Time to Give Up

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I get a lot of emails and PM's from people seeking advice. Usually they've been losing money and don't really know what to do next. But I received a particular letter recently that made me want to write this post.

What are some of the characteristics of people who are losing money:

- No plan
- No way to measure themselves (they just focus on net profit)
- No consistent method, jumping from one trading room or indicator to the other
- Unrealistic expectations
- Unwilling to do the work required
- Not in a position in their life to make trading a priority

There are many more.

For every good trader out there, there are 100 more who think they can just copy someone else's method and start making money or join some trading room or download some expensive set of indicators, and be profitable.

Most of these guys have completely unrealistic expectations. They expect to take $10,000 and turn it into $100,000 at the end of the year, for example, even though they have no track record of performance or gains.

These people have no plan. They constantly blame their computer, their trading platform, their broker, their wife, their kids for missing trades or mistakes during a trade. They have no idea what to focus on or where to start.

And worse, most of them are unwilling to do the work. Yes, there are people for which that does not apply who are truly trying their best. But they are few and far between. Most people that are struggling aren't even willing to maintain a journal. Most people aren't willing to set realistic expectations. Most people aren't willing to accept responsibility for their actions.

On top of that, most of these guys aren't in a position in their life to even give trading a chance. Examples would be that they just lost their job. That is the worse time to start trading. Other examples would be that they have a job but no real savings, no money to burn in trading education expenses (and I don't mean from a trading room or buying a product). Worse still, many of these guys have no support from their wife or girlfriend because as you can imagine, they are losing money and also spending a lot of "free time" with trading instead of with their loved ones or kids. This is an impossible situation to put yourself in and expect good results.

So the point of this thread is not to talk about really any of that but instead to talk about when it is time to give up, or simply to move on.

In fact, a lot of times my advice to these guys is to move on. Stop trading. Let's be real, if you are undercapitalized, unwilling to do the real work, and have no support from your family -- you aren't in a position to be a good trader.

But I also have to be honest, some times when I tell someone to stop trading, what I am really wanting them to do is come back and tell me NO, they will not stop, they are going to make it work. I mean if you really want this, then fight for it. But as I've said countless times before -- willpower alone is not enough to make you profitable.

We know that most people "give up" once they blow all or a significant portion of their initial deposit at a broker. This usually happens in less than 90 days according to brokers I've talked to. Most of these people aren't a part of any trading forum, and those that are, most of them are not participating, do not have a journal, have not taken time to ask questions or formulate a plan, etc. Again let's be honest: if anyone had taken the time to formulate a plan and prepare, they would not have allowed themselves to blow an account in 90 days.

For the rest, the ones that are members of futures.io (formerly BMT), I find that the overwhelming (close to 100%) of people that are struggling are the ones that have zero posts. I've come to look at this as an important metric. The ones that are uninvolved in the forum, for whatever reason, are going to be at a big disadvantage in my opinion. They lack a support network but also lack the benefit of accountability which is so critically important.

I've also found that these struggling traders are ones that haven't participated in any webinars. So that means they are unwilling to put in the time. They spend all their time, instead, on downloading indicators or searching for a new trading room to call trades.

OK so let me end by putting this out there... when is it the appropriate time to give up? Let's be honest, not everyone is cut out for trading. In fact, if we are honest, very few are. So it's cruel to string some of these guys along, it would be better for them to help them identify early on they don't have what it takes and they should move on.

Mike

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Quoting

But I also have to be honest, some times when I tell someone to stop trading, what I am really wanting them to do is come back and tell me NO, they will not stop, they are going to make it work. I mean if you really want this, then fight for it. But as I've said countless times before -- willpower alone is not enough to make you profitable.

BTW, I should complete that by saying that while willpower alone is not enough to be profitable, it is a prerequisite. You cannot succeed without it.

Some people think that their willpower to succeed is their edge, because they will make this work no matter what. I view that as more of a prerequisite than an advantage over the other professional traders.

It is always helpful to know who you are trading against and see how you compare.

Mike

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I meet some of the criteria you have in your post for not trading. I am more of the mindset that it is on hold for a bit, but refuse to give up.

D

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Gee thanks @Big Mike

Mike, you have spot on accuracy on posts of this nature. I suspect that is because you stuck it out once or twice past when you, yourself should have moved on? That IS certainly the case for me.

The follow up post IS a description of how I was able manage.

Two weeks ago I met with a friend and former CBOT guy. I was SHOCKED to here that the topic he wanted to focus on was a post trading career. He was leaving the trading business after 15 years. The floor is a young mans game (if it is still a game at all). The trailing 12 months is a loser for my friend, only the second such period in his career. A typical year, over the last 15, is + $400,000 to $600,000. He says he is just tired, like a worn out horse.

My friend told me that my recent trouble (losing more than two or three days a month) are an indication that I too should escape through the open door while I still had a bag of loot to carry. All of my quiet time on vacation was spent on this.

Here is something interesting. ALL of the points on your list are items that I can STILL find a way to wrestle with. When I get out of balance and lose just a little focus or when I reinforce just one or two bad habits I can find myself speeding down the road to ruin.

My nature is to win, win , win. Guys have seen me type about "to trade well" is all that matters. I do believe that without my recent meeting that my previous course was a path to disaster.

I'm saying this to reinforce how brutally difficult it is to be a consistent profitable trader. That said, "to persist" is the ONLY way. The how of that is the eternal question, and again Mike's post is exactly on track.

Sometimes on futures.io (formerly BMT) I see discussions that are perfect example of correct path wrong mountain or correct mountain wrong path. Often when I speak up I get grief, not consideration...and as the popular phrase goes..."ain't nobody got no time fodat". Other times I am reluctant to post asking for help or providing it because of what tends to happen in those situations is not real pleasant either. Someone who has never made any money at any endeavor will tell me I'm wrong or I will get jumped by a pack of the send me everything you know searchers...neither usually result in productive relationships.

BUT there are all kinds of posts and ideas here on futures.io (formerly BMT) that do represent extreme value. I stay on task to mine the nuggets, always learning and always considering things. I try or want to try to type in a way that helps others pick up a nugget or two from my great and many errors. For me that sometimes becomes a battle and detracts from focus.

The single item from Mike's list...try your hardest...that is the critical item and it does encompass many of the other elements. To persist IS the only way in this, the most competitive business in the world. Few have that capacity and fewer still the ability to be humble and know what it is they are missing. Once "there" finding the answer just puts you at the line to start the race...in other words most NEVER have a chance.

Interesting metaphor from my vacation. Adult alligators are top of the food chain predators, but 2 or 3 out of every 100 eggs make it to an attained age of 1 year. Trading is the same. What elements are in the alligators cognitive behavior and what is totally outside of their control. I would encourage struggling traders to consider those things... although alligators don't.

Have to leave now...can type more if anyone cares. DB

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David_R

I meet some of the criteria you have in your post for not trading. I am more of the mindset that it is on hold for a bit, but refuse to give up.

D

So David let me ask a blunt question... hope you don't mind or take offense... why do you believe trading is right for you?

OK let me back up to be fair. Do you believe that anyone can be profitable at trading? Or do you believe that some people are not cut out for it? Some believe any skill can be learned, others believe that there are some things they should accept are not their strong suits and move on.

Mike

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wldman

The single item from Mike's list...try your hardest...that is the critical item and it does encompass many of the other elements. To persist IS the only way in this, the most competitive business in the world. Few have that capacity and fewer still the ability to be humble and know what it is they are missing. Once "there" finding the answer just puts you at the line to start the race...in other words most NEVER have a chance.

But trying your hardest is a requirement. It is not an edge. While someone who doesn't try their hardest can have a good trade, a good day, a good week, or even a good year, the likelihood they will be a long term profitable trader is slim.

So if you are measuring yourself against long term trends, say a 10-20 year career at minimum, then I don't think "hard work" is an edge. It's a prerequisite.

All the floor traders I've talked to have had a terrible time transitioning to screen trading. On the floor there was an edge by simply being there, you could buy the bid and sell the ask and pocket the spread from my understanding. That particular edge does not exist for screen trading, but perhaps there are other edges that do. For example as an individual trader, professional or not, you are more nimble than an institutional trader which can give you an advantage.

Mike

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Very extraordinarily and awesome post @wldman, thanks a lot for speaking right from my heart.

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wldman

Gee thanks @Big Mike

Mike, you have spot on accuracy on posts of this nature. I suspect that is because you stuck it out once or twice past when you, yourself should have moved on? That IS certainly the case for me.

That may be true but was not the inspiration for the post. The inspiration was one too many emails or PM's from people who -- many of which have no business trading -- wanting to know what trading room they should follow, or what system is the most profitable. Then there are the PM's and emails from the guys who have lost their life savings, are on the outs with their wife, who have devoted the last two years of their life trying to make this work -- but cannot.

Mike

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Big Mike

many of which have no business trading

Does this person have any business trading?

- Has been trading for 2 years, and has lost 50K out of his kids college fund
- Has paid over 20K in "courses" and "trading rooms" for "mentorships" and "systems"
- Hasn't told his wife or kids the extent of his losses

Mike

Time to Give Up

Time to Give Up

Discussion in Psychology and Money Management

Time to Give Up