I quickly read through the thread, and I believe right now that most of the blown accounts were very small. The largest number I saw posted was $20k and then some $10-15k accounts as well. However, the majority of these numbers were below $10k.
Even though we should think in terms of percentage returns, people also assign dollar values to their returns. A trader returning 25% on $200k will have an additional $50k in his account at year end. A trader returning 100% on $10k will only make $10k. However, trying to score 100% gains (or more) every year significantly increases the risk of blowing up, yet most people consider that acceptable in order to chase the dream.
It may not sound sexy to most people, but when you have a smaller account, the best way to increase your capital is through additions from your salary and not through trading profits. The larger your bankroll, the less risk you need to take in order to make significant $-amounts. Yet most people never get that far because a) they lack the discipline to consistently save and b) they dream of turning their smaller accounts into large ones by just having large returns.
Odds are, some people will succeed in getting the truly outsized returns needed to turn the small account in a fortune, but for most of us that won't happen. However, reducing risk on trades (and then also reducing potential returns), adding in capital on a monthly basis, and building the account over several years can lead to a fortune. It is a much lower risk scenario that will provides a much higher chance of generating real wealth, but most people prefer to play the lottery. If you can not save up a decent sized stake to begin trading with, what makes you think you have the discipline to stick to your trading approach?
The following 10 users say Thank You to grausch for this post:
You can put my down for sure.
Also you can down play SIMULATION.
But do you know SIMULATION play important part in pilot and vessel capitan training ?
Also do you think that Company " x " is so stupid that they risk minimum 1500 $ per trader who only
need to pass 10 day or 20 day simtrading ?
I agree that real learning starts with money but simtrading is first step to take when you start
to learn trade.
The following user says Thank You to lemons for this post:
Don't get me wrong, I do agree with you that one should demo trade to figure out the platform, forward test strategy and setups, build a discipline before going live etc not doing that one may as well transfer money directly to Big Mikes or tturner or FT71 or couple other ninjas bank account -but one must not expect to take demo results and replicate it on live. I strongly believe in sorting out technical bits on demo and then immediately take it live. When I say live it is tiny trades but real cash nonetheless as there are apart from the biggest psychology issue, execution differences, sudden surprise slippage etc. A lot of people just don't have the patience to trade small when trading live and that's a problem too. Additionally I've done simulation thoroughly in the past and was taking it seriously to the point I was experiencing similar emotions to trading live - but still different to actually trading live.
All the best
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Consistency over time
The following user says Thank You to chr1s for this post:
I think the whole sim argument is very painful to a lot of people because it basically means they must give up on their dream to be a trader.
There is a large group of people that have been on sim for a long time, months, years. They have no business trading, but they like to think they do -- it is a dream of theirs, which is certainly understandable.
By advocating that sim is virtually worthless as a learning tool, people can't reconcile that with still achieving their dreams to become a trader one day.
The fact is, the majority of people are not good traders and are not cut out to make it in this business. It is a very harsh reality, but there is no denying it. Unfortunately, everyone thinks they are the exception to the rule.
If you want to be the exception to the rule, then you have to be put yourself in a competitive position. That means being sufficiently capitalized, and having sufficient real trading experience (again, sim does not count).
You don't have to take my word for it. Everyone that goes from sim to cash loses money, no matter how much of a rock star they were on sim. It's my belief (as I said before) the longer you are on sim, the worse you condition your mind for bad behavior and thus the more likely you are to fail as a real trader. Again, you don't have to take my word for it, it's been proven countless times before. You have to look no further than countless journals on futures.io (formerly BMT).
The entire point I am making -- sim trading is not trading education. The real education is obtained once you start trading cash. You do not need to risk your monthly salary. Just start by risking a small amount and get off sim.
Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.
Need help? 1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first. 2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses. 3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make. 4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance. 5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers. 6) Help using the forum? Watch this video to learn general tips on using the site.
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The following 16 users say Thank You to Big Mike for this post:
As someone who started out "sim" trading, I agree wholeheartedly. I was sim trading to learn some of the ropes while I saved enough money to open my first real account. I had nothing but time on my hands and wanted to learn, so this was a good use for sim. I sim traded for 2 years with moderate success. The big day came... I had finally saved enough ($10K) to be able to trade some "mini-lots" on a Forex spot account and happily opened my live account. Nine months later... KABOOM!
I would like to say I wasn't devastated, but I was. But I considered my lost money a "tuition"... a small price to pay in the journey of getting my "degree" in trading. I stepped back, took a few months off, re-evaluated my method(s), and realized that they were extremely flawed... and that my two years of good "sim" trading were really just akin to being the guy who thinks he's a genius in a bull market.
I worked a second full-time job for 2 years to scrape together enough money to cover my losses and open another account. This was the quickest way to get me where I needed to be. It wasn't easy, but I did it. BTW, this should be an "Ah-ha" moment for those of you "newbs" who are looking to trading as your dream, the way that you can quit your job and be rich. Like most things in trading you're going about it the wrong way. If you want to be a success you should be working harder at your job (or getting a second one) to help you get where you need to be, not telling yourself that someday you'll be rich from this "easy" trading gig.
A decade later and I'm happy to say I have been consistently profitable since my "big lesson" of blowing up. Don't get me wrong... I've suffered through some pretty big drawdowns in my long-term trading (up to 50%), but I'm confident in those drawdowns because my testing told me they would come pay a visit for short periods. I've recovered from all of them without ever getting close to a margin call and have averaged over a 25% CAGR return for several years now.
I'm not telling this story to brag... just that there are some harsh realities to trading, but there really are rewards as well. The rewards aren't necessarily monetary though... I really see them as having spent several years learning a new skill that will last me the rest of my life. Being financially independent doesn't necessarily mean billions in the bank (I have enough to pay the bills and a little more), living in a mansion (I live in a 2 bedroom rancher), and driving a Lamborghini (I drive a 15 year old convertible). But I am financially independent because I have a skill which will allow me to provide for myself and my family for the rest of my life through my trading business.
Oh, and for those who are interested... yes, I still work a full-time job (only one now). I do this so that I can continue to compound my returns and add some cash to my account when I want to. Again, for those of you who really want to do this, you'll get there faster if you keep "paying yourself first" by adding to your trading funds when you can.
The following 14 users say Thank You to JerseyJim for this post:
Just to buck the trend.. I spent 2.5 years on sim and made money then made the jump to live almost a year ago and I have made more money live than sim.
I think sim is vital in any trader's journey and don't completely agree with the sentiment that it is a massive difference from live.
I do agree that it is not the be all and the end all but you can trade the same as sim with the right method and psychology.
The following 4 users say Thank You to Skinchin for this post:
Problem in your sentence. You made no money in SIM. You may have been 'profitable' in SIM but you never made money.
The average person will not be able to trade. That doesn't mean you can't make money in the market. Everyone should be investing in some capacity. ETF's, 401K's, etc... One of the best trades a person can make is 5% of their paycheck matched by an employer into a 401k on a monthly basis for 10-20 yrs. That will trump what ever you think you can make day trading tenfold.
The following 3 users say Thank You to tturner86 for this post:
Yeah, I thought the same thing during my almost year of live trading. Then I met the "top-tick" that took me down.
Best of luck to you in your future trading... and here's hoping that you aren't the "genius in a bull market" who just hasn't met his top or bottom tick yet. (Said with all sincerity, I'm not being sarcastic).
The following user says Thank You to JerseyJim for this post: