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I can't wait to hit my 5% Stop Out......

 

I can't wait to hit my 5% Stop Out......

Well those weren't exactly my thoughts, but I had been thinking of it all week. 

As much of a discouragement as it may have been I wanted to feel what it was like to take that big of a loss and be shut out of the system. Mostly to see how I reacted. Mainly to feel the emotion and reaction of getting involved in extremely risky positions and allowing myself to feed into it. After being up all most 2-2.5% each day last week my confidence was soaring. All week I managed my risk and grew my account at a conservative yet satisfying pace.

Here comes Friday I'm up over 8% for the week. Do I remain conservative or go for broke? The logical answer, if I wasn't in demo account would be remain conservative. I didn't, it was time to take some chances. I started to pull away from my system and even though I wasn't in a USD pair the GDP news came out and temporarily reversed the trend I was in. Immediately I started throwing .5 lot trades out for no reason at all, with no systematic approach.  I think we all know what happens next.

As I'm pulling out of losing trades, I'm throwing trades in the opposite direction. Here it goes it’s going to happen 2%.......1.5%.......1%........-1%...........I continued to place trades for no reason trying to save myself.......-3%.........-3.7%........come on reverse......maybe it will go up as I throw two .5 lot positions to the long side.......-4%.......-4.5.....-4.7%.......and BAM all my positions disappear. We did it we hit the -5%!

As I sit and watch the trend I was originally in head back in my favor, I know my emotions have got the best of me. Not because I couldn't control them, but because I let them. This is something every trader should experience before they move to a funded account. Do I think I'm a bad trader because of it? Absolutely not.

A bad trader would walk away from a situation like this and not come back.

A good trader can't wait for the markets to open on Sunday to get back to trading.

 I would love to hear anyones thoughts on the 5% stop out? Have you hit it? Do you think it defines you?  

 

Sat, 07/28/2018 - 8:44am
 
Rookie

Clark, three checks, 2% per trade, 5% per both will trigger a stop, 2-0% OF our account size.

You can trade quite well never hitting the checks and still hit the -20% very easily in a few days.

What defines a good consistently profitable Apiary trader is https://apiaryfund.com/forum/benjamin-formula-0

 
Clark

RNM, I have watched a few things on the Benjamin Formula. I will definitely check this out. Thanks for sharing.

 
alexteo468

Hi Clark,
I hit the 5% & 2% per trade stop outs many many times while in Gold 1, where I depleted my capital from $10,000 to $1,870 over a 7 month period. I partly had deliberately allow myself to hit these stop outs to experience the emotion of losing & psychological trauma, as well as to learn what the professionals had been saying about trading is roughly 60% psychological, 30% risk/money management and 10% methodology.

Allow me to refer to the quotes from youtube "8 Reasons Paul Tudor Jones is one of the Greatest Traders of All Time":-
- Be Risk Manager first, Trader second
- Be Flexible, let go of self ego
- Never add to a loser
- Learn from failure
- Reduce position size during losing streak
- Only take highly skewed Reward to Risk play.

There is a vast difference between actually hitting these stop outs versus assuming these stop out risk percentages in trading. We can assume these maximum risk percentages only on highly skewed reward to risk on our best setup (edge); i.e. going all in.

But to actually hit the stop outs means that we have made mistakes in our trading, e.g. over trading, lot size too big, adding to loser, impatient, etc (its important that we keep detail journals and analyse our trade history). Hitting the 2% per trade stop out is even worse than the 5% total trade stop out, because the magnitude of this loss is very difficult to neutralize with an equal or larger win (hence a huge setback on requirement of average win > average loss and positive expectancy).

As the criteria of average win > average loss is measured over the last 50 (Gold 1) or 100 trades (Gold II), I had resorted to place the next 50 or 100 trades using micro (0.01) lots and setting TP at 3-4 pips and SL at 1 pip, machine gun (rapid) fire type trade (each time 5-10 trades) to achieve green for average win > average loss and also nos of average win > nos of average losses.

On trading psychology, I would like to suggest going to www.staceyburketrading.com to download a free audio progam, "7 Step Daily Routine for High Performance Traders" by trader/educator Mr Stacey Burke.

Happy Trading and Learning!

 
Rookie

Alex very good G1 recovery and great advice in this post!

 
Excel0318

The emotions are real and raw! I was in some baaad trades and risk going to -4.2%. I wasn't intentionally looking out to hit the 5% stop out point and these were supposed to be my last trades for that level. My emotions went on rampage- from "why did I even go into this trade" to ...... I eventually closed the trades on the positive.

But do you know what? I learnt so much about price action from those trades than any other; because I was glued to the screen and watching every move of price. This experience though not palatable at that time has helped me so much in subsequent trades.

So while you are trying to observe your emotions when you hit the 5% stop out, use the opportunity to also observe price action, candle patterns at reversals points, characteristics of the currency pair you are trading....

I wish you all the best Clark!

 
sally261

I didn't hit the 5% on purpose however I did hit it and it definitely has made me a better trader since it happened. I think its a good thing that it happened to me

 
Clark

Alex, very awesome write up. I copied the 8 reasons by Paul Tudor Jones and added them to my desk. You can bet I will check out the audio program as well. I'm always looking for great content to learn from. Thanks and happy trading to you as well.

Excel, absolutely. I believe there will always be some type of emotion involved; regardless of how great we become. Some of the emotions that come with trading are what make me enjoy it. Thanks for the advice and I also wish you the best.

Salamon, I can't quite say mine was on purpose either. I just didn't try to stop from hitting it. Hopefully it brings me the same future success it brought you. Thanks for sharing your experience.

Hope you all have a profitable week to come.

 
Rookie

Speaking of my 2nd most fav trader, Paul Jones!

Alex, thx so much for the Paul post!

Paul Tudor Quote.jpg
 
alexteo468

Your know what??? Right on!

I hit my 5% stop out limit this morning, bringing my equity from $2,480 to $2,320, and this is the 3rd time since funded.

Though we may seem to have learnt our mistakes many times over, each time beating ourselves and swearing that we will not commit the same mistake again, yet in reality, we keep on self-sabotaging ourselves. We are always just one trade away from blowing our account (in this case, hitting stop out limits).

My mistakes was OVERTRADING & exceeding my risk limits set (which was suppose to be only 3% for total number of trades, but I had placed up to 19 nos 0.02 lots , which amounts to about 9%) in my hedging trade on a single currency pair, USD/JPY, such that when ALVEO resets the statistic of realised profits to zero for a new day this morning, my unrealised profit went on to hit the 5% stop out limits when USD/JPY continue to drop to a low of 110.75.

Nevertheless, I will not be deterred the slightest from my Vision; "I am a 1% elite profitable trader, making consistent profits so that I can give back to humanity 20% of my profits throughout my trading lifespan."

Nor will I be affected in my faith of my playbook best trading setups and will enter these best trade setups without hesitation whenever they appear. I will remind myself that I am as good as my last trade!

However instead of forcing trades or taking on trades seemingly profitable trades, I will adopt Mr Rande Howell's revelation (www.tradersstateofmind.com):-
1) We do not control outcome (NEVER), but we can control the mind that we bring to the moment of tradings
2) We do not make things happen in trading, but rather we ambush the market and wait for our my best setups to enter trades
3) We do not enter trades out of boredom, but rather the URGENCY is to be PATIENT, waiting in ambush (LESS is MORE, similar to Pareto's 80/20 ratio where 20% of trades is responsible for 80% of profits).

On being PATIENT, I will adopt the revelation by Ms L. R. Thomas that PATIENCE is not about will power (fighting ourselves), but simply about differentiating when it is time to be Reactive and when to be Proactive and to act accordingly;
Reactive = waiting for the correct setups, entry, take profit, exit, and
Proactive = everything else, e.g. preparation, analysis & risk management.

I will adopt the late Mr Mark Douglas "Trading in the Zone" revelation that a probabilistic mind-set pertaining to trading consist of 5 fundamental truths:-
1) Anything can happen
2) You don't need to know what is going to happen next in order to make money
3) There is a random distribution between wins and losses for any given set of variables that define an edge
4) An edge is nothing more than an indication of a higher probability of one thing happening over another
5) Every momentt in the market is unique

Last but not least, I will adopt the following quotes regarding "Mistakes are part of the learning curve" by Ray Dalio:-

“For every mistake that you learn from, you will save thousands of similar mistakes in the future, so if you treat mistakes as learning opportunities that yield rapid improvements you should be excited by them.”

“Do not feel bad about your mistakes or those of others. Love them! Remember that; 1)they are to be expected; 2)they’re the first and most essential part of the learning process; and 3)feeling bad about them will prevent you from getting better.”

“I learned that there is an incredible beauty to mistakes, because embedded in each mistake is a puzzle, and a gem that I could get if I solved it, i.e. a principle that I could use to reduce my mistakes in the future.”

LESSON: Always see mistakes in a positive way – not learning from them is why most traders fail.

Happy Trading and Learning!

 
alexteo468

Last night, I hit my 5% stop out limit again (4th time since funded) depleting my equity from $2,691 to $2,513. I had exceeded my risk limits (0.5% per trade; 3% on total trades) and overtraded (17 open trades of 0.02 lot size, works out to be 8.5% risk), repeating these mistakes for the longest time.

Indeed, MONEY / RISK MANAGEMENT is the most important in trading. My primitive mind (fight or flight survival instinct) had me thinking, the more money I want to make, the more risk I would have to take, which is dangerous.

Also, these losses were partly the result of my wanting to make money (focus on money, as it is 20th of the month), rather than to be a trader (focus on process of trading). When all I care is to make money, I will be trading my wishes and my dreams; i.e. the need for quick wins (rather than waiting for the right trade, the best setup) and the desire for a specific amount. Some trader educators had advised to concentrate on the “R” of reward to risk (i.e. trade only the best setup/edge offering the highest probability of rewards) rather than Returns (whether in % or $ value)

To overcome self-sabotage and to achieve consistency, I hereby re-dedicate myself to listening to the “7 Step Daily Routine for High Performance Traders” audio program by Mr Stacey Burke (free download at www.staceyburketrading.com) every day for the next 90 days (had listened for about 40 days).

I will also keep reminding myself of Ray Dalio’s advice regarding “MISTAKES”:-

MISTAKES ARE PART OF THE LEARNING CURVE…
“For every mistake that you learn from, you will save thousands of similar mistakes in the future, so if you treat mistakes as learning opportunities that yield rapid improvements you should be excited by them.”

“Do not feel bad about your mistakes or those of others. Love them! Remember that; 1) they are to be expected; 2) they’re the first and most essential part of the learning process; and 3) feeling bad about them will prevent you from getting better.”

“I learned that there is an incredible beauty to mistakes, because embedded in each mistake is a puzzle, and a gem that I could get if I solved it, i.e. a principle that I could use to reduce my mistakes in the future.”

LESSON:
Always see mistakes in a positive way – not learning from them is why most traders fail.

Even if I have to fail a thousand times, I will pledge myself to not stop at learning to perfect my trading SKILLs so to achieve flawless execution of my best setups (EDGE) and achieve my Vision of; "I am a 1% elite profitable trader, making consistent profits so that I can give back to humanity 20% of my profits throughout my trading lifespan".

 
alexteo468

Re-post from "Gold 1 to Gold 2 in 12 years" thread

[I would like to report that I hit the 5% limit stop out (the 5th time since funded), depleting equity from $2,520 to $2,360 a few minutes ago.

I had placed limit orders to close all the profitable long positions of the USD/JPY hedging trade when the price hit 111.576, and when the price did went down to 111.450 I could have put on the hedge again by entering long trades (this would result in 600 pips unrealised loss, with 208 pips realised gain) and able to ride the market moving higher.

However, I did not hedge and when the price move up to 111.717, it hit my 5% limit stop out.

The reason for failure of this "hedging wobble" strategy is due to my opening of too many trades (increased to 10 nos. long and 10 nos. short lot size 0.02).

Though I had failed again, I was able to practice patience and discipline by "do nothing" and use the waiting time to analyse and anticipate market moves. This failure will not dent my Vision nor my confidence in my playbook best setups and I will not hesitate to take these trades whenever they appear.

Happy Trading and Learning]

 
alexteo468

Since my last post, I’d hit the 5% limit again twice, igniting a concoction of ill feelings of shame, guilt, denial, despair, agony, anger, frustration, helplessness, hopelessness…but then this little voice keeps coming back to me; “Remember your Vision? Stick to your plan.”

After reviewing my journals, it was evident that I had subconsciously lapsed into a gambling mindset and trading addiction.

Unlike for an individual retail trader where losing trades are inevitable and acceptable, Mr Mike Bellafiore talks about the sole aim of his proprietary trading firm (or any prop firm) should be to make money and not talk about losing trades! It should be no different at Apiary Fund too.

All funded bees are aware that there are certain lockout periods, when a certain number of account suspension (due to hitting 2% per trade or 5% total trade limits) occurred over a certain duration, as well as account closure should there be a certain percentage of loss incurred over total funded value (need to work with Risk Manager to qualify for funding again).

My greatest take away lesson from these 7 numbers of account suspension since funded is as follows:-
“The best offence is defence” (Sun Zi Art of War). Be risk manager first, play great defence and let go of ego (Paul Tudor Jones).

I will take this “wake up call” seriously to “figure out” and hone my skills in both market anticipation (80% technical, 20% psychological) and trade execution (80% psychological, 20% technical) with particular emphasis on “Do Nothing” and PATIENCE.

To achieve my Vision to be a 1% elite profitable trader, I will focus only a single currency pair (USD/JPY) and use a “hedging wobble” type trade. Basically it is to enter both a Buy and Sell trade(s) and wobble for profits by scaling in or laddering in the direction of the trade momentum, while peeling off the losing position(s). Rinse and repeat and to switch direction when market reverse.

I am constantly reminded of Ray Dalio’s advice on the following:-

MISTAKES ARE PART OF THE LEARNING CURVE…

“For every mistake that you learn from, you will save thousands of similar mistakes in the future, so if you treat mistakes as learning opportunities that yield rapid improvements you should be excited by them.”

“Do not feel bad about your mistakes or those of others. Love them! Remember that; 1)they are to be expected; 2)they’re the first and most essential part of the learning process; and 3)feeling bad about them will prevent you from getting better.”

“I learned that there is an incredible beauty to mistakes, because embedded in each mistake is a puzzle, and a gem that I could get if I solved it, i.e. a principle that I could use to reduce my mistakes in the future.”

LESSON: Always see mistakes in a positive way – not learning from them is why most traders fail.

TRADING IS A LONG-TERM PROFESSION...

“People who fail to overcome the initial pain, effort, or boredom that is required to execute on a long-term goal tend to not make it that far.”

“If you are playing to win, temporary setbacks will not deter you because you know and accept the fact that it’s impossible to win big without failing first.”

“It’s important not to confuse ‘goals’ and ‘desires’. Goals are the things that you really want to achieve, while desires are things you want that can prevent you from reaching your goals.”

“Once you accept that playing the game will be uncomfortable, and you do it for a while, it will become much easier (like it does when getting fit). When you excel at it, you will find your ability to get what you want thrilling.”

LESSON:
Trading is a long-term business and a business takes years to build. Always have realistic goals and accept inevitable setbacks.

Happy Trading and Learning!

 
alexteo468

Today I hit my 5% limit stop out for the 8th time since funded, bringing my trading equity from $2,255 to $2,136, with a slight improvement to my previous low of $2,050.

My mistake was in GUESSING that the USD/JPY pair had peaked at 112.68 and NOT WAITING for confirmation of a price reversal downwards before I closed all the hedge Long positions (total 4 nos buy and 4 nos sell, each 0.02 lot size). The price then moved higher to the day's high of 112.88, triggering my 5% limit stop out.

I was using a "hedging wobble" type trade; i.e. entering both a buy and sell trade(normally enter 3 nos of 0.02 lots each) and would scale in trades (add another 3 nos of 0.02 lots) in the direction of the price move momentum, while closing out the losing position(s)(either long or short).

I take this opportunity to thank Lindsey (@triguylm1) for contributing his strategy in the thread "Part Time Funded Trader", as follows:-

[I have developed a system that doesn't need an indicator; one doesn't need to sit and watch the market; one doesn't need to know what direction to enter the market.

Do trade high profit target vs risk; meaning, use 52 week time frame to see the big picture. use this to ladder your position into the best bargain price of the day, the week, month, or even the year!!!!

How it works: Look for 30 day support or 30 day resistance or "Pivot" High/Low prices, Only buy near these support or resistance zones, this is your strong buy or strong sell entry.]

The main problem I encounter with the "hedging wobble" trade is to be able to more accurately determine price reversals, so that I can time the removal of the hedge (i.e. close out the losing either long or short positions), as well as to be able to identify the price ranges which is appropriate for me to enter, maintain, or exit this type of "hedging wobble" trade.

I will be try to tweet Lingsey's strategy into my "hedging wobble" trade.

Happy Trading and Learning!