The importance of stops

Been awhile since my last post, and the reason why is coz all my trading has been break-even. It's been dull and boring, and I've been doing things wrong. Still the damage to my account has been minimal. In the past I couldn't have placed 50 trades in the market and still have a single dollar in my account, it's easy to lose when your a beginner as you all know. I had rules like 2 point stops, but would hold assuming price was "over-extended" with the hopes that price would retrace to my entry, naturally price would run down another 2 or 3 points and I would be looking at a -$250.00 loss on a $5k account in a single trade. Placing just a few bad trades in a day would leave me down anywhere from -5% to -15% on my entire account in just a day! This was my years ago when I traded with real money, I lost almost everything in that account, and eventually withdrew the remaining balance for living expenses. Bottom line, stops protect your account, so adhere to your specific stop loss rules!


So after 56 trades the account is down 10% and half of that loss is due to commissions. I'm an expert at bleeding slowly.. however in all seriousness I think this data is telling me that I need to be more selective with my trades. As you can see I have over twice as many losing trades than winning trades, yet my gross loss on the account is only -4.00 points after 56 round turns, how have I managed this? For starters I cut my losses very quickly, as a result I tend to take losses frequently, the losses are mostly like mosquito bits to the account, small and annoying. My winning trades are typically 2x the size of a loss sometimes MORE, I'm constantly looking for big winning setups, sometimes I want to see them so much I imagine things that aren't there, this has led to some over trading on my part, but not by much, for the most part I've managed to keep myself in check. I'll be making some minor adjustments to my trading style attempting to manage my trades a bit better and avoid some of the noise, hopefully my next update will be a tale of profits. We'll see.


56 trades
wins = 15
losses = 34
B/E = 7
Profit = -4.25pts / -$212.50
commissions = -$280.00
Total P&L = -$492.50

Original Account value = $5,000.00
Current Account value = $4507.50