Author Topic: Am I being over cautious?  (Read 87 times)

Kim

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Am I being over cautious?
« on: March 16, 2020, 08:26:10 AM »
Hiya all  :)
I'm still only learning and demo trading and I decided to stop even demo trading as things are so volatile that I am not sure that I will learn anything in the current market. Sometimes I win and sometimes I lose but the moves are really big, more than I expect.  Do youthink I am right to stop or do you think I can still learn and am just panicking? 

Caesar

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Re: Am I being over cautious?
« Reply #1 on: March 16, 2020, 12:54:26 PM »
Hello Kim.
I can see why you're reluctant to trade, even on demo,  but there are still some things you can learn even in unusual conditions such as we now have.
For example,  if you see  a trade that interests you and that fits your trading plan,  you can still enter it and see if/how your money management rules protect your account.
You will likely see that you need to widen your stops. Are you prepared to do this,  is the reward worth the potential risk?
You may find that different time frames are more profitable than others. Have you the mindset to scalp or do you think looking longer term would better suit you?
Best wishes

Kaitsu

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Re: Am I being over cautious?
« Reply #2 on: March 16, 2020, 01:54:42 PM »
Hiya all  :)
I'm still only learning and demo trading and I decided to stop even demo trading as things are so volatile that I am not sure that I will learn anything in the current market. Sometimes I win and sometimes I lose but the moves are really big, more than I expect.  Do youthink I am right to stop or do you think I can still learn and am just panicking?

I 100% echo what Caesar says above. There is a lot to learn here - but only on demo in these circumstances!

You have already learnt a lot that has led to you even asking the question! Many traders believe that "a trading method, is a trading method, is a trading method"  i.e. that "one size fits all" mentality. But this is not so. An approach that works consistently in one type of market will probably not work when the market dynamics change. And this a good opportunity to explore your trading approach and see what needs to change in order to adjust to changing circumstances.

For example, my standard "bread and butter" method works well in "normal" markets but in these markets the standard stops would be far too close and I would get seriously and serially stopped out if I tried to keep blindly to those rules. For example, on SP500 my usual stop of 150-200 points would now need to be around 750-1000 points!

In these circumstances I can either stand aside (which I am doing at present) or I drop to a lower timeframe (15m or even 1m) and trade shorter breaks. This actually works well, but I cannot keep it up for very long - it is so time consuming and I have experienced more than enough of screen monitoring to put me off this!

But a demo account is a training account and I think you could make very good use of that right now! :D
« Last Edit: March 16, 2020, 03:44:45 PM by Kaitsu »
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Kaitsu

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Re: Am I being over cautious?
« Reply #3 on: March 16, 2020, 07:19:59 PM »
For example, my standard "bread and butter" method works well in "normal" markets but in these markets the standard stops would be far too close and I would get seriously and serially stopped out if I tried to keep blindly to those rules. For example, on SP500 my usual stop of 150-200 points would now need to be around 750-1000 points!

By way of example, I took this trade today on the 15m chart even though I am supposed to be self-sidelined! But it has been such a negative news day today before the US markets opened that there had to be at least one push downwards in early trading . but, as I mentioned, where does one put stops and targets in this kind of market with such wild swings!!!!

The SP500 market started with a climb back to the lock-down levels from the far-east this morning but then closed back below the band on the attached 15min chart (1st red ring). This was a classic sell signal and in normal markets I would look for around 150-200 points from this. But in these times a reasonable target was towards the earlier lows, which in this case gave a 720 point profit (second red circle)! But , of course, the stop level had to be in proportion to this, and that is hard to sit with at these levels unless one reduces the position size. But then that tends to diminish the value of taking the trade risk at all! It is all a compromise of all these aspects - or a trade- off, one could say!  :)

In other words, the same method was used but applied to a shorter timeframe and with widely adjusted stop/target levels to match market volatility. Some traders might use ATR multiples to adjust these levels but I prefer to use either a fixed target pip value or recent high/lows.

These are elements in one's method that are definitely worth exploring in these types of markets - but stick to your demo account!  ;D
Ships are safe in harbour - but that is not what ships are for......

Kim

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Re: Am I being over cautious?
« Reply #4 on: March 16, 2020, 07:31:07 PM »
Thank you both for your replies. That makes things much clearer and I will continue demo trading  :)

Kaitsu

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Re: Am I being over cautious?
« Reply #5 on: March 16, 2020, 07:44:12 PM »
Thank you both for your replies. That makes things much clearer and I will continue demo trading  :)

You are very welcome, KIm  ;)

Now that you are no longer applying the three Ducks strategy, what approach are you using and with what instruments and timeframes?

No obligation, but it would be interesting to hear more of what you are doing nowadays!  ;D
Ships are safe in harbour - but that is not what ships are for......

Kim

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Re: Am I being over cautious?
« Reply #6 on: May 23, 2020, 10:27:20 PM »
Hi all  :)

I have spent loads of time this month on my demo account. I reduced the amount available to me to $1,000 and dropped the leverage to 30% maximum to make it more realistic. I have generally been following the 3 ducks for trade entry and use support and resistance for my targets and stops.
So far its been good and I am up this month by a little. I will be delighted if I can get through a whole month like this

Talk again soon
« Last Edit: May 23, 2020, 10:28:55 PM by Kim »

eddieb

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Re: Am I being over cautious?
« Reply #7 on: May 24, 2020, 08:15:52 AM »
Good morning Kim, nice to see you have a plan in place.

I think the limits you have set on your account are very sensible (I think you mean 30:1 on leverage not 30%) and will give you a better feel of how live trading will actually be.

Fingers crossed for the rest of the month and for coming months ahead.

Namaste
Disclaimer. Posts are just my thoughts,  not recommendations.  Do your own due diligence before trading

Kaitsu

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Re: Am I being over cautious?
« Reply #8 on: May 25, 2020, 01:46:37 PM »
So far its been good and I am up this month by a little. I will be delighted if I can get through a whole month like this

Hi Kim,
That is very good news! Well done!
It may not feel like very much at the moment but consider that even getting a "plus" in front of the number is important at this stage, so be proud of that!

It is important to keep realistic objectives in these early stages. Once profits are being made consistently it is then only a matter of winding up the position size and maybe introducing some scaling in/out of positions.
Ships are safe in harbour - but that is not what ships are for......

Kim

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Re: Am I being over cautious?
« Reply #9 on: May 26, 2020, 08:39:29 AM »
Thank you Kaitsu.
I am determined not to get carried away with myself ( I have a tendency to do that) and  want several consecutive good months  before I even think of opening a proper account with money.  For now its an enjoyable,  slightly stressful at times, learning experience for me. Thanks again for your encouragement  :)

Kaitsu

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Re: Am I being over cautious?
« Reply #10 on: May 26, 2020, 09:29:19 AM »
You are certainly on the right lines, Kim. I am sure that many promising newcomers fail from trying to earn too much too soon - which inevitably means too much risk!

Our latest member Thescruff has a lot of trading experience and i remember from one of his Youtubes where he talks about realistic expectations and he said that one might be disappointed only earning 20 dollars at the end of the week but there is no Bank in the land that would pay you that on a 500 dollar account. And that is very true and is all about perception!

Growing confidence and skill is far more important than the dollars - they will inevitably follow in due course! 👍
Ships are safe in harbour - but that is not what ships are for......