When to stop for a bad day?

[anhkind 1]

Hey guys, do you have any experience on how to stop trading effectively when you have a bad day? Keep trading on a bad day may end in even greater loss, so for psychology part of the trade, this is a very hard problem and I would also like to know from your experiences. Thanks.

[frank2403 5]

My target goal is 150$ per day so my stop for the day is -150$. That leaves me with 3 bad trades in a row that way I have plenty of room to improve my p&L and losing a day worth of money isn't soul crushing. Right now I have around one bad day every two weeks (a bad day is a day that I lost money without making newby mistakes). As I am not an experience trader yet (been doing it for two months) I get days when I lose money because I'm dumb and try to improve them. Some days are just made to take your money so I don't let it go past my daily goal.

[Jason H. 56]

I try to be critical of my mental state. If I recognize that I'm practicing some bad habits after a loss (chasing, overtrading, FOMO, etc.) I turn of my monitor and walk away. I'll then either ignore it for a while or self analyze and if I can get myself back to calm and focused I might go back. More often than not I don't. I've only been trading for a few months and I almost exclusively trade SIM, but I try to treat it like real money and consider the bad trades and losses as real.

[Abiel 475]

We need to acknowledge and distinguish day trading risks from losses. As Alex Elder says in "Come into my trading room": "We must draw a clear line between a loss and a businessman's risk. A businessman's risk is a small dip in equity. The business of trading and must take normal business risks, but I can not afford losses. "

[Robert H 455]

Make a bad trade: take a walk. Hit max loss: take a hike!

[thenamesfizzy 1]

I agree with what Frank said. My daily goal is $200 and I quit at -$200, but ultimately you should set your quit amount at an amount you can emotionally handle losing. For instance, if I set my quit amount at -$1000, I just know myself well enough that my trades would start becoming emotional. You have to feel it out a bit.

[mumabbas 0]

I really appreciate the sentiment from Abiel's response. Far too often I find great plays/setups, but for some reason the fear of being wrong and making a bad trade stops me from making a trade at all. The psychology of trading is a huge factor, if not almost all of trading. The technical side of trading, I believe, is something acquired with hours upon hours of practice. To answer the question, I have began to set dollar amounts, similar to Frank, on when I should stop trading on the day. You must be prepared to take risks, but don't let losses deter you. Make sure to learn from them and you'll come out okay.

[Brendon 146]

Taking a bad loss right out of the gates can be really tough to mentally recover from to continue the rest of your day. There is no avoiding that feeling but you learn 'hmm let's not take too risky a trade too early in the day because if it doesn't turn out, my whole day will be wasted trying to recover'...and you will jump into other trade abnormally.

 

So for me I try not to go guns blazing too soon. I may go smaller size early in the day or trade less risky stocks could be an alternative if you want to get into the action..while waiting for the account killer stocks (pennies and stocks with huge ATR) to mature and become less 'risky'.

[Paul S 5]

Losses are going to happen period. To help with my psychology I consider my losses to be tuition payment towards my education and focus on learning from my loss. For me I set my max daily loss at 1% of my account and a max weekly loss of 3%. If I hit 3% I go back to the sim for the following week to work on the basics. I have been fortunate enough to not have this happen but it is one of the rules I set for myself when I went live. I really don't set a max gain for the day because there are days I feel I am "trading in the zone" and try and capitalize on that and other days that I feel lucky to get out green and quit when I'm ahead. You are the only one that can judge your risk tolerance and how it will affect your psychology.

[bike2la 0]

Just like others who posted here, I too set a limit of $150-200 for day. Today my first dip in the water was just that $250 lost on quick drop(blind slider). I was emotional because it was my first live trade. I walked away for few minutes to do some yard work and came back to regroup and went back on sim to help me focus on trading again.

Also Brendon has a good point on not pursuing low float or fast moving stock but starting with less risky stock.

 

JP