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Ding dong the Bull is dead, the wicked Bull is dead!


Mercury

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Ding dong the wicked Bull is dead!

Ok not for sure yet but with every stock index (or at least all of the ones I regularly look at) having now broken their respective Ice Lines for me the probability is now high that we have indeed turned into a long term Bear market.  You can see all of the index markets LT chart below.  I will be keenly watching events as markets approach their long term Bull channel lower edge line, a break of these will absolutely confirm the Bear for me, not that I need any more confirmation.  However some markets have already broken key supporting trend-lines, including the Dax and Russell 2000.  The Dax is a major large Cap but perhaps the Russell s even more interesting as this a a small Cap "Growth" company index, which, together with Tech, was a large part of the basis for the Bull.

So net it will be interesting to watch the progression of the current Bearish move to see whether more LT supporting trend-lines are broken and how low it goes before any relief rally.

DJI-Monthly_221218.thumb.png.cf67078a0b1fd1f99d71f7c81e245c85.pngSPTRD-Weekly_221218.thumb.png.d3429bd3911200eef82bbfdc6b22c0c1.pngNASDAQ-Weekly_221218.thumb.png.95c3e9402209ada8d1c503bc2bfb9ec5.pngNIKKEI-Weekly_221218.thumb.png.20eb9f3de7411d110f292614a622d415.pngFTSE100-Monthly.thumb.png.7b1ae465441f91b1ee0c927907b6345e.pngDAX-Monthly_221218.thumb.png.8c72285de1f57af4ed4bd1e5bc54994a.pngRUSSELL-Weekly_221218.thumb.png.9efdd4d88bee51196b79e53560c2a4fa.png

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My stop loss @10500 for Dax 30 got hit, GBP 13k down the drain :-(. I am the one to blame though. I was out for sometime and didnt bother to check or manage my positions/risk.

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Bad luck @fhk-uk I have suffered similarly in the past, I know how that feels.  In fact this is the reason my trading methodology seeks low exposure opportunities at turning points.  I have read many interviews and books by traders where they universally state that they would be richer and more successful if the scratched loss making (trades that do not follow their initial expectation) early and sought reentry later if appropriate.  This has become a major element in my risk/money management.  Another part of my approach, again based on similar experiences to the one you mentioned, is to be contrarian at key points so I can spot trend changes early, cash in previous trend profits to maximise returns and reverse my bias.  Doesn't always work of course but I also follow the maxim, "there is always another trade" (i.e. if I am wrong I can rejoin the trend after the retrace having secured profits to leverage).  This is the essence of swing trading.

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Thank you @Mercury, I am a perfect example of someone who is not willing to take small loss and eventually lose big chunk of their trading account. I kept moving stop loss further down in a hope that Dax30 would bounce back but it never happened since August 2018. It is never a good idea to 'keep moving your goal post' but if you do, you will learn a lesson the harsh way. 

I will take some time off and will be back next year. Good luck with all your trading, have a nice xmas and happy new year to you all in advance. 

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I think you are right to take a little break @fhk-uk, the temptation is often to try an win it all back quickly to wipe out the ego hit and restore confidence, I have done this in the past and it rarely works out.  I have also done what you have done with this trade in the past too, in a sense I think it may be something all new traders have to go through to learn.  The key now is how you respond and learn from the mistakes, which are always valuable if viewed in a constructive light, as a learning opportunity.  So a break over Christmas and then some assessment of what you did wrong when your have achieved a bit of distance and perspective is the best course, it always is for me at any rate.

I think it shows some good psychology on your part to be able to share this experience here on the forum rather than hide it away.  I also applaud you taking responsibility for your own decisions and actions, this is a very important part of having the right mentality in trading, in life really.  I note you were following someone but still blamed yourself.  Many of the great traders do not use automated stop loss orders but they have deep pockets and monitor their positions real-time so will execute a cover when the market shows them they are in error.   This is essentially a stop loss, just a manual one.  An automated stop loss is like AMEX for me, "don't leave home without it!"

When it comes to following people I would say it is fine for educational value (follow several - and better if they have different styles to see which most resonate with you - this could be more than one style that you blend into your own methodology).  However I would recommend never following anyone when it comes to actual trade placement (or indeed not trading).  We might look at a trade idea and, through your own assessment, agree and take a similar trade but if we follow someone blindly then it is like getting a stable-boy tip on a sure thing down at the track without knowing the horse or the race it is entered in and without knowing the form of the other horses.

FHK-UK, already knows what he did wrong here I think but it is a timely reminder to me of the dangers of not having a stop loss position (a line in the sand) in place, which is a loss amount you are willing to bear if wrong and/or also the classic of moving a stop as the market approaches because you really don't want to take the hit and you feel or hope the market will reverse and you fear getting stopped out and then missing out on that reversal.  I have so been there over the years but now my methodology forbids this (I just have to make sure I follow that rule 100% of the time!)

This situation can happen at any time in a cycle but the worst of the worst is when a trend changes because you move from trading with the trend to trading against it and you didn't even realise it.  Regardless of what time frame we trade to go against the trend is dangerous (only swing trading major retraces makes any sense and even then it is tough to do).  Therefore I believe we must always be alert to trend changes and to do that we need mechanisms to assess for this constantly.

Again thanks for sharing this FHK-UK and have a good break.

 

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