Three years in futures, 1.3 million and 200,000 left, what should I do?
This is a typical question on Zhihu.
Almost every trader goes through periods of losses, the only difference being the number and duration of the losses.
This article doesn’t tell you a story. It tells you what to do when a deal goes bad.
I took a look at the responses. They ranged from repulsive to mocking to sympathetic.
Mostly emotional catharsis and teasing.
The subject is so difficult, he should be given a real solution.
The solution is to organize, summarize and analyze transaction records.
Losing a lot of money, you need to know where you lost, how you lost, can’t be confused.
Once a little friend said that the loss is tragic, do not know what to do.
I asked him to send me the transaction records.
And he actually said, “I’m too lazy to do it, I feel bad when I see it, I don’t want to see it.”
Is not the gambler mentality, after losing the ostrich blindly escape?
The Ceding bill may be the only thing you win.
By analyzing the causes of losses, find trading problems and try to solve them.
Identifying and solving problems is the eternal way to progress.
Don’t want to look, too lazy to look, the result is nothing.
Even with $200,000 to go, sooner or later it’s still going to lose.
The starting point for successful trading is to face up to your own dismal cutting sheet.
After all transaction records are sorted out and summarized, the following steps can be divided into three steps: The first step is to calculate the cost and determine whether the transaction is too frequent.
The commission fee of stock and futures is generally calculated as a percentage of the transaction amount.
Calculate the transaction amount flow can calculate the transaction cost.
The transaction costs of outside market makers are mainly reflected in the spread.
Transaction cost = spread * Point value * Number of trades.
Transaction cost to principal = Transaction cost/initial principal.
If you are in a profitable state, you can use the accumulated transaction cost/book value.
The high proportion of transaction cost indicates that the transaction is too frequent and the cost expenditure restrains the growth of net capital.
I always warn new account openers not to trade for cash, rebates, electronic prizes with trading volume requirements, or trading credits.
The wool comes out of the sheep.
What you get is a part of what you give, and what you give may be all you have.
Savvy traders will set rebates, enticing you to trade large amounts of money for peanuts.
Every time you open a position, you risk the spread alone.
My transaction costs for the last six months were about 2.5% of the principal.
Short-term or day trading costs may be slightly higher.
But if the result is a loss, you have to keep the cost ratio down.
What is the point of trading many times without making money and losing money?
It is better to do less and save transaction costs.
We should always do the same thing.
I feel that if the transaction cost is more than 15% of the initial principal (on an annual basis), it must be cut by all means.
The way to do this is to slow down the trading frequency and wait for a good trading signal.
Frequent trading leads to frequent stops, impulsive stops, and even more.
The more you do, the more mistakes you make, and the net profit barely covers the fees.
This is the most efficient way to deal with losses.
Cutting transaction costs by 50 per cent can, in turn, cut a lot of losses.
The second step is to calculate the average profit and loss points for the purpose of recognizing the profitability and analyzing the problems in the stop-loss process.
A list of profits, how many points, or how many hops (units of minimum change) each trade makes.
Calculate the average value, both the average profit points.
Loss of the list, also calculate each loss how many points, and a loss points.
It’s certainly not ideal to calculate the profit/loss ratio.
Three to one is impossible, even three to one is impossible.
Earning too few points, losing too many points, the profit and loss is unreasonable.
Not earning enough points comes down to trading power.
Average profit points are the most intuitive reflection of trading power.
If it is less than 1/3 of the trading target’s regular daily fluctuation (N), there is no possibility of long-term profit.
If the average gain points can be 1N, just make a stop loss and make sure you can afford to trade.
Therefore, to make a profit bottom line, not just a few points of profit.
If the method is above, it is only in the middle. If the method is in the middle, it is below.
The bottom line is too low, and you’ll never get enough points.
Now let’s look at the loss statement.
If the number of loss points is uniform but relatively high, it indicates that the stop loss is too large, the tolerance of floating loss is too high, tightening the stop loss can only treat the symptoms, and strictly control the opening cost to cure the root cause.
If there is a huge loss of points to pull up the average, should not be set to carry a stop loss.
Need to set a strong stop damage.
The history article specifically talked about, here is not to expand.
If the average loss points are not many, but the loss of a single surprising amount, must be frequent trading leads to frequent stop losses.
The solution is to trade less frequently and relax stop-losses moderately.
This part of the process also involves saving money and making less money.
Generating more profit points is not easy for most people.
The effect of throttling is immediate. Simply do not trade without a stop loss, lock in a maximum loss, and reduce the frequency of stops.
You want to make sure you can execute your stops as planned.
The only way to make money is to stop losing money.
The third step is to analyze leverage utilization rate and observe whether there is heavy position behavior.
Leverage ratio = Contract volume * contract value/principal.
This is the leverage ratio per transaction.
Holding multiple trades at the same time, the ratio of total position value to principal is the overall leverage ratio.
The higher the leverage ratio, the greater the capital risk, it is necessary to limit the actual leverage ratio upper limit.
I prefer to use the concept of risk control for position management.
You also need to calculate the amount of profit and loss per unit of trading volume.
It’s the same $1,000 profit, 5 hands on trade A, 20 hands on trade B.
A makes $200 on each hand, and B makes $5 on each hand.
Obviously, trade B is making a profit on a big position.
Heavy position to earn small points this way of income randomness is too large, but also will bear high risk.
This is the inevitable result of a crash.
If the profit came from the heavy position, there must be a heavy position loss order in the trading record.
Heavy trading is the most deadly risk is reluctant to stop the loss.
Passive carry single until pull burst, or panic stop losses.
When the amount of loss changes beyond tolerance, trading behavior is dominated by panic.
Think about the possibilities and how to deal with them before you make a bet. Don’t put all your eggs in one basket.
Don’t repeat bets at a certain price or in a dense area.
Especially optimistic opportunities, to plan the batch layout.
A good run won‘t last in a day, and there will be plenty of opportunities to add to your position with less risk.
In order to avoid the hidden danger of heavy position, it is better to clearly set the risk control of a single trade, calculate the size of the position through risk control and stop loss, and also do a good job in the overall risk control after adding positions.
After analyzing the transaction records in these three steps, it is clear how the $1.3 million loss went to $200,000.
Write down any problems you find and address them one by one.
If you can solve a problem, you can solve it.
If you think it’s too hard to solve, then don’t make the deal.
If you don’t plug the leak, all the money will leak out.
At the end of the day, these three steps are all about solving the problem of not losing money you don’t have to lose.
Instead of trying to make a profit on every trade, try to minimize unnecessary losses.
We must lose as little as possible.
That’s the way to live.
Reducing deadweight losses is defense.
Good defense, offensive points to win the game.
The defense was porous, and the attack could not be helped by a Tiki-Taka display.
Analysis of trading records is not only necessary for large losses. It is best to review trading records as part of a regular physical examination.
Always find problems, always solve them.
Don’t wait for a small problem to make a big mistake.
