HI guys, Even though everybody has them, most don't want to talk about them or even admit it. Just for that reason I thought this might be a good topic for discussion. So you are in a draw down, the things that were working are all the sudden not working. Has the market changed? Do you stick to your plan? If you stick to you plan how much draw down can you accept before you have to stop? Reduce size? What do you do? Currently I am trying to work through these issues myself with a fairly significant draw down. I have been here before and will probably be here again. My first few encounters inevitably led me to all of the psychological pit falls of a draw down and ultimately blown up accounts. Today I accept that they are a part of trading and the only way I am going to get out of this is to grind my way out with a very specific plan. Here is my plan: 1) Take a few days off, go on a bender, do yard work, go to the beach - have fun. 2) Trade reviews. Have I been trading sloppy or has the market changed? What is working and what is not working? I use Tradervue Gold and I have a significant list of tags that can tell tell me anything from what trades are/aren't working, what scans have been better, what time of day to trade etc, etc etc. 3) (very important) Summarize the trade reviews for each week into a paragraph or two. Include summary , tag analysis, observations and goals for each week. 4) determine what trade setup is working best. Ready to trade.. 1) DO NOT INCREASE SIZE!! (you are not going to make it all back in a single trade.) 2) Stick to the trade setups that are currently working based on your analysis.. 3) Be green- if you get green do not go red. Even $1 profit can turn things around psychologically. 4) Do Not Sell just to be green! Let your winners ride and only sell if you have a reason to sell. What if this doesn't work? I am not a big fan of paper trading. If "what you are doing" isn't working I suggest you study "what is working". It's not that hard to look at the big gainers of the day and try to determine where the proper entries and exits should have been, what was the set up? etc, etc. Reduce your size and try those setups. So... How do you guys deal with a draw down??
Just bumping this thread back to the top for @Steven_Burt in case anyone missed it... I'll try to chime in with my own 2c a little later this weekend, but I think you nailed it pretty good there yourself Steve with your plan. Sorry to hear of the draw down, but I think you're absolutely spot on with what you said in your post. This topic really doesn't get discussed much at all since as you said, most people just don't want to ever admit to experiencing draw downs in trading and prefer to just talk about their winners all the time. We've all suffered some kind of draw downs in trading ... anyone who says they never did is just flat out lying IMHO. Anyway, I thought it was a great thread idea personally! Thx for starting it up in here. Hoping it catches some other peoples eyes as well and we get some good input from the other regulars here.
