Many losers in a row - stats?

[Tomarossa]

Hi,

beside my bad trade in coffee, I have another 3-4 losing trades in a row; I never had that many losers together. Is that because the markets are strange these days (months) or is it "bad luck" or is it just an unlikely but real result of long-term stats (I have cca 75% success rate for the past 2 years)??

Thanks,
Tom

[Joe Ross]

Two things happen that cause successful traders to begin losing.

1. The market change and you don't
2. You change what you were doing when you were winning. You slowly, by making minor changes suddenly find that the cumulative effect of those changes now is causing you to lose.

Either way, you have a problem. The best thing I have ever found to do is to get completely away from the markets for at least a week. Don't even think about trading or markets. Don't do anything related to markets and trading. No newspapers, TV, radio, or Internet that has anything to do with trading.

At the end of 7 days, start again looking at trades. Trade on a simulator until you think you are back on track. You should be keeping a chart of your equity as taught in our seminar or in personal tutoring. But if you haven't it's not to late to start. That is why we developed the Equity Evaluator, which you can purchase on a stand-alone basis or get free when you buy the Life Index for Traders (LIFT).

Once your simulated trading is working, then you can start trading with real money.

It is not unusual for a trader to get off track, or to fail to see that the markets have changed and he/she hasn't. It is going to take some serious self-examination and study to find out what has happened to cause you to go into a slump.

[Tomarossa]

Joe,

regarding the possibility No.1 (the markets change and I don't) so much that it causes me lose, in spread trading it means seasonalities stop working? How do I know if/when they start working again?

Cheers,
Tom

[Joe Ross]

Tom, it could mean that seasonalities have changed, but it could also be other things. For example it could be that commodity funds are at work screwing up the seasonalities. It could be government policies, weather, many other other things.

If seasonality fails to work I don't know of any way to know when it starts working again. it really depends on what the underlying is. If it is agriculturaly commodities, then eventually the seasonality will return. Man cannot control that. But if the market changes because of human intervention it may never come back to what was seasonal.

Tom, I'm afraid I don't have a crystal ball. I can't see into the future.