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Please bear with my long post and I hope its not a bother.
I started getting interested in trading forex back in 2008-2009. The temptation of quick profits was enough to get me in. As with most people I opened an account with a broker deposited 50$ and blew took it up to 100$ then blew it in two trades. I kept depositing small amounts 100-200$, and during this time went through different webinars and indicators. Eventually after searching around for the holy grail which was of course nowhere to be found and multiple small deposits I ended up with a loss of approx 1500$. Thats a lot considering the average monthly wage here is 150$. Then I gave up and moved on with my studies/part time work until 2012.
Around 2012 I figured out that indicators was not the way to go and to really learn I had to work hard. I then learn volume spread analysis and price action. These two together were really good since it gave me an understanding of why the markets moved unlike indicators which I had no idea why they worked.
I slowly lost around another 1000$ in small amounts of deposits around this time. I realised that I needed a strict rule based system if I was to succeed.
(I have this problem that I have low self esteem and willpower and it does not help me in setting rules and sticking to them)
So despite having a rule based system whenever I would take losses I would immediately double or triple up and take enormous risk and of course end up loosing it all.
mid 2013: By this time I had gone through all the discipline books, webinars psychology stuff I could find but for some reason I just could not stick to following stuff. Around this time a friend introduced me to binary options. At first glance it looked like pure gambling but as I looked into it more I realised its the same as trading but just a shorter time period. The thing that was most appealing was that the risk was limited and fixed beforehand. Little did I know that that didn't stop me from blowing more money. The fact that binary options provided money at a much faster rate got my emotions all jacked up and I eventually lost more money.
End 2013-2014: By then I was frustrated and sat with a friend and started trading a system based on pure price action and support resistance, 5 minute expiries. I took 200$-2000 in a week. Then lost it in 3 trades. Deposited again and took 100-1500$ and again lost it in literally 3-4 heavy risk trades. Its like I trade with the rules and everything but sitting around I tend to take random trades too. Things like Oh I think that will reverse in the next 5 minutes let me take that. And when I loose couple in a row (and I am risking normal 2-5% on these trades) something goes wrong in my head and I put a 30% trade in. And of course it looses then I put a 80% trade in and I have blown my account.
Just a couple weeks ago I traded with my friend and we took 5$- 3000$ in 2 days (5 hrs) of trading price action. We split the money and decided we would do it again. And I went home and started trading alone and lost the 1500$ again in like 3-4 large bets. I traded with my friend the next day and we took the account up another 1000$. I was crying at night because of this self sabotage attitude I have.
I can see it clear as day. I can make money and I can make it fast if I trade properly, but what happens every time is I loose it in like 3-4 trades putting enormous risk. This happens repeatedly. Its now been over 4-5 times. I don't know what to do. It's like something ticks in my head and I am unconsciously risking large amounts and blowing the account.
A couple things A trader has recommended is that I do the strategy or analysis and I let a friend control the cash. That does make sense since whenever I trade with him I don't do stupid stuff but will that help me in the long run learn to not blow my account in 3-4 trades? Another thing he recommended is I could make a public journal which would keep me in check since I would he held accountable to some extent.
Is something really wrong with me that I blow my account every time in 3-4 large trades? Have others been through this? How did you cope? I really would like some guidance on this.
I feel as though I have come so far and this stupid thing I keep doing every time is the only thing holding me back from being a profitable trader.
Can you help answer these questions from other members on NexusFi?
They say the first step in any problem you have is admitting the problem. You've figured that out, so congrats!
Just addressing the "big trade" issue - see if your broker can impose limits on the size of your open position. That way, you would only be able to make small trades.
I suspect that even if you could have your broker do this, that problem might be solved, but another one will take its place.
I have found Van Tharp's work to be a great help with psychological issues.
Now that you know the problem. Time to fix it.
I may not be correct but it sounds like you have a problem admitting you are wrong when trading.
When you take a trade you probably do some of the stupid things that cause large losses:
Tip
1. Slip you stop or not using a stop.
When you put on a trade, you should have a pre-defined stop and target in mind.
NEVER move the stop further away.
(Moving it to reduce your risk <breakeven or better> is ok)
NEVER trade without a stop. This is just asking for trouble.
Use this rule. "Before I take a trade: Know my ENTRY, My Stop and My Target."
If you don't know these three things, you don't have a plan and should not take the trade.
Your risk needs to be realized and accepted before you take a trade.
Embracing the risk does not mean you will not have a loosing trade.
It just means when you do, you know what that loss is before you take the trade.
2. When the trade is going against you, you are becoming emotional and 'praying' for a miracle.
There are no miracles.
Each tick further from your entry is painful but only when the pain is too great you exit.
Then the market turns and runs away in the other direction and you chase it.
Take the 'pre-defined' stop and WAIT for a better entry.
No need to rush, the market will be here when you are ready.
3. Beat yourself up when you loose.
Let your wife or girl friend do that. (It's more fun)
EVERY trade is JUST A TRADE.
You can not control nor predict the market.
You can only reduce your risk by leveraging your EDGE.
If you don't have an edge, then don't trade.
There is a lot more to it than that but if it were easy, everyone would be millionaire traders.
Rejoice in the Thunderstorms of Life . . .
Knowing it's not about Clouds or Wind. . .
But Learning to Dance in the Rain ! ! !
(1) Journaling and (2) trading in sim until you learn to follow your own rules, is what you need.
Keeping a detailed journal of your decision making rationale and specific record of your actions will identify patterns in your behaviour and trading in sim will make sure you don't lose all your money whilst training.
I'd highly recommend writing down a trading plan to clarify (1) your goals and techniques in detail and (2) a list of specific mechanical rules you must follow to enter and exit trades, and as you begin journaling you'll find you tweak your trading plan where it's weak and you'll get better in your trade.
If you can afford to lose the money then trade live. But from your post I think you need to focus your efforts on improving your self discipline first.
Please take this with a grain of salt as it is only my opinion but to be completely honest with you it sounds like you have a gambling problem. Maybe a little introspection about your relationship with money and why you are trading?
