This has wide ranging consequences and needs to be addressed immediately. Sorry but stealing from your kid's college fund and not being honest with your wife about it is simply inexcusable and shows weak character, recklessness and poor judgment. These attributes almost disqualifies this person from being a good trader for starters.
The problem using college funds is it is "scared" money and you don't want to trade with scared money. This can place immense pressure on every trade and as losses pile up the trader will normally resort to destructive practices such as averaging down, doubling down etc, risking too much of the account on each trade etc.
Suggested go forward position for this trader
1. Sit down with your wife, explain the situation and take full accountability for what occurred. Explain you were only doing it to help the family financially but unfortunately the plan backfired.
2. If you don't have a job promise her you will get one and start looking asap. Promise her you will pay every cent back to the college fund.
3. If you have a job get a second one and promise her you will use those funds to pay back the college fund.
4. Once you have repaid the college fund and still have the desire to trade direct excess funds each month to a trading fund. This will not be scared money and will be money you can afford to lose. Do this with the full knowledge of your wife. The objective should be what @peterg pointed out above. Try and grow the account slowly to something sizable. Make sure effective risk management is practiced on each and every trade. One mistake can blow the entire account as Peter discussed earlier.
The most important point is to stop trading immediately right now. If you continue to dip into the college fund it will likely be all be gone and you can probably kiss your marriage goodbye at that point as well. As @PandaWarrior pointed out in one of his earlier posts family is everything so you need to do everything possible to salvage the situation while there is still time.
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Agreed. I don't recall the exact percentage but its very high that marriages end in divorce because of financial issues. That statistic is really only dealing with, for lack of a better term, the average joe. Part of the problem is money management is never taught in school. Hell half the financial professors have more debt and are more broke than anybody. Anyways though, now you take money out of whatever account be it kids college, retirement, etc and blow it trading. Talk about wanting to ramp up the fire between you and the spouse, oh boy. Reminds me of Rodney Carrington and "we need to talk" google it and first YouTube link that pops up.
In the end though the reason we are all working our ever loving butts off is to provide for our family and give them a better life them we had. At least if your priorities are in the correct order. Trading should not take over that number one priority. I admit I'm a trading addict and I could spend every minute that I'm not asleep or not at work in front of the computer watching reviewing charts but I balance that time with time with my wife. I work stupid long hours but instead of keeping to trade after long days I sacrifice trading for time with the wife and the horses and dogs. Balancing that time is still tough though.
My opinion is that there is a type of trading for everyone. My father in law is the sit back and let it ride for years type. I'm a day trading type that looks for the larger moves. He is big time successful and I'm moving in the right direction. But finding your niche is the tough part. Understanding who you are as a person will help you decide what type of trading is good for you.
My .02 ...
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There are a lot of Four Letter Words in My Trading
I use them frequently and at Volume.
But the most important one is........................ STOP
..... Before even trading and/or during
Especially When trading Other Peoples Money...Accountability is higher, conduct is critical.
Trading affords that you take the TIME & STOP
STOP....... look at the Photos of your wife and children on your trade desk.
STOP........look in your Desk Mirror, & Ask (audibly of yourself,) if this is for you or them and if you're fit to perform.
STOP........& ADMIT your trade day may end right here right now ...hit the showers,..... plant or pick flowers.
STOP.........& Wait, hurry up annndd wait some more
STOP....... on Individual Trades, When tired, When bored, When obsessed.
STOP........when you hit your Daily Loss Limit & especially your Account Suspension Limits, @3%,@6%,@9%
STOP ....... & Evaluate Trade Performance Stats every day, week, month.
STOP........Trading Live Completely @9% Account Loss...Game Over...off to the Simulator....
or off to work...... learn the value of the money lost..... the hard way...pick weeds.
I do this every day, its routine, somewhat childish...I have a big mirror and a Smeagol pearing out below a monitor lest I revert to this less than savory humanoid state.
I also have one forex account just off suspension after a month of sim trade back; cant break the rules, gotta own it, gotta survive,
gotta be human.
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Hell no!!!! Just my quiet and humble opinion. Here are some of my thoughts behind this (again based on just this post and how you contribute here).
You have listed some areas that you don’t like but what are the strengths? Hard working, sharing, team player, good communication, intelligent (in awe of your programing abilities), persistent open and honest. And to have the courage to face addiction and be clean for 7 years – maturity.
It would be time to give up if you kept doing the same thing over and over, maintaining the same expectations while risking money you could not afford to lose. But your way past that. You have a lot of strengths – how do you use those to compensate for areas you are weak in? That’s a question I am working on right now.
I understand the addictive nature of the market - I have an impulsive side that kicks in. If I have a string of wins or a big trade that works well my wife can read the signs that addiction/overconfidence etc is setting in. All of a sudden I see opportunities that really are not that great – I enter and it costs me.
I owned a small business previously and the amount of younger people that wanted top dollar for doing nothing, wanting to tell me what they would do, doing what they wanted anyway when unsupervised…it was scary. Many were overconfident and under skilled and believed they could get what they wanted because they were sooo good…they trouble is they were not that skilled. They could be if they would listen and learn (Mr Miyagi style) – but few people take that road. What do they look like if they become a trader – I can do this…tell me the secret…I don’t want to waste time looking at that….your service was crap it taught me nothing (did they really apply it anyway…). For people with that approach - give up trading and look at yourself- and COME BACK when you have a willingness to learn, listen, apply, try, ask, interact and thank…and won’t use money you need in the process.
From where I sit XAV you are in the zone of what it takes to trade. I am in the same place and I believe that I will be profitable consistently BUT my hurdle currently is actually managing me. It is working on Who am I – and what does that means for trading.
Here are some thoughts that helped me reach this conclusion. These are the things that I would not look at 18 months ago BUT they are my way forward. I have three processes I am now working on as my plan
I struggle with directional bias (first trade I take a profit and I re-enter expecting a continuation). One issue here is that my state of mind when executing or managing the trade is different from the state in when I placed my first trade. I often get a good trade and if all I did was stop the second trade it would make a big impact on my trading. If I cannot do this I should stop – I will always struggle in this area but may improve over time with practice and build up to a second trade. So the plan – one trade per day.
I can be disorganized and impulsive at times. To continue trading I need to look at external brakes such as a "drop dead" once a loss limit is hit (HELLO TST ).
I also need very explicit, simple and structured rules to follow without variation (for me rules such as one trade per day and tell my wife I am finished and then get a life and do other things for the family)
Understand that I can become addicted to watching screens and PA unfolding. This leads to me second guessing my initial trade decision – I exit and reposition – and then often find out my original analysis was correct. My brain plays trick on me when I watch too much live data (that was something that took a while to figure out) see https://www.youtube.com/watch?v=JiTz2i4VHFw My plan – plan one trade, enter and do not watch the screens. Let the TSL and money management do its thing.
Also to do this I work with my wife as a team - It's pride that tells me I can handle it on my own…and it leads me to fall. I am considering working with one trader – learning from someone with a deeper knowledge of an approach I like – learn from the best to become better. Teamwork – how can this be built into my process? I need it for my personality. I will work with my family. I will find a good mentor to learn good habits.
This means that watching the DOM and order flow is now very minimal FOR ME. I love those tools but they are not the best for my personality. I need to look to a longer timeframe.
Perfectionism anxiety. I am achievement-oriented and need to replace performance goals with process goals. How do I manage…..(me, money, trade execution) not buy at XYZ for $$$ profit
A great Quote from Brett [COLOR="rgb(255, 0, 255)"]Most traders who are convinced that they have deeply-rooted psychological problems or addictive trading patterns are actually caught in a vicious cycle of perfectionistic self-demands, increasing performance pressure, mounting anxiety, disrupted performance, and renewed self-demands to compensate for the failure. After a while, traders caught in such a cycle begin to doubt whether they will ever succeed. By addressing their problems at the source—the expectations that generate performance pressure—traders can often turn themselves around in a surprisingly short period of time.[/COLOR]
When should I give up trading? If I don’t address the issues at the source.
Another of Bretts Quotes [COLOR="rgb(255, 0, 255)"]The key to success is finding a seamless fit between one's talents/skills and the specific opportunities available. For traders, this means finding a superior fit between your abilities and the specific markets and strategies you will be trading. Many performance problems are the result of a suboptimal fit between what the trader is good at and how the trader is trading.[/COLOR]
When should I give up trading - If there is a "cancer" in my trading, removing it may be as difficult…If I don’t want to remove it or look at it I am in trouble.
I need to reflect on what I do wrong so I can improve my game.
So to go back and add to my earlier post - The values of patience, resilience, hard work, relationships and honesty need to be applied by matching my personaliuty and life circumstances to a fitting trading approach. At the end of the day my kids and family just want time above toys).
Trading for me is a complicated mix of personality, risk management and market understanding.
When should I give up?
If I am unwilling to work on the issues above then I should give up – left unresolved they will undo my success I may have
Every trader is unique but there is a common theme – what do we do with the cancers that are killing our trading.
Do I humble myself and face them? Or ignore and hope for the best. What will the outcomes be based on my choices? That’s a good guide for me if its time to give up or not.
Last edited by Disciple; March 30th, 2013 at 02:46 AM.
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Thanks a lot for sharing Xav and my hat off for you succeeding in turning you life around.
When I first went into trading I did not know that it would get so close to my first goal or "higher call" in life, which is to found a retreat center for youth. I am half way in my psychology education where troubled youth is my main interest. As most others I guess I did not realize which effect trading would have on me as a person, but after a while a realized that under normal circumstances this is where one can get the best psychological and emotional beating one can get in life. If one have issues there is none that will escape when you do trading. This is the single one place where you can not lie to your self. As Dr. Rande Howell put it; "Your trading account is your "lie-meter"". You get it right away. With life in general one have the opportunity to deny, lie to one self and postpone, but with trading you get it right into your face. No room for "another day". So since I came to really love trading I also came to realize that trading is the best catalyst for personal growth there is. One could say the perfect wrestling ground for every Zen practitioner. And as a therapist at a retreat center for youth one have to go a lot of rounds with one self too before "stepping into the ring". In this regard I think trading is a quite amazing and unique opportunity.
My point, going back to your last words, maybe what I wrote could give you a new perspective on things? If you really love trading you could have an opportunity here. You can continue to grow as a person and earn money as a secondary effect by also doing something you love to do. This is my perspective on trading. So maybe quitting is not the answer?
Taking what you wrote in perspective I personally think that Dr. Rande Howell is the best trading psychologist available. He is a great presenter and I think he is addressing these issues and how to overcome them in a very unique way. I am inclined to say that he has lifted "Zen" up to a new level. You can get in contact with him over at tradersstateofmind.com .
“If you wish to see the truth, then hold no opinions for or against anything.” - Hsin Hsin Ming
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I think for many people at some point in their trading career, this becomes true, that the trading account is the 'lie-meter' -- they convince themselves that it's okay that they keep losing money, and they don't make necessary changes (which may include quitting, maybe permanently). But for most new traders, the account is not a "lie-meter," it's an "inexperience-meter" and an "ignorance-meter." They don't have enough experience or enough knowledge about how trading works to have much of a chance to make money. And even worse, they may do incredibly well at first, in which case the account is a "luck-meter." Account P/L is perhaps the "bottom line" for how we're doing psychologically and technically in our trading, but it says nothing about our risk profile (profit as a function of risk or drawdown), our consistency (profit as it relates to volatility), and for newer traders particularly it is not indicative of psychological issues alone (which may be present), but of all issues, including those related to skill.
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I think you would just know when it's time to give up.
But.... if you were capable of knowing this, and more importantly, able to action it, then you probably wouldn't be doing too badly in the first place.
For me, it's been a steep learning curve with many false summits...so far. When I trade consistently, I am profitable, when not, I am not.
I also work part time to pay the bills, the wife is fully on board with this venture and we have reached the understanding that it is going to take about 2 years of consistent trading to make the amount of money that I will need to do this full time.
But, We have a plan and we are sticking to it.
For me, clarity came when I realized it was not about indicators, but about my insight into why price was doing what it was.
Last edited by StayOnTarget; April 9th, 2013 at 10:56 AM.
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A bit on the side, but I think it touches into an important part when it comes to have good perspectives on what trading is.
In my process of figuring out what trading actually is I have experienced that I have gone away from approaches only to get confirmation later that what I was doing was very straight on. Mainly I am not talking about methodologies here, but about perspectives or attitudes to what one are doing. Because I had not been taught by or been amongst professionals I thought that I had to be missing something here. You know, the common beginner or aspiring to something self doubt.
Regarding this I think what DionysusToast wrote in his document about trading over at jigsawtrading.com is the most down to earth and best document I have read on the matter. One of the things he wrote that I like is the comparison he makes between trading and sports. You learn the techniques and then you practice so much that you get a good subjective feel with what you are doing. I think this perspective is very important. It's just like with tennis or golf. I have done things in my trading that I do not do anymore, but which I did very well. But because I thought that this was not good, "because this had to be too crazy or I had to be missing something", I stopped doing it. One do not have any green crossing that or red crossing this when one play golf. If you have trained your technique to the point where you get good consistent results it's working and you got the feel! And it doesn't matter where you get it from. If I do not get into the zone where I have my subjective feel on high gear when I trade my trades goes bad. I am just not there. It's the same as when I compete in something else. If I am not able to touch into my feel I loose.
I would like to add another point regarding psychology also. In the beginning, when I was asked about recommendations from people about where to start with trading I was passing on the opinions of others who said that one should start with psychology first. Turning the typical road the other way around. But if one have not traded at all how do you know what will make you tick. One do not have any reference points. Another thing is if you do not have your general trading plan and methodology in order how can you distinguish between the degrees of if it's insecurity caused by sloppy home work that is making you more nervous or if it is the trading it self....? If today I sat down in an airplane and took off by myself I guess my pants would be wet when I landed, if I was able that is. But if I got a pilot's license I would like to think that my thongs would be okay. But back to trading; I fell into the latter category where I realized that working on psychology was meaningless as long as I did not have everything in my business in order. So it was back to the drawing board. I suspect many others have been or are in this category too.
“If you wish to see the truth, then hold no opinions for or against anything.” - Hsin Hsin Ming
Last edited by Laurus12; April 14th, 2013 at 06:27 PM.
Reason: changing text
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