Friday, July 13, 2007

Trading Collars

So, after I lost money again yesterday, I called my company's friendly risk manager and kindly asked them why the heck they keep letting me blow up all over the place.

It may be hard for you to believe, since I began this blog when I began my steepest decline as a trader, but there was a time when I was pretty damn successful. And these guys remember that and I think they basically figured I could work my own shit out. Wrong. This time feels different and I need "a little help from my friends".

I had an email conversation with Scalper a while back (hey, where the heck are you anyway? Send me an update!). He stopped trading each day if he was down $500. And, he did it on his own. He'd close his stuff and come back to fight another day. Great discipline there. That's the kind of discipline I've slowly let drift away from me.

So this is what I asked them to do for me. If I go down $400, the system will shut me out from putting on new trades for an hour. This will let me regain my composure and also let me know that I'm pursuing the wrong strategy for the day. After an hour the system will let me initiate new positions again, but if I lose another $400 (or $800 total net loss for the day) they'll turn me off for the day.

It feels kind of draconian to me but it's been a long time since I strung together a few strong days ($500+ net). I keep having weak up days followed by large down days. This will at least help me to stop the bleeding.

I'm not over the fact that I haven't made money since February. Because of this, my trading has been turned around. I hope when I should be fearful and vice versa. I'm holding out for "big trades" so I'm not selling when something goes in my favor (because I'm hoping it keeps running instead of taking what the market gives me) and I'm holding and adding when positions turn against me (hoping that they'll rebound and give me a large winner).

We'll see if this helps. I'm hopeful it will.

1 comment:

Jeff said...

Yes- good idea I collar myself too. 3 losing trades in a row - I take a time out. If any of my trades take a loss of more tha $500 - I usaully call it a day. My heads gets to f-ked up too easily so I do not fight it.