Skip to main content
Asked a question 3 months ago

Hey there, I am just 4 months old in intra day trading and somehow I've managed to save my account from completely blowing off but have drawn it down by 70%. I am using small stop losses as per my risk apetite. the problem here is I am losing small amounts but too often. I am ending up my day in losses. Big profits are no where to be seen. Jan and feb were good because I was winning some and losing some but when I was winning I was winning big (atleast 1:2) but last two months have been insanely adverse. Any idea how can I better my trading? any tip for right path for being a trader?

Join FYERS Community to pick others' brains on Trading/Investing

Hi Mahesh, 

As a trader, the right approach is to keep a track of every trade you execute and write down the reasons for the success/failure of each trade. The objective of doing this is to learn from your mistakes and improvise on your strengths. If a trade goes wrong, you need to find out whether it went wrong because your set up missed something or was it bad luck? Also, if a trade goes right, you need to find out whether it went right for the right reasons or was it mere luck? A good approach to keep a track of your trades is to maintain a trading diary. This will help you in understanding whether there is a repeating pattern in your losses. If yes, steps can then be taken to avoid it.

Also, you need to a have a particular drawdown mentioned in your diary. In case it is breached, you need to stop trading until the time you review your trades, identify what is leading to bad trades, and make amendments by learning and tweaking your approach. For instance, if you fixate on a drawdown of 10%, then in case you capital falls by 10%, you need to stop, review, identify, and learn, before resuming.

As you have already lost 70% of your capital, the first thing to do is to stop trading and do a deep analysis of what is causing the drawdown. Is it because of:

  • The approach chosen?
  • Bad timing of trades?
  • Incorrect entry/exits?
  • Wrong position sizing?
  • Wrong instruments chosen (relative to capital size)?
  • Incorrect stop loss placement?
  • Losing discipline after a string of good trades?
  • Taking excessive risk to earn small returns, etc...

You said that you keep small stop losses. How small are they? If they are way too small, chances of getting hit are higher. So, do not place a stop loss that is too close to your entry.

Master a particular approach rather than trying to learn half of everything. As you day trade, Technical Analysis (TA) can be helpful. Thoroughly master the basics of TA and use 2-3 intraday time frames (TF) when trading. For example, you could use 30 mins TF to identify trend and then 10 minute TF to take trades in the direction of the larger trend (30 mins TF).

Also, you don't need to trade everyday. Trade only on days when you are mentally fit and when good trading opportunities arise. Don't let emotions get the better of you (this might be easier said that done). Don't overtrade.

Be flexible in your approach and adapt to price changes. For instance, if stop loss set is 0.5% and target is 1%, don't fixate on these. If your position is profitable, trail your stop loss in the direction of the trade. If price is showing signs of reversing, you could also consider booking a profitable position rather than waiting for the target to achieve and then seeing all your profits dwindle. Also, if stop loss gets hit, exit the trade without a second thought. Do not average your losers, unless you thoroughly understand the risks of doing so.

  1. Placing a stop loss is not easy. Only with experience you can master it. I too had same issue with me. Because of this, I never used stop loss until I suffered a big loss.
  2. These risk to reward ratios are tricky.
  3. There's a probability that a trade might reverse just before hitting your target or reverse after hitting your stop loss.
  4. So, it's better to have a stop loss when you enter a trade, but you should trail it when you're in significant profits.
  5. I don't know, if you're trailing your profits or not. If you're not, then I will suggest you to trail your trades in profits.
  6. Stop loss should be set, where it should be, like support level etc.,. Not based on your desire of small loss etc.,.
  7. If you feel that, the stop loss set at support might cause you big loss, if it goes against you. Then either reduce your trade quantity, in such a way that, the stop loss set at support should be equal to risk appetite or loss endurance. You can add quantities to it, if it is profitable etc., that's up to you. Or simply skip the trade, because it goes against your risk and wait for the next trade.

    Hope this will be helpful.