Dump it Here
- Thread starter Skate
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@KevinBB is absolutely correct but let me expand on his answer.
In simple terms
There are three possibilities when trading. You win. you lose or you break even.
LOSS OF CAPITAL (1 of 2)
For a clear explanation. If you buy at one price & sell at a lower price that's a "loss of capital". We all know this. That is the "FIRST LOSS" in @ducati916 "Quote of the Day."
LOSS OF OPPORTUNITY (2 of 2)
For a clear explanation of a "Lost Opportunity". Imagine if you didn't follow the buy signal because your inner self said "IT WILL GO LOWER". Not buying this position when a signal is generated means it's a "LOST OPPORTUNITY". That is the "SECOND LOSS" in @ducati916 "Quote of the Day"
Now this is it in a nutshell
The first loss = Loss of capital (in English - loss of your money)
The second loss = Loss of opportunity (in English - you lost the opportunity to make money)
What the quote really means is this
1. A capital loss is the only loss where you lose money.
2. Lost opportunity is not a real concern as opportunities are always coming around.
Skate.
Good morning
If rcw1 might be so bold as to say this, rcw1 hates losing very very much (yes, that means pucking heaps ... ), so when rcw1 misses an opportunity to earn... that is what it is all about, then that opportunity is missed ... to bad how sad, no going back, an uppercut to rcw1, but yes sure, capital is maintained and there will be plenty of other opportunities that arise during the traders day....
Thats what makes traders so great and all inspiring.
What if? Traders can deliver on each and every trade each and every opportunity... To be perfect, why the hell not!!! Oh, the joy of it, the thought of it.
rcw1 thoughts.
Have a very safe and happy Christmas and prosperous 2023.
Kind regards
rcw1
If rcw1 might be so bold as to say this, rcw1 hates losing very very much (yes, that means pucking heaps ... ), so when rcw1 misses an opportunity to earn... that is what it is all about, then that opportunity is missed ... to bad how sad, no going back, an uppercut to rcw1, but yes sure, capital is maintained and there will be plenty of other opportunities that arise during the traders day....
Thats what makes traders so great and all inspiring.
What if? Traders can deliver on each and every trade each and every opportunity... To be perfect, why the hell not!!! Oh, the joy of it, the thought of it.rcw1 thoughts.
Have a very safe and happy Christmas and prosperous 2023.
Kind regards
rcw1
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@rcw1, lets talk about losses & the destuction of capital
Trading P&L as posted on Twitter
In the last couple of days, there have been further losses of capital to the tune of (-$47,119) ouch.
The YTD P&L results are now demoralising
The loss of (-$926,151) has to take its toll, no matter what the drawdown percentage is.
Destruction of capital
When you lose so much money trading, it usually comes down to one main reason. That reason is normally the lack of understanding of the maths behind "capital destruction". The more capital you risk per trade, the quicker you will lose it in losing trades. Once your capital depletes, it takes a larger return to get back to even than what you initially lost.
The simple maths
A 10% loss requires an 11% return to get back to even
A loss of 20% of your capital requires a 25% return to get back to even
A 50% loss of capital needs a 100% return just to get back to where you started
Risking 1% of your capital per trade puts you down 10% after 10 trades
Risking 5% per trade puts you down 50% after 10 trades
Skate.
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No matter how good a trader you think you are
You have to understand that you can’t keep trading the same way when large losses are starting to mount, doing so, a losing streak of this magnitude could ultimately be your last. If you risk too much of your trading capital, even a few losses in a 50% winning streak will destroy your capital. (that's something to think about)
You need to curb your losses
You’re not going to be a good trader if you don't play the defense "needed" to protect your trading capital from losing streaks.
My question would be
How long can you survive with your current risk exposure?
Skate.
You have to understand that you can’t keep trading the same way when large losses are starting to mount, doing so, a losing streak of this magnitude could ultimately be your last. If you risk too much of your trading capital, even a few losses in a 50% winning streak will destroy your capital. (that's something to think about)
You need to curb your losses
You’re not going to be a good trader if you don't play the defense "needed" to protect your trading capital from losing streaks.
My question would be
How long can you survive with your current risk exposure?
Skate.
Good morning Skate,
Yes frightening scenarios, true that ... ; one cannot escape the cold and yet hard reality that awaits traders at times. I may have covered off on this one in a previous post.
Financial accountability, sure, a maker or breaker. Exhibiting fit and proper control over finances, dead set requirement.
Sometimes one's own ability to overcome is really tested.
Not for everybody.
Kind regards
rcw1
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It's a pity
@rcw1, I've used my "Quote of the day" quota for today, otherwise your quote "would have made it". So bolding will have to do.
Skate.
Skate, You are too quick for rcw1.
No matter how good a trader you think you are
You have to understand that you can’t keep trading the same way when large losses are starting to mount, doing so, a losing streak of this magnitude could ultimately be your last. If you risk too much of your trading capital, even a few losses in a 50% winning streak will destroy your capital. (that's something to think about)
On the other side of the coin, that one last effort or efforts may well be the saving trade that renews confidence and ability to focus and exhibit better judgement. But yes, certainly a statement rcw1 would agree with.
You need to curb your losses
You’re not going to be a good trader if you don't play the defense "needed" to protect your trading capital from losing streaks.
Agreed, 100%. Modify trader behaviour in accordance with financial hurdles are becoming more prevalent. Positivity and reality are two completely separate constructs ha ha ha ha ha. However, rcw1 view has always been one needs to be positive but at the same time realistic about traders competence and judgement, this is a continual 360-degree self-assessment. Therein lies an answer. If you cannot be honest with yourself time to give up the game.
My question would be
How long can you survive with your current risk exposure?
How long is a piece of string?? Nice one. ha ha ha ha
Skate, rcw1 gotta go, have some punting duties to perform, lovely talking with you today.
Kind regards
rcw1
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I can tell you, there is a mathematical formula to answer your question
This question always comes up. And my answer is always the same.
# Get the piece of string "fold it in half", measure it, then double it.
Skate,
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Dr. Flippe Flye about recency bias
"This is a mental disorder that greatly afflicts mostly low IQ market participants, who regularly soil themselves when markets trade down. As soon as it trades up, these submentals jump up and practically smash their heads against the ceiling — so excited by the market's resolve. Truth is, the market’s true resolve is to go lower. Any brief period of time that elapses with actual gains should be considered something of a gift that should be taken, POST HASTE."
Skate.
"This is a mental disorder that greatly afflicts mostly low IQ market participants, who regularly soil themselves when markets trade down. As soon as it trades up, these submentals jump up and practically smash their heads against the ceiling — so excited by the market's resolve. Truth is, the market’s true resolve is to go lower. Any brief period of time that elapses with actual gains should be considered something of a gift that should be taken, POST HASTE."
Skate.
Good afternoon Skate,
This is a few times now in one day, people will talk.... let em rcw1 says. Reckon Dr. Flippe Flye could learn from us... ha ha ha ha ha
Have a very nice day today.
Kind regards
rcw1
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Dr. Flippe Flye has a unique style of getting his message across
In an earlier post, I explained why traders miss opportunities even when they happen to hit you in the face.
LOSS OF OPPORTUNITY - FEAR
"Lost Opportunity" mainly comes from fear, from being fearful of making the wrong decision. Overriding a strategy is one of the worst fears you can have as a system trader.
Have a watch of this informative YouTube video
It explains how we miss opportunities waiting for clarity.
Skate.
Fully agree on your last paragraph.
That was what I am trying to convey.
Bear with me for my explanation..
If I loss 30% and hoping the next trading day will be up but instead it gone further down to 40% loss while there are opportunities to buy cheap on my intended entry price. If I don't sell, I don't have any moolah to purchase n if I exit with 40% loss, its gonna take me much longer to recover or get my balance back.
I am speaking for myself.
A retiree playing with hard saving pocket/ pension money. No one answer fits all types of players.
Thks for the explanation of Loss of opportunity 2 of 2. I got it. My mind was wrapped up with the last 4 weeks stuffed market environment.
Suffered heavy paper loss on BHP ( and a couple of other energy stocks) even with the last couple of good days, still trying to catch up.
Its a solid company and I am aware it would come good in med to long term.
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@Rabbithop, you are absolutely correct. If you don't hit the sell button you will quickly turn a trade into a long-term investment. Selling is a valuable tactical tool & is by far the most valuable tactical tool that any trader has at their disposal. Selling is cheap, easy & can be undone in the blink of an eye. When in doubt, I say "pull out". For most traders, the biggest stumbling block to selling is mental.
Why do some traders lose so much money?
For one simple answer, they fail to sell at the right time. You could call it the "it will come back - faulty thinking syndrome". Some traders don’t understand what causes capital destruction.
A Chart of Faulty Thinking
Buying into a position & when it sinks, there are some traders who will add to their position & convince themselves it's "cost averaging" because the "Trading Guru" said so.
Skate.
Was in my thought, I cld have cut the loss, Sell n Buy back, when price drop further. Working my Maths out on the paper for this instance, it doesn't work for me.
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We all love hearing & watching train wrecks
You hear it all the time. "Well, this week didn't go as expected" without giving a second thought as to why. There are traders at the moment holding shares whilst the markets are in free fall. Some have outwardly justified that they are not worried exclaiming they are in it for the long haul so they haven’t sold anything yet "even justifying "that it's too late to sell now" & (that was a week ago) while others have responded by declaring "I've held these positions this long I might as well keep holding them".
Fear is an emotional weight
We all tell stories to ourselves thinking it would be better to sell & come back in later, hopefully when the shares have sold down further, purchasing them cheaper sometime in the future, then they go on hold for another week, until the message repeats. Fear makes us indecisive.
Skate.
Extremely True to the above. We are only Humans. Do we have logic thinking all the time?
Its debatable.
My common comment on smaller or Penny stocks. Hold if you dare. Here today and vanish in another week.
Good evening Rabbithop,
Having a real chop at the market, you are, well done M8. Difficult beast to tame, as you would know. Paper money gain and or alternatively loss, hard one to measure until the chips are turned in and the true value of your trade is revealed... and then the subsequent trading resulting from that initial trading loss or for that matter gain. In the end we do what the heart says. Shift the coin around abit or wait for the share to appreciate in value. Get burnt yep, make better coin, you bet. Wouldn't be dead for quid's...
Have a safe and happy Christmas and prosperous new year.
Kind regards
rcw1
Too right mate. We just have to think, weigh it n act. Sometimes we win n sometimes we loss.
Same to you row1 n all members in the Forum...Wishing Everyone A Happy Christmas and Prosperous Healthy New Year.
Stay Well n Stay Safe.
Thank Almighty for each brand new day.
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