Maybe the posting of weekly statement is affecting him...

Fat88Trader said...

Trader didn't know I am posting it here, so no such anxiety, it's still the flaw in the trading strategy on averaging bad trades that he employed on the mini accounts. He has deviated from the teachings of his guru, by jumping the gun in execution based on shorter time frame indicators.

So far he has been lucky in many of the trades. I told him a about a season floor trader who average his trades for more than 20 years and survived. Finally a few years back, the market went one way without retracing and this trader busted his entire account and paid with his life.

Just one trade can ruin a trader, thus money management is very important. Though trader 8023 always have a stop, the damage can be quite serious when the stop is triggered for all the trades.

I am not in favour of such a strategy unless he is able to ride the profit far enough to justify the huge losses. But so far his entry level does not seems to be able to so.

I am giving him time to adjust. It's always bottom line that counts. And of course, his part time job does affect his concentration and focus.

GNY said...

Thanks for enlightening, FAT. Good pointers you have given here which I will bear in mind.

coconut said...

my apology and thanks for the song fat.

very busy entertaining my relatives from china, put my trading on hold except those open positions.

its not as easy as i thought haha mainly becos of culture differences.

3rd day already and they had visited MBS, very impressive according to them. (i'm not thought! haha)

tell you a joke, they bring 15 chicken as gifts and manage to get pass the custom! haha. may be next time they might try to bring their cows! who knows.

Fat88Trader said...

Oh yeah, my sister in law, a Chinese national brought back 2 big fat ducks from her village for us, really appreciate that they can go through all the trouble to do so.

And Coconut, if you tell them you want fresh milk, probably they will bring the whole cow for you on their next trip, no joke!

KAW said...

Indeed very sad and sorry to hear about the veteran trader who paid with his life. I once read a line: "There are bold traders and there are old traders, but there is no old and bold trader."