This Tuesday, I came back from the Easter holidays and blew up a big part of my account. (50%) - i was very frustrated in not capturing the big moves from last Friady's NFP, which I predicted and could have traded perfectly, but decided against. This horrible Tuesday, I wasn't well rested and started taking all kinds of horrible trades. Nothing planned. (I actually have a trading plan).
Looking backwards I see a few major problem areas:
- not following my own plan
- playing with too much leverage while I know better
- not having fully developed my plan
- lack of self control. (I know, I shouldn't take more than 5 trades per day, that Tuesday, I took 30 trades, all losers).
I'm glad that this topic is open and active. At least I can use the forum to stay honest.
My goals:
- finish my trading plan
- re-commitment to self control.
- making sure I have a 2nd income stream.
I think I can't relax and focus during trading, because it don't have enough funds to support myself without trading.
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For me, When i first tried with my first account this is what I did. Had recently graduated from uni. Basically worked for a few months saved up. quit work and tried to become a trader.
Since then I went out and got another job that has more flexible hours. Makes a world of difference psychologically to know that you do not have to make your own over leveraged account work as your sole source of income.
Having the 2nd job allowed me to move ahead with other life goals - I got engaged!
None of my big daily losses and my account blew ups started with a predetermined plan to trade size.
The recent S$22.5K big loss started with 1 lot Mini HSI and 1 lot Mini HHI short position which I took in the last minute before the 11.45 pm close of the after hours trading session. The plan was to carry a small HSI and HHI short from the night close to the morning open.
The 1 lot Mini HSI short was filled at 26804, 560 pts above the afternoon HSI close of 26244. At the morning open, my Mini HSI short has a 93 pts profit and my Mini HHI short has a 42 pts loss.
The additional HSI & HHI shorts that I took within the first 15 minutes after HSI/HHI futures open at 9.15 am were not planned. They were taken based on my scalping instincts and I had about S$1.5K floating profits at the peak, before the cash market opens at 9.30 am.
I had expected HSI & HHI to trade lower after 9.30 am. Why I did not exit my shorts when my losses were small, I have no answer.
For the last 2 years and this year I have been trading with 1 lot per click default position size. I did have a burning desire recently to take more risk and hold more for more as my average daily profits is just a few hundred, when I have them.
I have traded very cautiously the few days before I got hit with this latest big daily loss. I could sense that it is coming but I could not stop it from happening.
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Essentially I have 3 main rules in my trading plan:
1) only ONE trade per day (pattern trading during main hours)
2) a strict optimized stop loss - NO overruling!
3) a NO trade day after previous day was too volatile
With these easy to follow rules and some discipline to push them
through - a loser day and one more again do not hurt really.
Market is there every day - so as winning days bring more points
than the losing days your account will thicken again.
Of course this is not meant to convince anyone. But using a rule
plan and following it with discipline and maybe starting to journal the
trades here on futures.io (formerly BMT) can help to stick to one's own trading plan.
And will be a step to success.*
Hope this helps.
Good trades!
GFIs1
* for those who are not familiar with my journal where I announce
the trade before taking with entry and exit TIME - just read it here on futures.io (formerly BMT).
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Of course you could stop it from happening!! You make the decisions... Nobody else.... You have ABSOLUTE CONTROL over the money in your trading account.
You did it. You took the loss. Yes, you could have stopped it from happening. Your a trader! That is the belief system that needs to change. "...but I could not stop it from happening."
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Around 95% of human population today doesnt know how to relax or havnt experienced the blissful feeling of relaxation by turning off the mind chatter. True, we all experience glimpses of it when we are awed by certain experiences but are unable to sustain it or invoke it at will. Observe a cat or dog after a good meal, how they stretch and relax with ease. We are so wired, and hooked into everything around us, every living cell in us is throbbing with stress, worry and anxiety.
If you start observing your thoughts and what is derailing your discipline, focus and objectivity, you will learn a great deal about yourself. Consider trading as an opportunity for self improvement and awareness, all the areas of our lifes we easily ignore to deal with. Trust me trading will bring all those daemons out, either you face and address them or continue to destroy trading accounts. I did a few myself including a $70K account trading Options 5 years back, after learning about option trading from few friends. I remember the stress and rush and decided to deal with it if I continue to trade. Honestly sticking with it and strive to improve myself is the best decision I have ever made.
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If I had traded HSI/HHI that morning with a "I could sense that it is coming" mentality, I would have avoided the big loss.
Whenever I have that feeling which to you is a losing mentality, I either do not trade at all or trade very small, focussing my thoughts on getting out, not adding. I make very little profits or none at all whenever I trade with this mentality.
I have never suffered big daily losses when I trade with a losing mentality. I usually lose a few hundred or make a few hundred.
It is when I trade wanting to win badly or confident that the market will not move excessively against my directional view, without thinking about losing, that I can get into deep trouble.
Thinking that one cannot lose big or lose all is a disrespect for the markets, now the other way round.
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Hi Ron99, thanks for speaking up for me, but I guess I should have been wiser with my choice of words as well.
Anyway, it was out of concern for Jac that I wrote that post, so it did not come across as hateful to me, until I re-read my post a few more times.
Maybe "emotional pain" would have been a better choice of words, as that was how I felt about his post (and still feel) about my own blown-ups. Again, it was never my intention to offend Jac or spite him in any way.
Still, I should not have jumped into conclusions as Jac's subsequent posts reflect his actual thought processes.
And Yukoner and others are giving very good advice in this thread.
I'm ok being on Jac's ignore list (no offence taken).
On the subject of blowing up accounts.... I think we all need to never forget that inside of us at anytime is the ability to blow up our own account. OUR past performance is not indicative of future results.
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Why on earth are you going all in? I can see if you're going for asymmetric gains and scaling in, but you gotta be damn sure you have a high probability of being right. Even so, if you have a 80% chance of being right, what's not to say that 20% is going to hit? I forget where (maybe in the money management section) but "All In" is a gambling mentality; similar to a "go broke or go home" mentality where you are playing russian roulette with the markets.
I'm not one to tell you how to trade since I've had my share of blowups and do make mistakes often, but in reflection, all my blowups were never a slow bleeding account. They were all an "All In" moment or refusing to take a loss and averaging down losses hence, making it "all in" situation.
In trading, shortcuts lead to the longest path possible.
The following user says Thank You to fminus for this post:
same here. Been "profitable" for years now, but in the past I could never survive long enough without such a "moment" to make it count. It all starts with just one click...
To me, the only thing that helped was strictly limiting the number of trades per day, regardless of outcome.
These days, partly due to time constraints, mostly because it works, I take one trade per day and quit.
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From the lessons learned from my past mistakes, my present trading mindset says I should go all in when I see the opportunity because:
1. it would help me make enough money to continue trading for a living,
2. it would help me avoid blowing my account as the other trader in me, for which I have no control, could take over and go all in, if I don't go all in first.
Going all in does not mean putting my entire trading account at risk. To me it is executing my trading strategy/plan with the maximum lots that I am allowed to trade, with the money that I have in my trading account.
Based on what I have left in my trading account (US$72,730), and the limits that I have set for the contracts that I trade, all in for me is 6 lots for HSI and 40 lots for NKD/NIY/SNI.
My main focus when I trade daily is the Nikkei 225 futures contract. I take HSI trades a few times a month, when I see opportunities for quick profit during the pre cash market opening trading period from 9.15 am to 9.30 am.
For the whole of last year, there is just one day that I went all in, holding 115 lots SNI (SGX Nikkei futures) short, unplanned, resulting in a S$47K loss.
I did not start the day with a plan to go all in. I liquidated all my shorts before the 10.30 am break. Holding the shorts to the 2.30 pm close would have wiped out my entire S$150K trading account.
My present Nikkei 225 trading strategy, when executed properly would cost me up to S$600 (5 ticks cut loss) on 4 lots (my usual daily position size) when I am wrong. Maximum profit potential is S$1.5K on 4 lots. Going all in with 40 lots would cost me S$6K if I execute my plan with a focus on getting out first if wrong.
If my Nikkei 225 trading strategy has a 80% chance of being right, I would attempt to go all in daily because I could make S$15K a day for 8 days and lose S$6K a day for 2 days.
My present strategy which is based on either a long or short bias for the day has a 50% chance of being right.
When I see an opportunity to take a trade or trades that has very high chances of winning, I want to go all in.
Last year there were 3 days where I see the opportunity to go all in for Nikkei 225. I went in with 20 lots, 43 lots and 12 lots and made S$6.3K, S$6K & S$4.7K respectively. In the past, when I take a large position, I have no contingency plans for getting out should I be wrong because I never thought I could be wrong on my "pay days".
Thank you for providing that bit of info. In Reminiscences he already realised his own weaknesses and set up a trust to protect himself well, from himself. After the crash his net worth was apparently $100 million (thus we are assuming cash is worth 10x more today than in 1929). At the time of his death, the trusts and cash reportedly were worth $5 million ( Jesse Lauriston Livermore - Wikipedia, the free encyclopedia - refer to the suicide section) which is $50 million today based on the previous assumption.
According to Paul Livermore (in Richard Smitten's book), Jesse's then wife Harriet, was packing suitcases full of cash and jewelry on the night of JL's death. Perhaps there was another million or so in there, putting his worth at $50 to perhaps $60 million. So even though he lost a lot in the markets, his way of life was not at risk.
Jesse Livermore also liked going all in, although he called it plunging. Even though he was bankrupt more than once, he is still regarded as one of the best traders, if not the best, of his era. Taking into consideration his skill and experience, don't you consider it scary that he declared bankruptcy as often as he did? Every trader should ask themselves what can be done to avoid a similar fate. Unfortunately the only real answer is trading smaller.
Several Market Wizards also lost big or declared bankruptcy.
Michael Marcus - squandered most of his earnings outside of trading;
Ed Seykota - declared bankruptcy after receiving bad tax advice and being in a deep drawdown;
Richard Dennis - flagship fund was closed in 1988 and his second fund was started in the 1990s and quickly closed;
Gary Bielfeldt - seems his trading method no longer worked;
Tom Baldwin - not sure how much of it was trading related and how much outside of trading.
When you see recognise that these are some of the best traders of their era, it should be rather scary. All of these traders, (except for maybe Bielfeldt - I can't recall) traded with huge leverage. Perhaps there is something to be learnt from that.
Besides trading with insane leverage and not abiding by reasonable stops, what other wisdom have you got from your own experience, to invite getting whacked?
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From my own experience, traders can "invite getting whacked" if they use maximum leverage to park working orders to scalp futures contract.
I used to park 8 or 16 lots at every bid and offer price to scalp "counter trend" for 1 tick profit on the SGX Nikkei 225 futures contract. I stayed awake until 2 am every trading day, to key in GTC orders right before the close to get in front of the queue.
I have stop using this scalping method to earn a living since early 2012 as it "invite getting whacked".
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You know, JacLau, this is always a tough one. The fact that you have been earning a living from your account is commendable. Should you change to a lower risk approach, then you run the risk of not making enough on the account to fund your lifestyle. Should you continue trading with high leverage, you run the risk of facing a larger than expected loss. It really is a tough situation to be in.
Should you wish, you could always read up on Mark Minervini. He achieved gains of 220% p.a. from 1995 to 1999. During that period, his worst quarter was just under -1%. If you read his interview in Stock Market Wizards, you will find he is extremely risk adverse, and yet in absolute terms, he still outperformed most traders I know of. Best of all, all those returns were accomplished while never placing his account at excessive risk. You may not wish to adopt his style of trading, but perhaps there are some insights that you could find useful.
I find that if I spend less time digging my account out of holes, then I can spend more time close to new equity highs. There is a table showing that if you lose 10%, you need to make 11% to get back to break-even. If you lose 50%, you need to make 100% to get back to break-even. Thus, the larger the loss, the tougher it becomes to recoup that.
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I have never blown up an account to $0, or to some amount where I couldn't trade the minimum amount to cover margin, but I have had some big losses that made me think I needed to do something completely different or change course. One time included a margin call to cover some short naked FAZ options on March 6th, 2009, right near the bottom of the financial crisis bear market, and they were selling for something like 200% implied volatility. I covered them to liquidate the position and, of course, the market turned upward the next day or two and it would have been a huge winner. To make matters worse, I funded the trade with low-interest cash advances from credit cards. My trade and prediction was correct but my position size and risk management was whack. I was numb for weeks. I didn't mention it to my wife. Instead of trying to revenge my way back, I just took responsibility and decided I need to make some changes. And that's about when I discovered Ninjatrader, futures, and BigMike's blog, now futures.io (formerly BMT).
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actual the 38% with "NO" are something between liar or ignorant........
It is a matter of definition. If you loose more than ca. 30% of your trading capital in one or some trades, YOU HAVE blown up your account.
Why?
Btw. .....the understanding from instiutional investors.
If so, if you have a DD with 30%, something has happened what was not planned, .....means you ignored your own plan, means your investor will loose his trust in you. He will ask you why and you have to answer reasonable. If not sufficient he will draw his money.
If so, it is a important question if it could happen again, ......means you will ignore your plan again, means your investor will loose his trust in you. .....investor draw his money
If so, how much gain you need to get back in track? It drives you to increase your risk and leave your plan again. ...Investor don´t want to bear this risk and draw his money.
If so, it will last a long time, to much long, that you as a CTA will get again a performance fee, it is likely that you will loose your interest in working for nothing!...... your investors know this, and draw his money.
So.............. ahhhh you are not an institutional investor? It doesn´t belong to you? BULLSHIT!!!
TREAT YOURSELF, YOUR OWN MONEY LIKE YOU ARE AN INSTITUTIONAL INVESTOR!
...................otherwise don´t give yourself money to trade.
@Mike......
ask this question again with the add, that everything more than 30% loss is equal to have blown up your account :-)
The answer divides the one who are traders and the one who are not!
Traders = 100% otherwise they are still on the way on experiencing and trying.
I agree 100%. I hate it when people recommend beginners to sim trade for months and months and months until they are "profitable". Honestly, sim trading serves the purpose of learning how to click around a damn trading platform, and after that, you better be playing the real game or your mind will not take the exercise seriously.
If you are beginner and don't know how to trade,
don't know how to make money then starting from 2 day
after you have practiced 1 day clicking on damn trading platform
is not intelligent move.
Do you think 1st year medical students start operate on live people
or do they first practice on donated dead bodies ?
I see direct relationship. My successful start on TST live account is based
years COMBINE ( TST SIM ) trading.
Yes it toke longer that expected.
And the route from sim to live shoud have been shorter.
I made all the classic mistakes.
SUCCESS THOUGHT THE PROCESS OF ELIMINATION
There is my results for first 16 days.
By the way my own trading rules are even tighter then TST demands.
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Who cares? Sim trading does nothing for real practice, which comes from putting real money on the line and learning skills WHILE building psychology.
Medical students are simply reading and studying, and the cadaver serves the purpose of learning gross anatomy. Medical residents in surgery, on the other hand, start their real learning at the live operating table under the guidance of seasoned surgeons. They don't learn real skills in the simulator, or in medical school. Residency training in surgery is real.
I did the real money on the line from day 1 and lost 8000 $ in 6 months
And what I learned :
- I dont know how to trade
- adding to the loser dont work
- hoping dont work
- picking tops and bottoms dont work.
- support / resistance must hold - no they dont
With sim first my learning costs to trade would have been only fraction of that.
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lemons, don't you think that losing the original $8k shortened your learning curve quite significantly? I find that feeling real pain is usually needed before traders have a chance at improving.
Don't feel bad about the money lost...if all you needed to do was lose $8k before you turned things around, then you are way ahead of the crowd.
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Maybe but sim trading has value. Even Steen sees value sim as development tool.
Most in futures.io (formerly BMT) see sim has no or negative value.
I see I know that sim had big value in my development.
Heat me and call me shortsighted.
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First I lost $30k on stocks, back in the Dot Com era crash. I was an expert in "catching the falling knife".
My most memorable was TiVo, I made $8000 in 1 day! I did a little dance. I said out loud "Thanks, Money Tree!".
Next day is rebounded down $12k. Wash, rinse, repeat.
I would quit on and off, over the years. Thankfully, I was still sitting out over 9/11, so I missed that one.
Second blown account was during "Flash Crash". I had been having trouble with my discipline, and so installed Stop Loss orders on every single investment just days before...all gone, despite what would have been a flat day overall.
Third time was not really a full blow out, but I had switched to Options, writing covered calls and selling puts on stocks "I would be willing to buy anyway." Found out that writing options is taking on the role of Insurer, and sure enough, my good stocks were called away and I acquired one bad stock which proceeded to lose 75% of value. Quit again.
Recently acquired a mentor, who taught me Futures. He instilled a great sense of discipline in me. I wanted to start out small, just a baby $2500 account. Paper traded ES first to learn the ropes, then on to SIM. "Made good money" on SIM, so graduated to Live. I thought it was reasonable to risk 10% of the account per trade. Needed to lose 9 times in a row to fall below the day margin. Kept a trading log. Made it up to $4000 in 2 months trading. A 60% gain. My confidence grew. Discovered I was "Curve Fitting". Thought that was a good thing. Account now dormant at $1300 balance. My "method" had ceased to work, starting around Thanksgiving last fall.
Starting again, now with Ninja Trader. Much of my troubles could be attributed to "Trade Breakage", as I was entering trades by hand while working my Day job. My log records over $3000 in such manual slippage, as psychology would intrude on my planned entry/exit points. I re-created my old method in a Strategy, which back-tested well against my planned trades last year (not what I actually executed). Outside of futures.io (formerly BMT), I would hear a lot that successful traders back tested their systems. I still do not quite understand @Big Mike's dislike for backtesting. If you are trying to scalp, slippage would get you, but if you shoot for medium term swing trades, I have found that subsequent backtests reflect what I have seen in forward SIM testing.
My strategies always involve an active Profit Target and Stop Loss, in case of internet disconnect. I can move the Stop Loss in my favor, but Profit Target is fixed. My biggest fear is a runaway trade bankrupting my account while I cannot get online.
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I used SIM trading to get the statistics for my trading system when I was learning it. I kept detailed results on a spreadsheet over a 3 months period of time to calculate the win rate and expectancy. Learning the system and knowing the statistics of the system is an important part of psychology. It gives you the needed confidence so that one may learn to think in probabilities. How can you think in probabilities when you dont know the probability of your trading system ?.
True one may very well do this while trading live. I choose to learn and get the numbers using SIM and work on rest of the psychology once I started trading live few years back. It is still work in progress but I can honestly say trading thus far made me a better person , if not the best trader I can be , yet .
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Is there a difference between someone who sim trades for years and years and years and never goes live, and the person who sim trades for a couple months. Goes live, experiences a blowout or large drawdown. Realizes what he needs to work on. Goes back to sim trading to work on those problems and then goes live again?
For the person who is just simming away year after year I don't see the value in that. But I can see the value in someone who has experienced live market conditions and goes back to sim, taking it very seriously to figure out what they need to do.
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Losing money live does teach a trader something, but one can't keep losing the same amount of money testing out what they think might or might not work. Sim or no sim, there needs to be some sort of re-evaluation phase either simming, back-testing, or trading incredibly small sized trades to the point the losses don't really affect the account size. I would consider the latter to be simming to a certain extent before consistency or growth is attained considering the results of such small size is simulation for larger proportionate size.
R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
Of course the studying is done first - medical school is the studying of basic science and general observation of some specialties, then if you become a surgeon you will go through a residency which DOES consist of studying behind the simulator - but there is only so much stuff you can do with that.
At some point you do have to make the leap. I think the best way to not fuck yourself is put a trailing stop on your own equity. So you kick yourself back to sim before you actually blow up. Or even just take time off if that seems to be more in order. I do think, though, if this is what you want to do, you shouldn't give up. And you shouldn't trade with negative emotional capital (I can't recall who coined that one but it's a good phrase), either. If anything, trading is about acceptance, more than it is about anything else.
Everyone has their own style as well as different situations in life. There are so many very deep emotions regarding people's relationships with money and everyone learns at their own pace.
While people give analogies to go against simulating, I can think of athletes that practice their swing, throw, lift, run thousands and thousands of times before becoming a professional. Trading with real money gives experience with one's attachment to the money, but doesn't allow the trader to develop their technique.
That's an extremely interesting concept that I thought about before. How many hands did that that asset, contract, etc. go through and how many people lost money for that 1 winner? How many commissions were paid? It's pretty crazy to me.
I've never blown up an account, i.e., taken account down to a cash balance that was untradeable, but I have had a few large losses that resulted in margin calls and/or being numb for several days, leading me to stop trading or just cash out my account in surrender.
The most memorable one was the last time I did this. At the time I was trading money I got from a credit card cash advance 0% interest for 12 months. I figured any idiot can make more than 0% in 12 months so I went for it. It took me a while to pay that back but at least I've gotten trading loss write-offs from on my taxes for years. It was primarily from selling naked options on 3x levered ETFs like FAS/FAZ during the height of the 2008/2009 financial crisis. I was collecting fat juicy premiums for a while and then the market went hard against me. The funny thing is that if I could have just held on for another day or two I would have made a sweet profit. I was margin called right before the bottom of the market on March 9th, 2009. I was trading way too much risk. Shortly after that I discovered Ninjatrader and BigMike's blog.
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That sentence scares the hell out of me. The idea that somebody is consciously aware of the fact that they have no control over certain parts of themselves and at the same time they trade an account with significant size is downright scary for me.
I consider myself still fairly 'green' when it comes to trading - been trading real money less than a year now. But even I would consider the thought of not having that kind of control extremely dangerous. I hope the poster is going to seriously consider a way to gain control over that part of themselves.
I like peteM's 'tough love' post . His recommendation about thinking like an institutional investor is something worth considering in my opinion.
I also like his point that says basically if you lost 1/3 of your capital in a relatively little time (e.g. in 1 trade) you have blown out, regardless.
In a way, it should provide people with alarm bells signalling that something's wrong.
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So to add my own experience... I blew out once, less than 3 months after I opened my first futures account.
It was, you guessed it, on one trade
I was trading Bund, which up to that point had kept going lower and lower for several days, so I went short with 2 contracts at a place where I thought I was getting in on a pullback........... unfortunately it was the day when the Bund reversed course..............
I experienced what I called the 'Frozen rabbit syndrome', i.e. a part of me believed (or wanted to believe) the price would eventually come back down to test the low and another part of me simply could not take the loss, which became bigger, and bigger.... until I could not take it anymore.... classic.
So I closed the position when in fact I had not gone to zero but I was below the day trading margin so I could not trade anymore... I think that fits with the 'blowing out' definition, as I had to post more margin into the account.
Thankfully I had gone down the route of opening an account with the minimum possible margin I could initially post, so it wasn't a devastating loss.
What I learnt from it was that cutting the losses means you can always come back to the market another day. I also changed (albeit gradually) my downside risk limit to a smaller and smaller one.
In a way, when I was into that losing trade, something inside me was telling me to let it blow out anyway. Was it self-sabotage? Perhaps. Was it the knowledge that if I did, I would learn something more valuable from it? I hope so.
I have read all of this thread with interest, although I have not been able to address the fundamental question:
Do the majority of people think that blowing out 1 or more accounts is a necessary part to the path to consistent profits? Did that change your perspective?
N.B.: I am not suggesting that everyone must necessarily blow out an account at least once in order to become successful. I know everyone's different and there will always be exceptions to the rule. What I am wondering is what the vast majority of traders who consider themselves consistently profitable think about the subject.
The following 2 users say Thank You to xplorer for this post:
Quite often we enter into trading with preconceived notions of how the markets should work and we do not wish to change our notion of how things should work. Blowing up generally forces traders to take a good hard look at the assumptions they've made about trading. Does not mean anyone will become successful after blowing up, merely means someone may be more open to becoming profitable after blowing up. It also does not mean everyone needs to blow up in order to be profitable.
I see you quoted @JacLau. I also found his numbers quite scary and don't see how anyone can still make rational decisions subjecting their equity to such massive swings - it must be one wild, scary and exciting emotional and financial roller-coaster ride. Best way I can see to avoid this is to trade very small until individual trades stop to matter. Anyone who has read Mark Douglas should see the logic in that.
The following 3 users say Thank You to grausch for this post:
Yes, good point. I assume you're referring to humility, which I would concur with.
Of course.
Agreed. When I was very young I remember my father telling me about a friend of his being addicted to gambling (must have been poker) and losing his house to gambling debt... I thought to myself 'this guy is a loser, I would never do that'.
It's ironic in a way, not that I lost my house or anything, but even losing the smallest amount of control when in a trade gave me humility in my opinion, because it let me realize me and the guy who lost his house are not that different, we both lost control.... certainly the amount of control which was lost matters - perhaps there's a threshold which kicks in with me that the other guy does not have - but bottom line I am thankful because of this increased sense of humility...... I think I agree with whomever said that trading teaches you a lot about yourself.
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Humility is a good trait to have when trading, but it should be balanced with self-confidence lest a trader find himself incapable of really "pushing" a trade that works in his favour. I was also thinking of letting go of the need to predict market moves, learning to stick to a winning system and not deviating and most importantly accepting that it takes time to build up capital. Most people view trading as a quick way to riches - IMO if you have that view any riches you get will be short-lived.
I also know a compulsive gambler. It is scary to see what they can put themselves through and quite scary to see how easily I find myself sometimes thinking "this is such a sure thing - I should be trading much larger!". The easiest way I know of not to lose control is to trade really small, increase size slowly and reduce size quickly if things don't work. Whenever I trade too large, individual trades become too important and then I usually get shaken out of positions just before they start working.
The following 4 users say Thank You to grausch for this post:
First experience. When I was a student finishing my master I though I know everything you can possibly know about options. I borrowed money with a friend and lost almost everything in less time than it takes to write it... (lost around 20K$)
Second one: what I have lived is not exactly an account blown up but I think it is the same process and feeling.
It started with with the collapse of Lehman. I had a portfolio of supposed "blue ship" managed by a financial adviser. I wake up one morning in panic. So I decided to take thinks in hands (and I know nothing about stocks). So I liquidated a large part of the portfolio between 2008 and 2009 and of course always at the wrong moment. I've decided to hold some positions and of course some of them took 3/4 years to reach their previous levels.
Realized losses around 2M$, opportunity costs around the same thing, psychological cost: invaluable.... If I had followed my adviser I would made money or at least lose nothing.
lesson: Today I everything in stocks I have is managed and put in a trust managed by people who know much more than me and in which I have no authority, I'm just a beneficiary.
same causes = same effects : panic, greed, fear, incompetence.
R.I.P. Olivier Terrier (aka "Okina"), 1969-2016.
Please visit this thread for more information.
If most of the poeple think that it is necessary to blow up their account, I don´t know. I am quite sure that many of the experienced trader can say that it has happened to them.
in my opinion, it is not necessary, but you have to consider it quite likely, that it will happen.
So many interesting postings here, great to share :-).
Ok, so I have to add mine..... I had it also, and also more than one times. To be honest I haven´t counted. In about 15 years ..... 3-5 times I think so at least. The worst one caused a pause of nearly one year.
Some samples for reasons I suffered.
1. The one at the beginning, ..... a "classic", collecting small profits until a "big swan" draws it and draws in average more than the small profits added up. After several months the account was down.
2. The frozen rabbit phenomenon, sticking in the believe that until you go out, the market will run in your direction.
3. The "classic".... "if your are in trouble.........double", the martingale trap.
3. The ....only 1.000 than the 99 comes to the 100... setup. ....... with ending in a 80% loss.
There was many more I think, not alway leading into a blown up account but into a strong drawdown.
An advice would be, if you think you can´t trust yourself and at the beginning you shouldn´t trust yourself, let the broker take the last decision, put only a part of your money on your trading account, that you can "restart" lets say at least for three times. Consider that this money will be blown away and it is ok for you. If you are wrong and you freeze, your broker will flatten, it is his job, it is ok, sometimes you have to pay a fee, but anyway it is worth to pay. WAIT, after this happens, for at least 3 or 4 weeks and think about why it happened and how to avoid in the future.
Once you reached a profit, not one or two profitable trades, but if you are at the end of the month, the month was good and you are quite satisfied, always withdraw a sum and save it, always leave a little bit more at the trading account then the month before, but "pay yourself first". add up your "safety account", add up to another and higher next try.
NEVER TRADE FOR "MONEY"...... I know, it sounds something strange, but if you have in mind "I want to have this or that amount earned", you will fail.
PLAY THE GAME
IF YOU ARE GOOD AT THE GAME .....MONEY WILL FOLLOW
It is great to read those posts. Lot of learning here.
The only 3 general advice that come to my mind are :
1 - when you enter a trade you can't know for sure what to expect but you must know for sure what you don't want to see. If you see that exit don't wait.
2 - never enter a trade without a stop loss. It is an urban legend that the market is chasing stop loss order.
3 - never use your stop loss as an exit strategy. Your stop loss is like the airbag in your car. It makes you safer to have one but it not a reason to drive your car directly in the wall.
if you follow this 3 rules you won't be rich but at least you won't blow your account.
R.I.P. Olivier Terrier (aka "Okina"), 1969-2016.
Please visit this thread for more information.
Broker: Primary Advantage Futures. Also ED&F and Tradestation
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There's obviously a potentially significant difference between "blowing an account up" and experiencing a near 100% drawdown. If I fund an account with 100k, then take out 5k/month for 2 years before "blowing the account up" in month 25 I'm still up $'s and have in reality only experienced a 45% drawdown despite "blowing the account up".
I'm curious when people say they've blown 2 or 3 accounts do they actually mean they got wiped out, meaning a near 100% drawdown?
The following user says Thank You to SMCJB for this post:
I took 'blowing out' to mean what @Big Mike meant at the beginning, i.e. bring your account down to a level where you're unable to trade any longer, so in effects it means the account must have less than the minimum margin allowed to trade... in which case if I want to trade again I need to top up my account.... that definition of blowing out fits what I personally experienced.
The following 2 users say Thank You to xplorer for this post:
I've just read again your question and now I think I understand better what you are asking.
In my earlier post I had indicated that in my case I had opened a very small account to begin with.
So it follows that with very small accounts the chances of 'blowing out' the account are pretty high, especially if you're classed as a beginner.
On the other hand, I believe it would be very unwise for a beginner to throw a lot of money into a newly opened account. In my case it would have probably made me more reckless.
Best to keep things small. There's always the psychological barrier of a margin call to deal with if I have a small account, so I'll try and avoid that.
I hope it makes sense...
The following 2 users say Thank You to xplorer for this post:
Blowing accounts is self-destruction and self-sabotage.
The real emotional control is to stop the rational side of the brain when the emotional is not good. If you can do this, you can trade safely.
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. His recommendation about thinking like an institutional investor is something worth considering in my opinion. 
- back on the topic at hand! 
