I have not blown an account but have donated about $20K to the market as tuition on the road to becoming a successful trader. I don't think it is possible to avoid losing money when starting out with trading, its just part of the process.
Regarding SIM trading, I don't think it is absolutely worthless, I have learned that nothing (rational) in trading is absolute. I read somewhere that if a trader takes SIM trading seriously trying to avoid changing what would be done in LIVE, one should expect about 70% the returns in LIVE vs SIM.
What I did after losing a bunch was to step back and finally stop going from one trading approach to another. I decided on price action trading using a scalp/swing blend based on Brooks & Mack but tweaked to my own likes.
I traded SIM until I was very consistently profitable. Then I wrote a Ninja script that I use to manage orders, this script is able to change the account in which trades are taken randomly (without me knowing the account being used) where I can change the percentage of trades taken in SIM or LIVE. I used this to wean myself off of SIM, its worked well so far.
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My first account was a TKO. Left with 1 K of 4. Reality set in and realized that I needed to work more and save true risk capital. (10k) The best thing i did was surrender before going to the goose egg. Live trading was another realm than was SIM trading. I think of it as a learning experience. I could of have paid for coaching but feel like the learning experience from having skin in the game was invaluable and the best teacher. So my goals now are to buy a sufficient computer as opposed to my 17 inch laptop and a good platform. Considering MOTIVE WAVE as it seems like the best for the MAC that i am about to purchase......(Any objections to MAC or MOTIVE WAVE please do tell in PM as i dont want to lead this thread off topic)
I continue to monitor the markets daily and read the great threads here @ futures.io (formerly BMT)'s. ( especially the SPOOO). Considering doing a combine at BLUEPOINT or TST to develop more discipline. Presently just getting settled in to the new job and getting my awesome veggie garden started !!
My losses were a result of tight stops based on a smaller sized account risk managemnt parameters (I know... you warned me!) and not following my rules for entry. I had a setup that I looked for in my simple old school indicators that day in and day out proved to be solid. I allowed fear to keep me from taking these trades and focused on smaller moves and the impulses of my lizard brain. Also had some profitable days get wiped out by being greedy and not taking what the market gave me. I was proverbally addicted during my quest. Would stay up all night watching the ETH tick for tick and , not getting sleep whilst getting caught up in the excitment of the cash opening. Not a healthy way to trade to say the least especially while working full time. Also jumped around to different trading styles. Thought i was going to be a gunslinging scalper in the beggining but realized that there is probably much more serenity in trading daily swings. I still want to orderflow one day but I will have to partition a chunk of cash that I am willing to lose, and a great deal of more experience before i take that journey. (KISS)
SO i have started a second job and will continue to watch and learn from the successful (and not) traders who share their experience here along with other avenues for learning. I believe that I can return to live trading by the fall if I work hard through the spring and summer and accomplish my fiscal goals. In spite of my losses I did learn a lot about myself, and reality. Reality- the world or the state of things as they actually exist, as opposed to an idealistic or notional idea of them.
"Napoleans severest comment on his beaten enemies - that they "saw to many things at once""- Hart
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1st account - trying to trade using online analysis and other people's views which resulted in short NZD/USD & AUD/USD and being high on hopium I held for 3 long hours while they were plummeting down (hoping more with each small pullback it will turn around and dying each time they made a lower low) until I got a call from Uncle Margin and everything ended - I'm glad my broker didn't allow me to top my account up as I wanted to rescue those positions STUPID me
2nd account - tried scalping DAX (need I say more ) and DJI switching from system to system, strategy to strategy at work and at home. Thinking that the spread is 1 tick I could make millions just by implementing a simple strategy (soft dev mindset). Taking £1-5 profits loosing £40-100 in addition to impulsively chasing the markets and wanting to make up by over leveraging and instantly loosing - example: put a revenge trade 4x bigger then and 20x bigger than now on DJI after the open and got immediately stopped out for 12ticks. Again it was a big STUPIDITY tax
This was all on SIM with 50k account - imagine how much I could leverage up and handle if I was given 150k Now what's the reality? The reality is that psychologically I can handle 1-3 mini lots (£1-3) at the maximum and just recently I've decreased that 10x. But you're completely right, it's a side topic.
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Consistency over time
Last edited by chr1s; March 24th, 2015 at 07:35 PM.
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The first one was at some point in the mid 2000's when the rage was trading stocks yourself and sites like Sharebuilder and Etrade were big. I don't remember exactly how but I ended up following some mailing list of penny stocks that promised profits for everyone. Needless to say I didn't make it very far following what I now know today are pump and dumps. That loss was $4500.
The second account I blew up was in 2010, I just gotten back into trading. This time I got dragged into Spot Forex and was trading based on every technical indicator you could imagine. I was not managing my risk, I was doubling down and revenge trading on losses. Pretty much everything you could imagine I was doing wrong. After I lost that account I took a break for a bit as the loss that time was roughly $15k.
In 2011 I started actually reading quite a bit, and doing a ton of research on the markets and what moves them. I stuck with price action, and the underlying fundamentals of the market. In 2012 I started trading Spot Forex again mainly due to my schedule and it was really the only market I could trade EST evening hours due to Tokyo being open. I still had losses but I stopped the revenge trading, I managed my risk properly. I also started keeping a written journal, every two weeks I started sitting down and reading the notes on trades I had that were losers. I saw mistakes I made, and overall slowly became a better trader. At the end of 2012, my trading accounts closed in the positive for the first time.
As of currently, most of my methods are semi automated(meaning I enter the trade based on what my systems see), or fully automated. I ran into an issue where I'm a much better trader if I'm forced to follow the rules I create, its far easier to have some code helping to force me to do that, than myself going through a checklist that I know I will most likely bend rules on. My fiance also acts as my auditor, every week on Saturday she goes through my trade logs and ensures the entry's were valid, as were the exits, and that risk is in compliance. That in itself has been worth its weight in gold, due to the fact I know if I violate anything I can't hide it.
All and all I'm glad I blew up two accounts over the years as I wouldn't be where I am today.
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I thankfully have never blown an account or a desk and I better not now cause it would really really hurt.
I do have a couple of horror stories, including a decent loss in my personal account though, back when I was young and naive!
My first horror story was back in the Tech Bubble of the 90's. I was working on an energy trading desk for a large energy trader. One of the guys I was working with, while less experienced than me was an excellent trader and he was trading everything in his personal account. Listening and watching him made me want to be more like him, so I started trading things up in my personal account as well. I piggy backed him on some S&P future trades and made some good money. Then I started dabbling in writing Call Options against tech stocks. The Vol was amazing. I'd buy a stock, sell 10-15% OTM Calls and collect and addition 10%-15% in premium. Then when the stock spiked I'd just roll the calls further out and higher. My pocket gold mine was JDSU. Then as we all know it all collapsed. I don't remember the exact timing of everything but the real problem was I booked gains on the options, and paid tax's on those gain's. Then when it collapsed I realized losses on the remaining call options and losses on the stock but couldn't take the losses against my already reported gains! So even though my net PnL wasn't that bad (up then down), the cash flow was horrific for me, and it took many years to be able to take all my losses on tax forms!
My largest trading mistake was really stupid. Several traders sat around bored, discussing the stock market. Discussing companies that are doomed to failure - and are just completely over hyped. Starbucks was one (in Houston we have a junction that has Starbucks on 2 of the 4 corners!), Kispy Kreme was another. My pet hate was Netflix. They were obviously doomed - internet was going to kill video & DVD companies. So I sold some Netflix calls. Several weeks later I was going out of town (international) for 10 days so decided to check my personal account. My short netflix calls did not look good. So being the genius that was back then I rolled my calls further out. Prices weren't as good as I would like, so to avoid taking any premium loss I rolled at a ratio, increasing my short volume. Unbeknownst to me Netflix had an earnings release while I was away, and their earnings were good - or at least their projections were! Don't recall the actual numbers but it was something like a 20K loss on 50k account when I got back. As it happens Kispy Kreme would have been a great long term short, and you really needed to be shorting Blockbuster not Netflix!!!!
I now consider myself a successful trader. Like @Big Mike and @tturner86 though I don't think I could pass a TST combine. The biggest issue for me is the rules are overly restrictive. Not being able to hold anything overnight would hurt me, but the biggest issue would be not being able to use XTrader. But then I guess it makes no sense allowing $1500/month software with a profit target of $3000!
Fireside Stories... (yeah @bobwest I'm old too!)
On the subject of blowups, my first ever trade (on a trading desk not personal account - I didnt have a personal account) was tied into the Metallgesellschaft blowup. Metallgesellschaft (or "MG" as they were know) were a massive German Industrial Company that lost about $1.5B back in 1993/94 in the Oil markets. I was the junior guy on the desk and I convinced my boss to allow me to put on a Spread Option Ratio Fence on the X93/Z93 Brent Spread (long ATM Put, Short 2X OTM Call - Zero premium - @ron99 !). MG had entered into these huge long dated forward (diesel I think) sales and hedged it with prompt Crude Oil. Then every month they had to roll (sell) their position to the next month. As soon as they started doing this each month the prompt spread collapsed under the pressure. Hence the short spread option position.
I also had a first hand view of the 1998 Midwest Power Crisis, when electricity prices never having gone above $50/MWh before suddenly went to $7500. Yes $50 to $7500, all be it for only a few days. There were many causalities of this price spike, the largest being Power Company of America ("PCA") and Federal Energy but the most interesting was the "City of Springfield" the capital of Illinois (no relation to the Simpsons!). Springfield in their infinite wisdom sleeved options for Federal Energy. Specifically Federal Energy were a high credit risk that many energy companies couldn't trade with. Springfield bought options Federal was selling and then resold them to the major energy companies at tiny profits. (Hence the sleeve) Unfortunately when prices went crazy, Federal went bankrupt and Springfield was left owing the energy companies tens of millions of dollars.
Since I'm now on a roll, and we are talking about blow ups, I also had a first hand view of first the Motherrock collapse ($500M Hedge Fund run by ex-NYMEX President Bo Collins) and then the Amaranth Advisors blowup (who blew Motherrock up), which for those of you who didn't know lost $6 BILLION trading Natural Gas in 2005 mostly to Centaurus (All hail John Arnold) but also Sempra, JP and Citadel. Several years later Bo Collins set up another Hedge Fund, The 1618 Group, named after the Golden Ratio, (should mean something to all you Fibonacci traders) which I believe failed under slightly more suspicious circumstances.
Must say, on the subject of all these blow ups, I very glad I've been in the right side of them rather the wrong one.
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I am happy for your success! however, I think that your success is also attributed to the fact that you are very structured person. Also, I think you are a competitive person by nature, and that is where you pick up and do not repeat the mistakes of others. Trading is a competitive sport, and in winning you do take advantage of your opponents weaknesses. This is not only an analytical game done with latte, recognizing patterns, but having the ability to see market action and reaction, volume price relationships, etc.
You shared your opinions about paper trading, and I totally agree. Sadly, when I said that to many others out there, they thought it was attributed to my occupation and compensation. Not only that paper trading does not lend to testing real methodologies in the market place, but there is an entire industry out there who wants to sell you what you are "missing". So you end up buying another indicator and/or software that will not solve all your problems in real life.
Your growth as a trader on futures.io (formerly BMT) is also reflected in the growth of this forum to encompass technical aspects, methodologies and finally reflect what it takes to be a trader. To many more successful years!
There is a SUBSTANTIAL risk of loss in futures trading.
PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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I strongly disagree, I have learnt a lot by testing ideas and methodologies on both Market Replay and Live Simulation. It is a great playground for testing ideas without risk of real financial loss. My theory is that if you can't trade on simulation with a methodology/strategy that you are comfortable with, then you should not be trading in a real cash account.
Basically, I have saved thousands of dollars by testing ideas in a live simulation environment rather than in a real cash account. You need to build confidence and consistency in a simulation environment before testing live.
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I failed a combine, and I've lost some money trading stocks, but all these things have done has make more interested in doing things the right way. I keep myself to a $500/day loss limit on the combine. I pick stocks carefully when I'm putting on swing trades. I still have a good ways to go, but hopefully I will never get an actual margin call. I really am trying to build discipline, and the right perspective before putting too much money on the line.
I'm actually doing well in the combine I'm taking now. There are good days and bad days, but they are only as good or bad as you allow them to be.
Of course, if you have live trading experience, you are going to treat simulation differently than someone who has never been live. The point is, even if you are already a live trader, or you are just starting out, the safest and best way to test new ideas is in a simulation environment without risk of real financial loss.
Once you have tested ideas in simulation and are comfortable with the results, then feel free to go live and follow your plan. If you can't become a confident simulation trader, then you should not even think about going live.
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