NexusFi: Find Your Edge


Home Menu

 





Account blown up


Discussion in Psychology and Money Management

Updated
      Top Posters
    1. looks_one JacLau with 12 posts (46 thanks)
    2. looks_two grausch with 10 posts (40 thanks)
    3. looks_3 Big Mike with 10 posts (150 thanks)
    4. looks_4 xplorer with 8 posts (13 thanks)
      Best Posters
    1. looks_one bobwest with 22 thanks per post
    2. looks_two Big Mike with 15 thanks per post
    3. looks_3 grausch with 4 thanks per post
    4. looks_4 JacLau with 3.8 thanks per post
    1. trending_up 37,766 views
    2. thumb_up 733 thanks given
    3. group 55 followers
    1. forum 155 posts
    2. attach_file 1 attachments




 
Search this Thread

Account blown up

  #41 (permalink)
 grausch 
Luxembourg, Luxembourg
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Stocks
Posts: 494 since May 2012
Thanks Given: 1,731
Thanks Received: 1,159

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?

Reply With Quote

Can you help answer these questions
from other members on NexusFi?
The space time continuum and the dynamics of a financial …
Emini and Emicro Index
Deepmoney LLM
Elite Quantitative GenAI/LLM
Better Renko Gaps
The Elite Circle
My NT8 Volume Profile Split by Asian/Euro/Open
NinjaTrader
NexusFi Journal Challenge - April 2024
Feedback and Announcements
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Get funded firms 2023/2024 - Any recommendations or word …
59 thanks
Funded Trader platforms
36 thanks
NexusFi site changelog and issues/problem reporting
25 thanks
GFIs1 1 DAX trade per day journal
19 thanks
The Program
18 thanks
  #42 (permalink)
Cornix
Novosibirsk + Siberia/Russia
 
Posts: 21 since Oct 2012
Thanks Given: 1
Thanks Received: 22

In my view it is just another variation of the same problem: addiction to trading (when people act like gamblers, not as business persons in financial markets).

Reply With Quote
Thanked by:
  #43 (permalink)
 
cory's Avatar
 cory 
virginia
 
Experience: Intermediate
Platform: ninja
Trading: NQ
Posts: 6,098 since Jun 2009
Thanks Given: 877
Thanks Received: 8,090



grausch View Post
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.
...

It is due to a more than double digits loss is too painful to talk about it, trust me on this.

Reply With Quote
  #44 (permalink)
 
lemons's Avatar
 lemons 
Tallinn, Estonia
 
Experience: Beginner
Platform: SC
Trading: NAS100
Posts: 959 since Nov 2010


chr1s View Post


cheers
Chris

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.

Reply With Quote
  #45 (permalink)
 
chr1s's Avatar
 chr1s 
London, England
 
Experience: Beginner
Platform: NT, TOS, MT4
Broker: TOS, CQG (NT), FXCM
Trading: ES, 6E
Posts: 435 since Sep 2014
Thanks Given: 1,716
Thanks Received: 670


lemons View 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.

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
Chris

sent from Tapaltalk

Consistency over time
Visit my NexusFi Trade Journal Reply With Quote
Thanked by:
  #46 (permalink)
 
Big Mike's Avatar
 Big Mike 
Manta, Ecuador
Site Administrator
Developer
Swing Trader
 
Experience: Advanced
Platform: Custom solution
Broker: IBKR
Trading: Stocks & Futures
Frequency: Every few days
Duration: Weeks
Posts: 50,398 since Jun 2009
Thanks Given: 33,173
Thanks Received: 101,537

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.

Mike

We're here to help: just ask the community or contact our Help Desk

Quick Links: Change your Username or Register as a Vendor
Searching for trading reviews? Review this list
Lifetime Elite Membership: Sign-up for only $149 USD
Exclusive money saving offers from our Site Sponsors: Browse Offers
Report problems with the site: Using the NexusFi changelog thread
Follow me on Twitter Visit my NexusFi Trade Journal Started this thread Reply With Quote
  #47 (permalink)
JerseyJim
Philadelphia, PA
 
Posts: 19 since Mar 2015
Thanks Given: 8
Thanks Received: 34


Big Mike View 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.


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.

Jim

Reply With Quote
  #48 (permalink)
Skinchin
Bocas Del Toro, Panama
 
Posts: 32 since Sep 2012
Thanks Given: 44
Thanks Received: 32

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.

Reply With Quote
Thanked by:
  #49 (permalink)
 
tturner86's Avatar
 tturner86 
Portland, Oregon
 
Experience: Intermediate
Platform: F-16CM-40
Trading: GBU-39
Posts: 6,191 since Sep 2013
Thanks Given: 10,459
Thanks Received: 12,695


Skinchin View 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.

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.

Visit my NexusFi Trade Journal Reply With Quote
Thanked by:
  #50 (permalink)
JerseyJim
Philadelphia, PA
 
Posts: 19 since Mar 2015
Thanks Given: 8
Thanks Received: 34



Skinchin View 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.

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).

Reply With Quote
Thanked by:




Last Updated on March 22, 2016


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts