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Account blown up

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  #1 (permalink)
 Big Mike 
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Guys, I wanted to start a serious discussion about a real and common problem -- traders blowing up accounts.

"Blowing up" means you took the account down to basically zero, where you couldn't place a trade any longer, or something similarly devastating.

As I posted on my first post ever on futures.io (formerly BMT) nearly 6 years ago, I have blown up a couple accounts in my day. None for many years thankfully, but it has happened. I view it as part of the learning experience, and naturally in hindsight it would be very easy to see why I blew up, and that I deserved it.

You can't expect to make poor trades and be consistently profitable.

I am starting a poll as I don't think I've ever asked the question on futures.io (formerly BMT) before. Everyone can vote anonymously on the poll, but if you wish to share your story about blowing your account and what you learned from it, please do so in this thread.

Mike

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  #3 (permalink)
 Big Mike 
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Have you ever blown up your account?

Total votes: 1540
 


Please vote (it is anonymous). Everyone can vote anonymously on the poll, but if you wish to share your story about blowing your account and what you learned from it, please do so in this thread.

Mike

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 Big Mike 
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I can still clearly recall several times in my trading career where I thought I had "solved it", and literally unlocked the magical gateway (holy grail) to money making.

It was during these times that I would do the most damage to my account, because of over confidence. At least without this over confidence I would trade a more reasonable size.

What I learned during these painful events was that I was wrong. I took responsibility. That is the first step. There is a really fantastic "Trader Intervention" that @FuturesTrader71 did a few years ago (I hope someone can post the link) where a guy basically doesn't own up to the failure being his responsibility, and instead says he is going to borrow money from family members because he knows he "solved it".

So the first step is to not make that mistake. Taking responsibility is key. Accepting that you (temporarily) failed, and that you don't know everything. From there, you can start building a solid foundation. You should be asking questions like what happened and why. This isn't so much about analyzing specific trades, but instead analyzing your overall behavior.

For example, did you bring a new methodology online without fully testing it? This is a difficult lesson to learn, particularly because most people simply don't know how to properly test. So then you would have to acknowledge you didn't test properly (if at all), and go about learning how to do that.

Another very difficult lesson was that you can be "right" about a trade, but still lose money. The market can remain irrational longer than you can remain solvent. This lesson involves learning about risk and proper risk management, so that when you are in a bad trade it doesn't do overwhelming damage to your account.

A key lesson is that you must live to fight another day. The single most important factor in trading is survival. The longer your survive, the more experience you gain, and eventually given enough time that experience will become valuable by providing you an edge over all of those with less of it.

Naturally, learning the right material is very difficult. Especially in a world of trading where rookies are constantly bombarded by vendors trying to sell their wares, with a great deal of them being dishonest, and even the "good ones" being usually flat wrong about anything they teach or sell. Eliminating the crooks gets to be easy with experience, but eliminating the "good" vendors that actually have good intentions is harder. To do that, you must have sufficient experience to know that no matter their good intentions, they simply are wrong.

I've personally always found the best learning tool to be my own process of learning for myself. Not being taught, in other words, but taking it upon myself to learn on my own. I prefer this approach in life, not just in trading. I know that some people say that a mentor is required to be successful, but I would argue that by simply taking the responsibility own yourself and not searching for a mentor, what you can do is empower yourself to learn from those worth learning from, while discarding the others.

Last, you really must maintain a written history. It is very difficult to know where you are or are going, if you have no record of where you have been. I strongly believe one of the best things a trader can do is start keeping a journal. A public journal on futures.io (formerly BMT) is that much better, because of the public accountability. Even if no one replies to your journal thread, it is still enough added incentive for you to perform better knowing that someone can be and probably is reading.

The lesson of the journal is not about recording your trades and screenshots, it's about learning your behavior. You must routinely go back and analyze what you've written, identify mistakes and patterns. Learning about your strengths and weaknesses in an objective way is crucial, so that you can then further develop in those areas. It is critical to be honest in your journal. It is important to talk about why you made a trade or decision, not just list the entry and exit price.

My own history on futures.io (formerly BMT) is something that has lead me to where I am today. I am more profitable today than I have ever been in my entire trading career. Last month I cleared over 60k, and I am on track to beat it this month. This has been steadily increasing for years, and I owe a large part of that success to futures.io (formerly BMT) because I've been able to see all the mistakes that people make and learn from them. They are routinely presented right in front of me, on a silver platter as it were. That information is here. You can find it too. Once these common mistakes are identified, you can start to set yourself up to avoid them.

I hope this has been useful information...

Mike

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 Big Mike 
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I should also mention -- for all of those on sim -- the real learning does not begin until you trade cash. If you are spending time on sim developing a method, it's almost entirely worthless in my opinion.

Mike

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 iqgod 
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Blowing accounts is self sabotage. Plain and simple. This article is a great read:



I've given up right before the finish line. It's not as bad as people say really.

It even has a nice ring to it. French. "I'm a self-saboteur". Maybe I'm a spy.

Like, right when you are about to make a lot of money, or finish a book, or get a job, or whatever, you can't take it anymore and you just give up.

It's too much. Take drugs or have a lot of sex instead. Enjoy. Who am I to judge?

For one thing, once you give up you take off all the pressure of being a "winner". Who cares anyway?

I once wrote the software for a company that I was going to split 50-50 with a guy. This was 20 years ago. I wrote the software. Well, I wrote almost all the software. I gave up. Too much work. I wanted to play with girls.

Now it's a thriving business. It's a fun consumer-oriented website. I'm a free member for life. He's made millions. Ok, that happens. I am happy for him.

When it comes to self-sabotage I'm an expert. If anyone needs advice on how to self-sabotage themselves I am here for you. I can even open up a clinic maybe. I'll wear my labcoat.

People will come in and say: I'm about to sell my company, or my book looks like it's going to be a bestseller.

I'll say, Whoah! Hold on there cowboy. Let's take a step back. And then let's take TWO steps back. Just sit back down hombre. Space is for astronauts, you know what I mean?

There are so many great things about self-sabotage, depending on who you are. More cheap and fun relationships? Or maybe just lying in bed and reading more books. I don't know. You and I, we'll figure it out together.

Here's the most common kinds of self-sabotage I've either seen or I've done myself. You are welcome to all of them.

I've even been addicted to self-sabotage. And I've had the best enablers. I'll admit I hope I'm over it now. But once an addict, always an addict. I see them everywhere, every day.

Not a day goes by I don't see it among even my closest friends.

A) CONTROL

Let's say you have a great idea. An idea that will change the world. It's brilliant. You can make a billion. Maybe ten billion.

But not everyone is good at everything. I'm not good at filling out my taxes, for instance. Thank you Richard M. Gabor for helping me with that. I'm not good at driving. Thank you Miss Claudia Azula Altucher for helping me with that.

I'm not the best businessman. But I have many many mentors who help me with that. Thank you.

Always say Thank You is what my mamma taught me.

When you have one piece of a puzzle but someone has another piece of the puzzle, then you have to let them help you.

But they want 95%!?

I called Chet the day after the Netscape IPO in 1995. I said to him, can you believe this BS?

He said, what are you talking about?

Marc Andreesen, who wrote the software, only ended up with like 5% of the company. Jim Clark and James Barksdale got a lot of the rest.

J-j-j-James, hold up there, Chet said. Without those guys this software would never have left the lab. And now he's rich anyway.

Great ideas happen to individuals. But great executions happen in groups.

Another BRILLIANT example is with PayPal.

Peter Thiel (Paypal.com) and Elon Musk (X.com) were going head to head and destroying each other through competition. How did they solve the problem? They merged.

When PayPal finally sold to Ebay for $1.5 billion, Peter Thiel, the FOUNDER of PayPal had just 3% of that. Did he care? Of course not. He took 1% of what he made and invested it in a tiny website called Facebook.

B) LEAKS

I was once at a poker table in Las Vegas during my "year of poker". I played poker for 365 days straight, every day, every night, including the night my first daughter was born. I'm not proud of it but if I worried about every way someone could judge me from 16 years ago I'd be a scared man all the time.

One guy at the table, maybe the best player there, said to me, "I have one leak. Women." In other words, he makes his money, and then he spends it all on prostitutes instead of saving up his bankroll and really making a play for the big leagues of poker.

Be honest. What are your leaks?. Maybe you fall for too many people. This is an addiction also. I am too trusting. I often have to rely on others to help me figure out who to trust.

Maybe you drink too much. Or read junk news too much. Maybe you think the finish line was earlier than it really was.

This happens to me a lot. I think, "Ok! I'm married. I don't have to focus on this relationship any more!"

Often it's in those final 10 yards in a 26 mile marathon that the race for gold really begins. But most people don't know that. I learn that over and over because I'm an addict. Every day I have to remind myself.

C) BLAME SOMEONE ELSE (EXCUSES)

This is the worst. It's nice and easy when something goes wrong to blame someone else.
Why would one blame others? It's nice when things are not your fault. That's one reason.

Another reason is jealousy. If the rich are oppressing the poor, then they are easy targets to blame and could explain why one is not rich. "I would never want to do what they have to do!" "MMmph!" (Stamps foot down!)

Or maybe everything would've worked out but you made a poor decision when you hired that guy. That ONE guy that screwed it all up! "He seemed like a good choice. How could I know??"

There's a two-step solution to blame:

a. It's your fault. It's always your fault.

b. Have a Plan B on every decision.

If you follow "a" you'll never waste time being angry with someone else. They have their own issues. Now they need you to be angry at them?

If you follow "b" then whatever bad happens, you have a backup plan. It's not always easy to have a backup plan. That's why very few people win the gold medal.

D) BLAME DOOM & GLOOM

"It was the housing bust!" That cost me my house. Then my family. Then my job. Then I couldn't get a new job. Then I got depressed. Then I had to take medication. Then and then and then! BLAH!

Every day there's bad news. I've worked for enough newspapers to know that the news is bad for a reason. It's not like there's only bad news happening. But they only REPORT bad news.

Picture you're in the jungle. To your left is a donut tree (I love donut trees) and to your right is a lion. Which one makes your brain light up more and pay attention.

The newspaper industry knows that you will pick up a paper that has a lion on it that is about to eat you. If you're American then you certainly aren't hungry so the donut tree can wait.

"It's Obamacare!" "It's the government bailouts!" "It's Greece!"

I like the last one. Everytime Greece is in the news every stock investor I know loses money because "It's Greece!" and then you turn on TV and people even uglier than me are talking about Greece like it's a Hiroshima on the economy.

Then they forget about it for awhile ("it's Ebola!") and then it's back in the news again.

Solution: Macroeconomics is largely a myth. It's just an extra thing to study in college so they can justify charging you $40,000 a semester.

Even politics is a myth, particularly in the West. How much has a President really moved the needle on your life.

If you're in the army (i.e. you work for the President) then they might move the needle. But largely the President, the Congress, some judges, etc maybe move the needle 5-10% on your life only once in awhile.

So ignore it all. People say, "but don't you need to be informed?"

About what? I can't really think of anything I've ever been informed about that has significantly changed my life. I like to focus on the things I love, not the things I'm informed about that disappear tomorrow.

E) ENTITLEMENT

I am happy to say I have never fallen for this. Only because I've seen others fall for it a lot. So when I see it happening in me, I shut up.

"I'm better than this! I deserve to make $X".

And that ruins everything. All visions, all bigger pictures. It ruins it for everyone who backed you and supported you in the past. It ruins it for your boss, who now has to fire you.

Entitlement is the same as the word "ceiling". Once you feel entitled to X, then X is your ceiling.

Nobody is entitled to anything.

A great example is Louis CK. The man is the greatest comedian alive (you have to admit top 10 even if you disagree with me). He was offered to be the head writer for Conan in the early 90s at $500,000 a year but he turned it down.

How come? He wanted to be a comedian. He went on the road. He shot a movie. He kept pitching his own shows. He kept improving his skills. Not over a period of months but over a decades. In the mid 00s he even had a show on HBO, "Lucky Louie" (also starring a recent podcast guest, Jim Norton). It got cancelled.

Then he pitched another show to CBS. They rejected it.

Finally he pitched a show to FX. He didn't give up like, "they NEED to give me a show. I'm the best!"

Now it's one of the best shows ever on television. And he's my hero. If at any point he had given up because of feelings of entitlement he never would have created the work of art he now does and gone on to higher heights as a comedian.

Oh man, long post again. What the heck? Can't I just make a list like everyone else does and keep these down to 300 words or less? I forget who said it: "I'm writing a long letter to you because I didn't have the time to write a short letter".

So ok, I will just list the other ways people self-sabotage.

F) COMPLAINING

G) GOSSIPING

H) FEAR OF CONFRONTATION

I) THE WORD "CAN'T"

Ok, I need to comment on this one. If someone says to you, go be the best pianist in the world, you might say, "i can't do that". That's fine. That's a normal "Can't". I'm not a big believe in "Can't Porn" - this idea that you should NEVER say "Can't".

But so many people take something simple: like "self-publish a book ever month or so and make an extra $1000 a month" and say "I can't".

Why can't you? Did you try the 20 times that are necessary to get good at something? Did you study all the books on self-publishing and the techniques of the people who did? Do you have to be 8 feet tall to self-publish?

Can you stop watching TV for one hour a day so you can do your full time job and write your book on the side and at least try?

It's your heart's desire but you're so afraid of failure that you don't even want to make the attempt so you can continue to live with the illusion, "I could do it ...if only I can't do it."

??

Roosevelt could've said, "I can't. I have polio." Hawking could've said, "I can't. I can't even move!" Thomas Edison said, "I can't. It didn't work the first 999 times. It will never work."

"Can't" is the jealous lover of "Persistence".

J) NOT MY THING

We get labels early on. I'm a mathematician not a businessman. I'm a dancer not an actress. I'm a programmer, not a salesman. I'm a pretty girl, not a physicist.

Richard Branson could've said, "I'm a music guy not an airline guy." Elon Musk could've said, "I help people on Ebay buy baseball cards, I can't blast a rocketship into space."

Steve Jobs could've said, "I'm a computer guy not a music/phone/movie guy." JK Rowling could've said, "I have to take care of my kid. Not write a fantasy novel with unknown prospects."

Maybe these are just anecdotes. Benjamin Franklin could've said, "I run a printing press. I don't know anything about lightening."

Albert Einstein could've said, "I'm a clerk in an office. I don't know anything about the time-space continuum".

---

I feel like there are some that I'm missing.

Please add to the list. We all see self-sabotage every day. I know it.

OH! Here's one.

K) NEVER THE RIGHT CONDITIONS

Like the guy who has to be in Paris to write. Or the woman who has to be Silicon Valley to start a tech company. Or you have to be in Hollywood to be an actress.

Or you're "stuck" and don't know how to get out. That's a post in itself.

What are others?

I see self-sabotage every day. People who don't know how to sell an idea, or express a vision, or who want to fail because that gives them something to blame.

So they give up.

What am I missing?

I will tell you this, though. If you run those last ten yards.... If you just make the attempt. If you just cross the finish line...

There's the other side of the finish line. And you realize you never have to stop running. Nobody is ever going to stop you now. (oh, they will try. But they will fail).

You can run out of the stadium. Past the people. Past the houses. Past the forest. You run and now you jump and now you're in the air.

You're flying.


- James Altucher


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  #7 (permalink)
 bobwest 
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I can recall two times I blew out an account -- actually, more like one and a half.

The first time was in the great bull market that began in 1982 (yes, not a typo.)

I was making my very first trades ever. I went long MacDonalds call options. The Dow dipped below 800. (Yes, 800.) But I was bullish. The options tanked the next day and I bought more, for I think 3/16ths (they did prices in quarters, eighths and sixteenths then.) That was the very last day that the Dow was ever that low. The next day was the first day the Dow ever had a 20 point move in its history (up, it was.)

I sold a couple of days later. I was a genius. Within a couple of months I quit my job. I got my parents into the market. I spent money. I would soon be rich.

"Never confuse genius with a bull market."

I was not a genius. I blew that account, or almost, and went back to work.

Many years passed. In and out of the market in a not truly serious way. Made a little bit. Took a longer-term view. Basically did OK with it.

Then I seriously hurt my options account in the flash crash, although didn't blow it. I began to wonder if I knew how to do this, anyway.

I got into futures partly due to wanting to avoid the risks of options (don't laugh -- if you've never held an option position where you were right about the movement of the underlying stock, but the option went down -- or went to zero -- due to premium decay, you have just not lived.)

I didn't blow that first futures account, but it came close (that's the half account.) Somehow, it came to me that I didn't know how to do this at all, really. It's got nothing to do with what you trade, or the "method" you trade with (or try to trade with, or think you trade with.) I say "think you trade with," because odds are you (and I) are really just trading exactly like every other naive noob who thinks he knows more than the market, when, of course, he is the market, along with all the others trading the same way, and he doesn't understand why he's always leaning one way then price suddenly goes the other. (Hint: when everyone is long it doesn't go up; when everyone is short, it doesn't go down.)

I am an indicator junkie and I love them. I still try out new ones, and I write my own versions and really enjoy it. I also like to read about all the neat charting and trading methods that people write about here. In fact, it takes far too much of my time and I am cutting back.

All that stuff is swell, but you know what? It makes absolutely no difference in whether you can trade worth a damn or not.

The most it can do is help to see what is already there. I try to use it that way. All the rest of my interest in them is just hobby, not trading.

In my opinion, the same can be said about every single thing that anyone has ever read or written about the market, and every method, every technique, every squiggly line and every line on a chart. Now, I do use squiggly lines and lines on charts, but I know where they come from: they come from my (very limited) understanding of the market, and they either help me visualize and clarify my current understanding, or they are useless. (No flashing "signals" .)

I have absolutely followed traders who showed their charts and who traded well, and I couldn't, using the same thing. Why? Because it wasn't the same thing for them as for me. Different set of eyes, different mind, different meanings, different actions because of them. I see this phenomenon every day on the spoos thread, following what Mike and the others are showing and doing. Works for them because it's their's. Won't work for me because it's not mine. I can learn from them, and I do try to, but I can't truly follow them.

So this long ramble is the little bit that I think I can add to this topic. Absolutely, facing serious failure in trading has helped me focus on where the failure came from, and that was the same place that, hopefully, the success will (eventually) come from. It's got something to do with me, I think.

I still can't trade these futures worth a damn. But they are what I'm interested in now. I trade the TsT Combine, which is better than sim because it is not risk-free and pressure-free, and a whole lot cheaper than live. It's something of a compromise, but I am making use of it to work on my weaknesses. I do a journal here, to my frequent embarrassment.

I hope someone will understand what I have tried to say here and will stop looking for success where it isn't to be found (other people's opinions/methods/whatever), and will work on themselves as they face the market, all alone, which is what we always do.

Bob.

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  #8 (permalink)
 lemons 
Market Wizard
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SIM is not worthless.

If you can't make it in SIM or TST Combine SIM then you can't make it with money 100 %.
If you can make it in SIM or TST Combine then there is small possibility that you can make it with money too.

4 years ago I found TST and futures. First 1-3 combines where goods. One ended ca. + 2500 $.
I though that lets open account with Deep Discount Trading
Wired money and started to trade ES. Tick value is big, big money will come. Result Blowing up.
Wired second time and traded NQ. Tick value less but big money will come . Result Blowing up.
Wired 3rd and final time and made wiser decision traded M6E . Tick value small but Blowing up
because big money will come if I trade 5-10 contacts at time.

Total loss around 8000 USD

And then decided to switch SIM only. Why I am still in SIM?
I have played around too long, tried different instruments, indicators, didnt stick with plan,
lot of bottom fishing and top picking.

But I am finally making progress. This year I have take it more seriously.
First TST Continues Combine passed with 28 days with 3000 sim $
Now I am 16th day into second TST Continues Combine and I am up 2585 sim $

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  #9 (permalink)
 Big Mike 
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Swing Trader
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lemons View Post
If you can't make it in SIM or TST Combine SIM then you can't make it with money 100 %.

Definitely wrong.

There is probably a 0% chance I could pass a TST combine. But I 100% make money, for real.

Combines can be useful, but they don't make you profitable, nor do they serve as "black/white" lines for who can be profitable and who can't.

And after running the forum for nearly 6 years, I don't know many people that aren't profitable on SIM. So I think that argument is basically pointless.

Mike

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  #10 (permalink)
 GFIs1 
Legendary Market Wizard
Switzerland
 
Experience: Intermediate
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I treat trading like a normal business.
The learning curve is steap when starting. Many parts may have a good end but some
real drawdowns (so many possibilities to have failed projects) can get you out of business.
Only the one who is stable and couraged enough get on the feet again and will find the
road to success.
Trading is very similar - money management is the central point here in this business!

GFIs1

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  #11 (permalink)
 lemons 
Market Wizard
Tallinn, Estonia
 
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Big Mike View Post
Definitely wrong.

There is probably a 0% chance I could pass a TST combine. But I 100% make money, for real.

Combines can be useful, but they don't make you profitable, nor do they serve as "black/white" lines for who can be profitable and who can't.

And after running the forum for nearly 6 years, I don't know many people that aren't profitable on SIM. So I think that argument is basically pointless.

Mike

Is it okey to blow 100 000 $ ?
or learn first to trade in SIM and make constantly "money" ´

Learn to trade from ZERO with money is way too expensive. Yes you are right trading is not for everyone.
Lets see maybe I will be wonder boy and show that from SIM to LIVE is possilbe.

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  #12 (permalink)
 fminus 
Washington DC
 
Experience: Advanced
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I've blown up several accounts.

1st blow up was a complete one around 2009 as the market was rebounding. I made some money during the 2008 crash which inflated my ego and turned into a perma-bear zerohedge kool-aid drinker. I was completely naive about the natural market drift to the upside. I was short in the hole a heavy load of SPY near the bottom of the bounce and it kept going against me, I added more. At some point the pain became so unbearable and with an account less than half, I went into I don't give a FCUK! mode and just left the trade on and walked away from trading a couple of days. I got a margin call a couple days later and my account was pretty much nothing. In hindsight, what occurred was a lack of taking responsibility, lack of quickly recognizing when I was wrong and getting out, and just everything you're not supposed to do.

2nd blowup (almost) was near 2011 as I was looking for a system and decided to follow one of those futures trading rooms. I blindly followed the dude's trades and I quickly took my account down to half. Even though it wasn't a complete financial blow up, my emotional capitalize was done. I learned that I need to stop paying for these FCUKing trading rooms and proprietary indicators and all this other shit that's out there that claims to work. At this point I figured that trading was bullshit and it was impossible to make money and took a year break. During this time I had to really decide if I was going to stop looking for shortcuts to financial glory and roll up my sleeves and put the work in.

3rd account blow (almost) was in 2013 about a year into trading again. I was trading pretty well in a certain swing style of trading and then it a string of about 5 losses in a row. Lost confidence in my method as I didn't have any proper backtesting or stats for it and started to slowly add shit, remove shit, change timeframes, and then after a while it wasn't anything like it originally was. The drift took me to another style of trading that I was completely unfamiliar with (scalping) and at some point I had to give myself a reality check that I didn't know what the hell I was doing or why I was doing it. Emotional capital depleted, I took 6 months off to reinvest myself again. Lesson here is to understand the randomness of the markets and to know your edge.

I've found a bit of success recently (a little, not much), just trading the simple shit. Simple price action with almost naked chart, just a MA. A market profile chart to help me have context of the day. And a daily chart with some simple MA.

The ironic thing is, trading seems so much more difficult now than when I was just rolling my face on the keyboard. Lots of lessons learned over the years but this emotional baggage from those lessons are a (female dog).

In trading, shortcuts lead to the longest path possible.
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  #13 (permalink)
 tturner86 
Elite Member
Portland, Oregon
 
Experience: Intermediate
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Big Mike View Post
Definitely wrong.

There is probably a 0% chance I could pass a TST combine. But I 100% make money, for real.

Combines can be useful, but they don't make you profitable, nor do they serve as "black/white" lines for who can be profitable and who can't.

And after running the forum for nearly 6 years, I don't know many people that aren't profitable on SIM. So I think that argument is basically pointless.

Mike

I completely agree. I have done well over the last year, but could not grasp TST.

And as the old argument goes SIM will never equal LIVE. Even if you try your hardest to trade SIM as LIVE, you will subconsciously take more risk in SIM then you will LIVE. And there is only one real way to get around that. That is to trade LIVE and work to trade it in the same I don't care attitude that you trade SIM in.

LIVE + I don't care is the only way to successfully trade.

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  #14 (permalink)
 Big Mike 
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Manta, Ecuador
 
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lemons View Post
Is it okey to blow 100 000 $ ?
or learn first to trade in SIM and make constantly "money" ´

Learn to trade from ZERO with money is way too expensive. Yes you are right trading is not for everyone.
Lets see maybe I will be wonder boy and show that from SIM to LIVE is possilbe.

You are commenting as someone that is not profitable and on sim. Because of this, your view/perception is inadequate to really see beyond your nose.

Saying that you need to make money on sim sounds like good advice, just like saying cut your losses short and let your winners run. In reality, things are just not that simple or black/white.

By remaining on sim for so long, what you are really doing is conditioning your mind in all the wrong ways. Like I said before, the real learning process does not begin until you start trading cash. It doesn't need to be 100k account, just whatever size that makes you start having skin in the game.

Mike

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  #15 (permalink)
 tturner86 
Elite Member
Portland, Oregon
 
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I blew out my first account, lost about $6400 total in 2013. Account sat at $500 margin for some time until I was able to rebuild and relearn. 2014 I became net positive and then some. 2015 I am flat or up slightly.

Overall the sting of that loss I still feel. Many dark days staring into the abyss as Elon would say. Problem I see going forward is balancing the I don't care attitude. I shouldn't care about each individual trade, but you have to care at some point or I could easily give it all back and then some.

I think the biggest challenge for me is to move this from a 'fear' item into a strength item. Use the experience to keep me moving forward and not hold me back.

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  #16 (permalink)
 DeadCatBounced 
Baltimore MD US
 
Experience: Intermediate
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Trading: ES, NQ
 
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When I started trading I split into two accounts. One to position trade forex. One to daytrade futures.

The daytrade futures account I blew out in a little bit over a year (It started with about 10k in it). Forex position trading account is still going strong.

I think I did learn alot though about trading and myself as I blew out that account.

In a sense that account was like a bad trade I could not get myself out of.

As it went further and further against me I simply could not stop myself and admit that 1. I was not trading correctly 2. That I was simply wrong in my belief at that time that I could do what so many others could not do and that was take a small account and successfully trade from it.

After stopping trading that account I took ~2 months off from looking at intraday activities. Spending some time working elsewhere allowed me the time to step back.

Ironically when I came back I basically continued what I had been doing before. As of last week I am hoping to change that, and approaching the future markets from a different angle then I have before.


Big Mike View Post
For example, did you bring a new methodology online without fully testing it? This is a difficult lesson to learn, particularly because most people simply don't know how to properly test. So then you would have to acknowledge you didn't test properly (if at all), and go about learning how to do that.

I guess this is where I am at now. I have gone back using historical data to identify a method that has an edge, places where I should be entering, adding, and exiting. Now im using sim to practice before going live again.

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  #17 (permalink)
 lemons 
Market Wizard
Tallinn, Estonia
 
Experience: Beginner
Platform: SC
Trading: NAS100
 
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Big Mike View Post
You are commenting as someone that is not profitable and on sim. Because of this, your view/perception is inadequate to really see beyond your nose.

Saying that you need to make money on sim sounds like good advice, just like saying cut your losses short and let your winners run. In reality, things are just not that simple or black/white.

By remaining on sim for so long, what you are really doing is conditioning your mind in all the wrong ways. Like I said before, the real learning process does not begin until you start trading cash. It doesn't need to be 100k account, just whatever size that makes you start having skin in the game.

Mike

Yes not black and white and I my be short-sighted but TST sees value in SIM trading.
If TST thinks that SIM trading has zero value the would use different selection process.

But sorry this is not LIVE vs. SIM thread and I :tape:

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  #18 (permalink)
 Malthus 
Madrid Spain
 
Experience: Intermediate
Platform: Ninjatrader, TOS
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I have blown my account twice, and for the same reason: some kind of psychological meltdown.

Both times I slowly grew my account + 50% and then erase all on one or two days. This is the chain of events:

- I'm doing great, but I still find hard to pull the trigger.
- I miss a great opportunity because of that fear.
- I make an impulse trade that have no basis. Loose. Make instantly the opposite trade. Loose. I enter again on the original position but with 2x contracts.
- The trade goes against me so I widen my stop. I add more, widen more, etc until I loose everything.

It's like someone takes control over my mind and I can't seem to know what the hell I'm doing. I thought I was very strong psychologically. I don't smoke, I don't drink, I don't do drugs. I was a very succesful professional tennis gambler but due to a change in european regulations I had to quit it, and I never made a bet since that day (whats the point if I can't make money?).

But trading is turning out to be more difficult to handle emotionally. I decided I had to do something so I changed habits and joined this forum. I have been able to identify when I'm starting to loose control over myself and avoid it, but the threat is always there.

Now I'm profitable but I don't exclude the possibility of blowing another account in the future, but it will be because the way I'm approaching the market doesn't work (I'll discard it and look for a better one).

But if I ever loose my account again because I haven't been able to control myself, that day I'll accept that trading is not for me and I will look for another thing.

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  #19 (permalink)
 grausch 
Luxembourg, Luxembourg
 
Experience: Advanced
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Broker: Interactive Brokers
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Never blown an account, I tend to be extremely risk aware. When I start engaging in the type of behaviour that will lead to blow-ups, I usually close all positions and take time off to clear my head. I have been lucky though...there was a period where I was trading way overleveraged with insane risk and the markets just kept on trending in my favour. That period did my account balance very good and luckily I realised what I was doing and stopped before I gave it all back.

Sometimes all you need is a little luck and the ability to hold onto winners.

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  #20 (permalink)
 Silver Dragon 
Legendary Data Wizard!!!
Cincinnati Ohio
 
Experience: Intermediate
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Broker: TastyWorks
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I blew up my first account in 99 - 2000. Started trading in mid August of 99 and took 2500 to 12K trading small caps. I was a trading god! Then I proceeded to lose it all by April of 2000. I remember the last trade I made; I was watching the tape and saw these big trades going through at the EOD. Decided to hop on because obviously somebody knew something. I felt like the two traders from Trading Places: "The Dukes are trying to corner the market, lets get in on it". Found out 15 minutes after the close why the big trades were going through. There ended up being some accounting irregularities and the stock was halted. The stock lost 3/4 or its value by the next day. Margin call and I was done. 2500 to 12k to 575.50 cents. I was crushed.

After that I traded in fear for the longest time. I would make some money then give it back.. once I made back to my starting account level I would quit for a while then start over. This has been my pattern up until a couple years ago. Now, I have overcome my fear or losing it all and realize that it is part of the business.

Robert

nosce te ipsum

You make your own opportunities in life.
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  #21 (permalink)
 Seahn 
New York, New Jersey/USA
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Futures
 
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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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  #22 (permalink)
 bourgeois pig 
asheville north carolina USA
 
Experience: Beginner
Platform: ATC trader (OEC white label)
Broker: ATC
Trading: futures
 
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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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  #23 (permalink)
 chr1s 
London, England
 
Experience: Beginner
Platform: NT, TOS, MT4
Broker: TOS, CQG (NT), FXCM
Trading: ES, 6E
 
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Hello

Blown almost fully 2 accounts - ~£2600 in total.

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

I've posted accounts balance charts from those in my journal (1st post):


I believe that hiding or not admitting the truth about loosing (not facing the harsh reality) is being as seriously delusional as an alcoholic denying his addiction (no offence to anybody).


Big Mike View Post
Saying that you need to make money on sim sounds like good advice, just like saying cut your losses short and let your winners run. In reality, things are just not that simple or black/white.

By remaining on sim for so long, what you are really doing is conditioning your mind in all the wrong ways. Like I said before, the real learning process does not begin until you start trading cash. It doesn't need to be 100k account, just whatever size that makes you start having skin in the game.
Mike

Damn, as simple as it sounds it is really great advice - yet again, simple does not mean easy


lemons View Post
Yes not black and white and I my be short-sighted but TST sees value in SIM trading.
If TST thinks that SIM trading has zero value the would use different selection process.

But sorry this is not LIVE vs. SIM thread and I :tape:

Hi @lemons can I ask you to visit couple of my posts about trading SIM and how you can even average yourself down from a massive move not in your favour? For example
  • I did it today on over 100point move (trading SIM for fun when having lunch etc) - won't even mention that in my journal
  • over leveraged scalping:
  • the other day I traded FOMC:
  • then my yesterday's post with a massive 27800$ daily gain (56%)
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.




cheers
Chris

Consistency over time
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  #24 (permalink)
 Branzol 
Baltimore Maryland/United States
 
Experience: Advanced
Platform: Custom
Broker: IB
Trading: Asian Stocks / Indexes
 
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I've blown up two accounts over the years.

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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  #25 (permalink)
 SMCJB 
Legendary Market Wizard
Houston, TX
 
Experience: Advanced
Platform: Trading Technologies
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, GC, SI & Bitcoin
 
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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.
Electric Utility Fails to Honor Contracts, Prompting Legal Dispute in Springfield - WSJ
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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My own history on futures.io (formerly BMT) is something that has lead me to where I am today. I am more profitable today than I have ever been in my entire trading career. Last month I cleared over 60k, and I am on track to beat it this month. This has been steadily increasing for years, and I owe a large part of that success to futures.io (formerly BMT) because I've been able to see all the mistakes that people make and learn from them. They are routinely presented right in front of me, on a silver platter as it were. That information is here. You can find it too. Once these common mistakes are identified, you can start to set yourself up to avoid them.

I hope this has been useful information...

Mike

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!

Matt

There is a SUBSTANTIAL risk of loss in futures trading.

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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nourozi
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Big Mike View Post
I should also mention -- for all of those on sim -- the real learning does not begin until you trade cash. If you are spending time on sim developing a method, it's almost entirely worthless in my opinion.

Mike

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 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.

If you are a trader, and trade real live money, and periodically you test new methods, then you approach sim in a different manner than someone who trades only sim and expects the same results live.

Matt

There is a substantial risk of loss in futures trading.

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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DrewDown
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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.

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nourozi
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mattz View Post
If you are a trader, and trade real live money, and periodically you test new methods, then you approach sim in a different manner than someone who trades only sim and expects the same results live.

Matt

There is a substantial risk of loss in futures trading.


Nothing you said negates what I said.

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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Nothing you said negates what I said.

.....If you can't become a confident simulation trader, then you should not even think about going live.

What is a "confident sim trader"?. Please share.
Matt

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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nourozi
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What is a "confident sim trader"?. Please share.
Matt

These are some qualities I believe someone should possess before trading a live account:
  • Someone who can write down their exact trading rules on a piece of paper and potentially automate their strategy if they wished.
  • Someone who has tested their rules in a real-time simulation environment for over 6 months and at least 1000 trades
  • Someone who is consistently profitable and has recorded all their results
  • Someone who knows what to expect from day to day, week to week and month to month based on their recorded results (e.g average weekly loss/profit, average drawdowns etc..).
  • Someone who is not risking capital which will affect their daily lives.
  • Someone who is not relying on their potential trading profits to live their lives.
  • Someone who is almost indifferent to their results and can handle a loss.

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These are some qualities I believe someone should possess before trading a live account:
  • Someone who can write down their exact trading rules on a piece of paper and potentially automate their strategy if they wished.
  • Someone who has tested their rules in a real-time simulation environment for over 6 months and at least 1000 trades
  • Someone who is consistently profitable and has recorded all their results
  • Someone who knows what to expect from day to day, week to week and month to month based on their recorded results (e.g average weekly loss/profit, average drawdowns etc..).
  • Someone who is not risking capital which will affect their daily lives.
  • Someone who is not relying on their potential trading profits to live their lives.
  • Someone who is almost indifferent to their results and can handle a loss.

honestly, this is a collection of a real funded trader, who has traded live funds for many years, especially the last point.
This is not a paper trader. Kindly, I wish to end it here.
Matt

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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  #34 (permalink)
 amoeba 
Sydney, NSW, Australia
 
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Its been a great read in this thread so far!

I would not say I have "blown" an account in pure $ terms, but twice in my 20's I tried to day trade stocks and ended up with 'buy & hold'. (or bought & hope).

First instance I was just excited about the tech boom and I had friends making money (or so they said), I really didn't know anything and RSI/MACD was pretty cool!

Second attempt was a few years later, I had spent 6 months learning as much TA as I could, I thought I had it, and I wasn't going too bad, but really didn't have a concept of risk management or a predefined stop-loss, so when some trades went against me I just held & held waiting for them to come back.

Fast forward to the end of 2013 and I was interested in trading again, happened across this site and have now spent 1 1/2 years studying the content and webinars (I think even full time, it would take close to 6mths to get through everything in here).

So thankfully I have been spared many of the trials of others learning through their experiences. I hate to think what I would have done with leveraged investments the first two times around...

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copa8
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Had blown my Lind-Waldock account trading commodities futures way back in 1998. Was a few years out of college and working at the operations group of a foreign investment bank. Basically, had a lot of free time, so started swing trading in Swiss Franc, pork bellies, live cattle, corn, etc. using some indicators I bought from some chart data provider.

It was all luck and no skills. This was how naive I was back then. I'd entered into a long position in the Swiss Franc a few hours before I left work. Planned to close the position the next morning for a quick profit. After I'd finished my reports the next morning, I checked the Swiss Franc 5 minute chart on the Bloomberg Terminal. I was perplexed/surprised that there were bars painted from 4:01PM the prior day to 9:29AM the current day. I thought the markets were closed during that time frame. Luckily, the trade ended in a profit.

Over a couple of months, I was able to increase my account from the initial $10k to about $15k, before greed and overconfidence did me in. One morning, after I'd finished my usual morning reports, I checked the live cattle chart and decided to go long. However, instead of the usual 2 contracts, I went in with 5. I got in at around 10:00AM. A few minutes later, my account was up to $17k (+$2k on the trade). Nature called, so went to the restroom to take a leak. Returned to my desk 5 minutes later and saw my account balance had dropped to $15.5k. I literally pissed away $1.5k. Should have bailed and taken the +$500, but didn't. Hoped to close the trade, once it goes back to +$2k again. Account now at $14.5k. Should have bailed and taken the -$500, but didn't. Hoped to close the trade, once it goes anywhere near positive. Account now at $13k. I couldn't believe it. The trade went from +$2k to -$2k in about 10 minutes.

Decided to average down with 5 more contracts, then minimized my trading screen and walked away (did some actual work). Got a margin phone call later in the day from my broker closing my cattle positions. A few weeks later, I closed my account with about $1.5k left.

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  #36 (permalink)
 blb014 
Dallas, Texas
 
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nourozi View Post
Nothing you said negates what I said.

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.

Agree with that, especially on longer term trades and options. Simulation, paper trading on TOS, lets someone see what type of risk is involved and how to react and roll options. Paper trading has definitely helped and I probably would have blown my account (since 2005) without it.

I don't know of Sim would help with trading futures intra-day though, faster trading, unrealistic fills, and the emotional roller coaster involve in intra-day trading.

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 blb014 
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mattz View Post
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!

Matt

There is a SUBSTANTIAL risk of loss in futures trading.

Just curious who are these opponents?

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nourozi
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blb014 View Post
Just curious who are these opponents?

Every other trader in the market you are trading. For every win, there is a loss.

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 blb014 
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nourozi View Post
Every other trader in the market you are trading. For every win, there is a loss.


Not exactly that simple though. Who knows the reasoning behind a retail, institutional, or hedge fund trades. Maybe the contract or share traded was a win-win for both parties involved.

Just my personal opinion from mentoring a few individuals over the years. The only trades someone can control are their own, and the mindset of trading and investing as a competition is destructive for someone new to the market. They focus on other traders and investor results and when they can't emulate those results they either blow up an account or just quit from frustration.

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nourozi
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blb014 View Post
Not exactly that simple though. Who knows the reasoning behind a retail, institutional, or hedge fund trades. Maybe the contract or share traded was a win-win for both parties involved.

Just my personal opinion from mentoring a few individuals over the years. The only trades someone can control are their own, and the mindset of trading and investing as a competition is destructive for someone new to the market. They focus on other traders and investor results and when they can't emulate those results they either blow up an account or just quit from frustration.

Yea, I didn't mean it literally. The trader you traded with could also be profitable. You don't buy and sell from the exact same trader. You buy from one, and sell to another. Hence, your trade being profitable does not rely on the other traders trade being at a loss.

BUT, considering the % of players who are long term profitable, It's more like for every win, there are 5 losses...

Anyway, that's another thread.

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  #41 (permalink)
 grausch 
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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?

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Cornix
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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).

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  #43 (permalink)
 cory 
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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.

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 lemons 
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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.

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 chr1s 
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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
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  #46 (permalink)
 Big Mike 
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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

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  #47 (permalink)
JerseyJim
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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

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  #48 (permalink)
Skinchin
Bocas Del Toro, Panama
 
 
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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.

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  #49 (permalink)
 tturner86 
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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.

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  #50 (permalink)
JerseyJim
Philadelphia, PA
 
 
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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).

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  #51 (permalink)
 Seahn 
New York, New Jersey/USA
 
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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.

The big problem with SIM vs LIVE is people that are really too under capitalized start trading SIM and do well. But when they go live inevitably the psychology of fear kicks in, they are afraid to lose money so start to exit early or skip setups due to fear.

Or they trade 10 lots in SIM while having a $10K real account and again inevitably go live and wipe out.

The key really is to trade small enough or with an account big enough so that they are in the "I don't care" zone when dealing with losses. Only then will SIM come remotely close to LIVE and have any value as a learning tool.

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  #52 (permalink)
JerseyJim
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Seahn View Post
The big problem with SIM vs LIVE is people that are really too under capitalized start trading SIM and do well. But when they go live inevitably the psychology of fear kicks in, they are afraid to lose money so start to exit early or skip setups due to fear.

Or they trade 10 lots in SIM while having a $10K real account and again inevitably go live and wipe out.

The key really is to trade small enough or with an account big enough so that they are in the "I don't care" zone when dealing with losses. Only then will SIM come remotely close to LIVE and have any value as a learning tool.

Agree... one of the things that helped me the most as I became profitable was the confidence I built by SLOWLY increasing my size so that I had time to psychologically adjust to the size of my losses. I trend follow in my long-term trading, so there are A LOT of losses. There are months now where I lose more money than I make working my full-time job... but it doesn't effect me because I got there SLOWLY.

If you're new and you think you want to risk 1 or 2%, here's some advice... start at 1/10 that amount to let yourself become accustomed to the dollar size of the loss... then once you're OK, step up a little bigger. Repeat until you're (un)comfortable and then comfortable.

Don't think about how much you can WIN, think about how much you can LOSE.

Jim

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  #53 (permalink)
 Branzol 
Baltimore Maryland/United States
 
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Biggest thing I experienced going from SIM to REAL was the fact fills in SIM are no where near how they work in real life.

Examples:

Stop-Loss on Simulation: On simulation you can set your Stop-loss the market hit's it and your trade is closed out. Don't we all wish this is how it really happened?

Stop-Loss on Real Trades: I've had Stop-losses set and Market momentum drive right through my price point and fill 20 ticks away in the past. It's the nature of the beast especially on high volatility instruments. I've had it happen to a lesser degree on some of the calmer instruments.

Limit Order on Simulation: You can set limit orders on simulation, and when the market comes to that price point your filled near instantly. Again this is nowhere near how it happens in real trading.

Limit Order on Real Trades: You have to set your order many price points in advance to get a near instant fill on a limit order when the market hits your price point. Again it will depend on the instrument and liquidity in that instrument. But I've had to place orders 6-8 ticks out thinking ahead to ensure I had a order that was first in the batch to be filled. Simulation cannot teach you these things. I've also had Take-Profit orders hit there price point, not fill go back down and turn into losing trades. I've since solved that by other means as back up protection to juts a TP order.

There are many other examples, but those are the two basic ones. Pretty much the concept you need to grasp is your fills on simulation are instant. In the real world they are not! My suggest to anyone who's been trading SIM is try a few trades on a micro future like m6e and just sorta start to grasp how the fills occur. Only reason I suggest M6E is the capital involved to place a contract is low, as is the dollar amount per tick.

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  #54 (permalink)
 Big Mike 
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Seahn View Post
Or they trade 10 lots in SIM while having a $10K real account and again inevitably go live and wipe out.

This is true, but I think an even bigger problem is while trading in sim people go through hundreds of iterations of a "system", constantly changing things, and never really learning anything about the market itself. They are so focused on "signals" from their system and risk avoidance they never actually educate themselves as to why markets move and how to capture those moves.

I feel like you must actually have skin in the game before that part of your brain takes over and the real learning begins.

Mike

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  #55 (permalink)
 Investorito 
Washington DC
 
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First off, thank you guys I needed this post. I started trading live 2 months ago and I haven't blown my account yet, but I am getting close of not being able to cover my margin costs for the instruments I trade (futures). I sim traded for a week and quickly realized that it wasn't for me. Not saying there is no value, I just didn't get vested enough to care for the trades. I ended taking trades without thinking, changing my entry rules, putting abnormal stops (stops I wouldn't risk with real cash), not logging my entries, etc.

As of right now, I'm focusing on biggest hurdle; state of mind/psycology. It really sucks to lose, and it sucks even more to lose again. And now, I need to find a way to stop the snowball effect of making terrible decisions and not being able to focus because I... well... feel like a loser. I believe that in order "to trade like a pro I should learn how to lose like a pro", so I'll resume my trading once I've made my peace with it. But as of today, it still sucks. Would've been able to understand and deal the state of mind that I am in by reading books or sim trading? I don't think so, not me.

Back to the original topic of blowing a real account, is it really necessary? I hope not, but I haven't met a successful trader that haven't blown one or two. If it is really necessary, then I am sure taking the right steps towards becoming a successful trader.

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  #56 (permalink)
 Itchymoku 
Philadelphia
 
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Blowing up is never good, but doing it over a long period of time might allow the trader more time to learn where they're going wrong.

Only two things will shorten that window of time:

1. revenge trading / over trading.
2. increasing trading size.

In my opinion, if anyone is blowing up they should really slow down and study their trades.

It's not a race, it's a marathon. Turtle wins this race.

R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
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  #57 (permalink)
JerseyJim
Philadelphia, PA
 
 
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GeekyTrader View Post
First off, thank you guys I needed this post. I started trading live 2 months ago and I haven't blown my account yet, but I am getting close of not being able to cover my margin costs for the instruments I trade (futures). I sim traded for a week and quickly realized that it wasn't for me. Not saying there is no value, I just didn't get vested enough to care for the trades. I ended taking trades without thinking, changing my entry rules, putting abnormal stops (stops I wouldn't risk with real cash), not logging my entries, etc.

As of right now, I'm focusing on biggest hurdle; state of mind/psycology. It really sucks to lose, and it sucks even more to lose again. And now, I need to find a way to stop the snowball effect of making terrible decisions and not being able to focus because I... well... feel like a loser. I believe that in order "to trade like a pro I should learn how to lose like a pro", so I'll resume my trading once I've made my peace with it. But as of today, it still sucks. Would've been able to understand and deal the state of mind that I am in by reading books or sim trading? I don't think so, not me.

Back to the original topic of blowing a real account, is it really necessary? I hope not, but I haven't met a successful trader that haven't blown one or two. If it is really necessary, then I am sure taking the right steps towards becoming a successful trader.

Blowing up an account (no matter how large or small) isn't necessary to become successful, but what it has a tendency to do is smack you upside the head with reality. It also seems to separate the pretenders from the contenders.

If you're willing to assess the damages after blowing up, then regroup and come back to attack with the new knowledge gained, you're on your way. There's no guarantee of success, but you're a step closer than you were before. Like the old proverb says, "A journey of a thousand miles begins with a single step". I also like "A man who wishes to travel a hundred miles should consider himself halfway at 90 miles."

Just ask yourself the hard questions... are you willing to commit the time (and money) that this will take to succeed? Look at it like any other profession... you need years of dedication and experience to become successful... and even then it still doesn't happen for everyone.

Jim

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  #58 (permalink)
Skinchin
Bocas Del Toro, Panama
 
 
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Big Mike View Post

I feel like you must actually have skin in the game before that part of your brain takes over and the real learning begins.

Mike

Agreed.. When I switched to Sim I already had 'skin in the game' after blowing a couple of small accounts a couple of years earlier, so I took Sim very seriously to the point where it felt and hurt as much as real money. Had I started with Sim then gone live it would have been a different story.
It's true that fills aren't the same but it is possible to trade well in Sim and maintain the same discipline and psychology live. Although not common, it is possible, which is the point I was trying to make.
After all, losses are just a cost of business and money is a byproduct of good trading.

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  #59 (permalink)
 pipandrun 
Krabi Thailand
 
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I had and it only happens with live trading...to overcome this is a step forward...


Waiting, Discipline and Patience Pays!
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  #60 (permalink)
 amoeba 
Sydney, NSW, Australia
 
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pipandrun View Post
I had and it only happens with live trading...to overcome this is a step forward...

Oh wow yeah, that brought back a flush of memories

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  #61 (permalink)
 cory 
the coin hunter
virginia
 
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pipandrun View Post
I had and it only happens with live trading...to overcome this is a step forward...

...

Y that was when a French brokerage liquidated their bad trade overnight. His recording is also very much inline with the guy who got shot but he had to posted a snap of his wound first before getting to the hospital.

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  #62 (permalink)
 t0030tr 
Detroit, Michigan, USA
 
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Big Mike View Post
Definitely wrong.

There is probably a 0% chance I could pass a TST combine. But I 100% make money, for real.

Combines can be useful, but they don't make you profitable, nor do they serve as "black/white" lines for who can be profitable and who can't.

And after running the forum for nearly 6 years, I don't know many people that aren't profitable on SIM. So I think that argument is basically pointless.

Mike

Agree here Big Mike, it really has nothing to do with anything. The combine is someone else's parameters and not your own. I have have been very profitable in the past operating in a completely different set of parameters than the combines. While I found the combine almost impossible to pass due to my learned trading process. The only thing I can say, is that passing a combine shows that you as a trader have the ability to be versatile. It is only just one more tool in the tool box, that is all.

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  #63 (permalink)
 mattz   is a Vendor
 
 
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blb014 View Post
Just curious who are these opponents?

There is a crowd behavior that is typical where early adopters come into the market in the early stages of the move. As the move extends, you have the late majority that is coming in and tries to take advantage of a move that is over or about to be over. This is the cumulative nature of the herd instinct. Odd lotters feed the smart money.
Good traders, in my personal opinion, not only understand their method, but also the ability to read how inexperienced traders will behave under those circumstances.

inexperienced traders love using terminology and always throw around the "positive expectancy", "let your profits run", etc. while the real context that it is done within and the big picture is lost. All those terms are fine, but they have a lot more depth in the context of reading the market right. Try and get your advice from people who actually trade, it adds a new color to trading.

Matt

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  #64 (permalink)
BestBrokerDeals
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It's common for people to think they blew up their account because they had yet to learn how to trade. However, it's generally because they had yet to learn how to position size.

Once you have a solid grasp of money management, then even with a win rate of zero you won't be able to blow up your account - as your account equity diminishes then so will your position size, until your position size becomes zero units. At that point, you're no longer able to trade, but you haven't lost all the money in your account.

Many hedge funds are obliged to cease trading once they incur a drawdown of 50% or more - the individuals and institutions investing in them shouldn't lose more than half of their funds that way (barring some kind of liquidity crisis preventing valuation and exit of positions).

Although there are sophisticated mathematical approaches to anti-martingale position sizing, the core rule is very simple: bet less when you're losing. As your account equity falls, de-leverage.

Hope someone finds that a useful distinction to keep in mind!

Nick

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  #65 (permalink)
JacLau
Singapore Singapore
 
 
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I lost control and blew up my trading account 3 times.

I started trading SGX derivatives full time from mid 2004 with S$200K capital after being retrenched at age 42 from my Engineering job with Chevron in Singapore. 1 USD = 1.37 S$ (SGD).

I made money 7 out of the last 10 years. My total net profits from 2005 to 2014 is about S$1,288,000.

On 15 Feb 2007. I lost S$191K trading SGX MSCI Singapore Index futures. After trading for 2 years, I had zero profits and about S$70K of savings left to support a family with 2 young kids. Lowest point in my life.

On 30 Apr 2009, I lost S$224K trading SGX MSCI Taiwan Index futures and another S$116K the next trading day on 04 May 2009. Total S$340K in two consecutive trading days. I surrendered my life insurance policy the next week, and an investment condominium a month later, to raise additional trading capital after the loss.

On 16 Nov 2012 I lost S$570K trading SGX Nikkei 225 Index futures. Although my trading account was not completely wiped out, unlike the previous two major losses, I forced myself to take a temporary break from trading to reassess my situation. As a result of this major loss, my net trading income over the last 6 years, from 2009 to 2014 is next to nothing.

There were two other "near miss" trading days where my trading account had floating losses that exceeded my trading capital but the market recovered and I had profits at the end of the trading session.

On Tuesday 15 Mar 2011, after Japanese Prime Minister Naoto Kan said a “substantial amount” of radiation was leaking from a nuclear power plant affected by the Mar 11 massive earthquake and tsunami, the floating losses on my Nikkei 225 long positions touched S$2.5 million, roughly twice more than what I had in my trading account. At the end of the trading session I made S$120K. It was the most frightening day in my life, more scary than the time I got robbed at gun point in Phnom Penh a few years earlier.

I continue to trade daily, with a S$100K account presently, focusing mainly on Nikkei 225 Index futures. My daily profit seldom exceed S$500 per trading day, nowadays.

I am 100% certain I can lose every cent in my trading account again.

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  #66 (permalink)
 ron99 
Market Wizard
Cleveland, OH
 
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I blew up my account twice. First time was 1998 just a couple of months after starting trading. Didn't have enough cash excess.

Second time was 2008. Just kept saying to myself this thing can't go any lower.

But I have done very well the other years. Trading is my sole source of income and I'm debt free.

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  #67 (permalink)
nourozi
New Zealand
 
 
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Branzol View Post
Biggest thing I experienced going from SIM to REAL was the fact fills in SIM are no where near how they work in real life.

Examples:

Stop-Loss on Simulation: On simulation you can set your Stop-loss the market hit's it and your trade is closed out. Don't we all wish this is how it really happened?

Stop-Loss on Real Trades: I've had Stop-losses set and Market momentum drive right through my price point and fill 20 ticks away in the past. It's the nature of the beast especially on high volatility instruments. I've had it happen to a lesser degree on some of the calmer instruments.

Limit Order on Simulation: You can set limit orders on simulation, and when the market comes to that price point your filled near instantly. Again this is nowhere near how it happens in real trading.

Limit Order on Real Trades: You have to set your order many price points in advance to get a near instant fill on a limit order when the market hits your price point. Again it will depend on the instrument and liquidity in that instrument. But I've had to place orders 6-8 ticks out thinking ahead to ensure I had a order that was first in the batch to be filled. Simulation cannot teach you these things. I've also had Take-Profit orders hit there price point, not fill go back down and turn into losing trades. I've since solved that by other means as back up protection to juts a TP order.

There are many other examples, but those are the two basic ones. Pretty much the concept you need to grasp is your fills on simulation are instant. In the real world they are not! My suggest to anyone who's been trading SIM is try a few trades on a micro future like m6e and just sorta start to grasp how the fills occur. Only reason I suggest M6E is the capital involved to place a contract is low, as is the dollar amount per tick.

The Live fills can actually be better than SIM. This really varies depending on the simulator fill engine you are using based on the platform and also the platform simulator settings. But, you can set it up so the fills are very realistic. I have actually had slightly better fills live than on SIM with Ninjatrader.

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  #68 (permalink)
 blb014 
Dallas, Texas
 
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ron99 View Post
I blew up my account twice. First time was 1998 just a couple of months after starting trading. Didn't have enough cash excess.

Second time was 2008. Just kept saying to myself this thing can't go any lower.

But I have done very well the other years. Trading is my sole source of income and I'm debt free.

Yep 2008 and early 2009 made me question the conventional wisdom of investing. It will probably happen again, right before I retire

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  #69 (permalink)
 blb014 
Dallas, Texas
 
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BestBrokerDeals View Post
It's common for people to think they blew up their account because they had yet to learn how to trade. However, it's generally because they had yet to learn how to position size.

Once you have a solid grasp of money management
, then even with a win rate of zero you won't be able to blow up your account - as your account equity diminishes then so will your position size, until your position size becomes zero units. At that point, you're no longer able to trade, but you haven't lost all the money in your account.

Many hedge funds are obliged to cease trading once they incur a drawdown of 50% or more - the individuals and institutions investing in them shouldn't lose more than half of their funds that way (barring some kind of liquidity crisis preventing valuation and exit of positions).

Although there are sophisticated mathematical approaches to anti-martingale position sizing, the core rule is very simple: bet less when you're losing. As your account equity falls, de-leverage.

Hope someone finds that a useful distinction to keep in mind!

Nick

Excellent post

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  #70 (permalink)
 dark pool 
detroit+mi/usa
 
 
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Big Mike View Post
Guys, I wanted to start a serious discussion about a real and common problem -- traders blowing up accounts.

"Blowing up" means you took the account down to basically zero, where you couldn't place a trade any longer, or something similarly devastating.

As I posted on my first post ever on futures.io (formerly BMT) nearly 6 years ago, I have blown up a couple accounts in my day. None for many years thankfully, but it has happened. I view it as part of the learning experience, and naturally in hindsight it would be very easy to see why I blew up, and that I deserved it.

You can't expect to make poor trades and be consistently profitable.

I am starting a poll as I don't think I've ever asked the question on futures.io (formerly BMT) before. Everyone can vote anonymously on the poll, but if you wish to share your story about blowing your account and what you learned from it, please do so in this thread.

Mike

Do you personally know any successful traders(years)who have never blown an account? I've been reading/studying for half a year now, and it seems that blowing up an account is an active choice on the part of the trader. You have to willingly ram your face into a streak of losses to actually end up at 0 or below. I really don't understand that. Or is there just several trades where the trader decides to risk it all?

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  #71 (permalink)
DrewDown
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I think it's just bad money management. For instance, a futures trader who is on the /ES only needs $500 at most boutique brokers for intraday margin. To bring an account to zero from that balance while having on contract on the table, your position would have to go against you by 10 points. So I think at that point, you are being self-sabotaging. If you aren't cutting your losses well before that 10 point mark, you better be trading longer term positions, because that would take a while to come back from for an undercapitalised day trader. Anyone with a large account that blows it up is probably stretching an account just as thin as the undercapitalised guy.

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  #72 (permalink)
 dark pool 
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JacLau View Post
I lost control and blew up my trading account 3 times.

I started trading SGX derivatives full time from mid 2004 with S$200K capital after being retrenched at age 42 from my Engineering job with Chevron in Singapore. 1 USD = 1.37 S$ (SGD).

I made money 7 out of the last 10 years. My total net profits from 2005 to 2014 is about S$1,288,000.

On 15 Feb 2007. I lost S$191K trading SGX MSCI Singapore Index futures. After trading for 2 years, I had zero profits and about S$70K of savings left to support a family with 2 young kids. Lowest point in my life.

On 30 Apr 2009, I lost S$224K trading SGX MSCI Taiwan Index futures and another S$116K the next trading day on 04 May 2009. Total S$340K in two consecutive trading days. I surrendered my life insurance policy the next week, and an investment condominium a month later, to raise additional trading capital after the loss.

On 16 Nov 2012 I lost S$570K trading SGX Nikkei 225 Index futures. Although my trading account was not completely wiped out, unlike the previous two major losses, I forced myself to take a temporary break from trading to reassess my situation. As a result of this major loss, my net trading income over the last 6 years, from 2009 to 2014 is next to nothing.

There were two other "near miss" trading days where my trading account had floating losses that exceeded my trading capital but the market recovered and I had profits at the end of the trading session.

On Tuesday 15 Mar 2011, after Japanese Prime Minister Naoto Kan said a “substantial amount” of radiation was leaking from a nuclear power plant affected by the Mar 11 massive earthquake and tsunami, the floating losses on my Nikkei 225 long positions touched S$2.5 million, roughly twice more than what I had in my trading account. At the end of the trading session I made S$120K. It was the most frightening day in my life, more scary than the time I got robbed at gun point in Phnom Penh a few years earlier.

I continue to trade daily, with a S$100K account presently, focusing mainly on Nikkei 225 Index futures. My daily profit seldom exceed S$500 per trading day, nowadays.

I am 100% certain I can lose every cent in my trading account again.

Can I ask what sort of risk control you were employing at the time(s)? What were your position sizes like comparative to your account size?

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  #73 (permalink)
 purveyor 
Tampa, FL, USA
 
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I have blown my account twice, both times trading forex. The amounts were $500 and $300.

I have also lost some money trading a cryptocurrency called Nxt. I bought around $1500 worth of Nxt and saw my investment go up to $4500 but did not sell out greed. I fell for all the hype that the price was going to sky rocket (think bitcoin). Of course there was a huge dump and the prices tanked. My initial investment was down to $600 when i sold.

Recently i opened up a futures account with $2000. I started to scalp, by the 3rd day i was up $280. Last Friday i screwed up, i experienced the same thing @Malthus mentioned. I had no control over myself and i kept making losing trades. I had told myself i would limit loses to $100/day, i ended up losing $900 in 20 minutes (trading CL).

I didn't take any trades this week and i won't be scalping anymore.

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  #74 (permalink)
 Big Mike 
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purveyor View Post
Recently i opened up a futures account with $2000. I started to scalp, by the 3rd day i was up $280. Last Friday i screwed up, i experienced the same thing @Malthus mentioned. I had no control over myself and i kept making losing trades. I had told myself i would limit loses to $100/day, i ended up losing $900 in 20 minutes (trading CL).

I didn't take any trades this week and i won't be scalping anymore.

Your first mistake was thinking you can trade futures with only 2k.

Your second mistake was trading crude. Seriously wtf...

Third mistake was trying to scalp.

Basically you did everything wrong so obviously you will lose money.

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  #75 (permalink)
 blb014 
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dark pool View Post
Do you personally know any successful traders(years)who have never blown an account? I've been reading/studying for half a year now, and it seems that blowing up an account is an active choice on the part of the trader. You have to willingly ram your face into a streak of losses to actually end up at 0 or below. I really don't understand that. Or is there just several trades where the trader decides to risk it all?

Yes many successful traders and investors that I know have never blown an account, these aren't full-time intra-day futures traders. To me it really comes down to money management, diversify risk across different asset classes, and most of all defining risk before a trade.

The equities and options market is complex with many different players with many different agendas. The percentage of retail traders trading the equities market daily is minuscule so I think the advantage is not from anticipating or predicting novice or rookies traders but more from trading a plan, finding value and longer term context for the equity. Besides that the amount of computer and brain power with gazillion PhD's at these institutional firms do I really think that I have advantage trading from my retail platform in my underwear, no not at all

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  #76 (permalink)
 purveyor 
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Thanks @Big Mike, I appreciate your comments. The three things you pointed are basic things that every trader should follow but it didn't seem to register in my head until it was clearly laid out in front of me.

For someone who's starting out i feel this experience gives me an clear indication of what assets to steer away from and that scalping does not suit my personality.

i hope my post will deter other beginners like me from making mistakes like these.

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  #77 (permalink)
JacLau
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dark pool View Post
Can I ask what sort of risk control you were employing at the time(s)? What were your position sizes like comparative to your account size?

You can ask and I will try to answer to the best of my recollection.

On the days or times that I blew my trading account or suffered huge losses, I have no risk control as I lost control.

Basically I am a day trader who scalps the futures markets with no hard stops.

On the days or times that I blew my trading account or suffered huge losses, my position size increased to the maximum limit that I am allowed to trade, with the available capital in my account.

On 15 Feb 2007, the day I lost S$191K trading SGX MSCI Singapore Index futures, I remembered I started shorting that contract after lunch when it started to move upwards one way, way beyond its normal range. I added to my small losing short position as prices moved higher and added more and more as I see bigger floating losses, until it hit my maximum limit. After the cash market closes in the afternoon, futures continue to move higher and my losses ballooned to more than I can stomach and I surrendered all my shorts in the T+1 (after cash market close, futures trading session) market which has not enough liquidity to absorb all my shorts, so I paid more for my losses which wiped out my trading account and made me a net loser after 2 years of hard work.

15 Feb 2007 was the day the Singapore budget was announced in the afternoon, and I was not aware of it. It caused the MSCI Singapore Index futures to move one way up, without meaningful pullback. My shorts that day would have given me S$2,000,000 profits about 2 weeks later, had I been able to hold on to them for that long.

On 30 Apr 2009, the day I lost S$224K trading SGX MSCI Taiwan Index futures, I remembered I started shorting that contract the previous night when I saw it moving so much higher than the cash market close. I carried my losing shorts to the next morning open on 30 Apr 2009 and had about US$10K floating profits which I did not take right after the cash market opens. When my floating profits turned into losses, I added more and more shorts until I ran out of bullets. I surrendered all my shorts as the cash market closes and lost S$224K. I revenge traded the next trading day and lost another S$116K and my trading account has a small negative balance.

On 16 Nov 2012, the day I lost S$570K trading SGX Nikkei 225 Index futures, I remembered the range for the OSE Nikkei 225 large futures contract was only 12 ticks, low 8910, high 9030. SGX Nikkei 225 futures contract which I traded that day had twice as many ticks (24) after the Japanese stock market opens at 8 am Singapore time. How could I have lost S$570K that day? Well, I traded about 10K lots (bought & sold) that day. I had about S$1.3M in my trading account and I have 1,200 lots limit for SGX Nikkei 225 contract on my X-Trader trading platform. I remembered holding 1,172 lots short at one time. I remembered seeing around S$100K loss in the beginning, and then around $200K loss later in the day and S$570K loss as I liquidated all my shorts at the close of the day trading session.

I remembered how I traded that day but I have no explanation why I traded the way I did. I find it extremely hard to accept that the person who traded that day was my true self.

Hope I answered your question.

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  #78 (permalink)
 Big Mike 
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In every situation you were short. I'm wondering what percentage of trades and overall profit is from shorts?

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 pipandrun 
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JacLau View Post
You can ask and will I try to answer to the best of my recollection.

On the days or times that I blew my trading account or suffered huge losses, I have no risk control as I lost control.

Basically I am a day trader who scalps the futures markets with no hard stops.

On the days or times that I blew my trading account or suffered huge losses, my position size increased to the maximum limit that I am allowed to trade, with the available capital in my account.

On 15 Feb 2007, the day I lost S$191K trading SGX MSCI Singapore Index futures, I remembered I started shorting that contract after lunch when it started to move upwards one way, way beyond its normal range. I added to my small losing short position as prices moved higher and added more and more as I see bigger floating losses, until it hit my maximum limit. After the cash market closes in the afternoon, futures continue to move higher and my losses ballooned to more than I can stomach and I surrendered all my shorts in the T+1 (after cash market close, futures trading session) market which has not enough liquidity to absorb all my shorts, so I paid more for my losses which wiped out my trading account and made me a net loser after 2 years of hard work.

15 Feb 2007 was the day the Singapore budget was announced in the afternoon, and I was not aware of it. It caused the MSCI Singapore Index futures to move one way up, without meaningful pullback. My shorts that day would have given me S$2,000,000 profits about 2 weeks later, had I been able to hold on to them for that long.

On 30 Apr 2009, the day I lost S$224K trading SGX MSCI Taiwan Index futures, I remembered I started shorting that contract the previous night when I saw it moving so much higher than the cash market close. I carried my losing shorts to the next morning open on 30 Apr 2009 and had about US$10K floating profits which I did not take right after the cash market opens. When my floating profits turned into losses, I added more and more shorts until I ran out of bullets. I surrendered all my shorts as the cash market closes and lost S$224K. I revenge traded the next trading day and lost another S$116K and my trading account has a small negative balance.

On 16 Nov 2012, the day I lost S$570K trading SGX Nikkei 225 Index futures, I remembered the range for the OSE Nikkei 225 large futures contract was only 12 ticks, low 8910, high 9030. SGX Nikkei 225 futures contract which I traded that day had twice as many ticks (24) after the Japanese stock market opens at 8 am Singapore time. How could I have lost S$570K that day? Well, I traded about 10K lots (bought & sold) that day. I had about S$1.3M in my trading account and I have 1,200 lots limit for SGX Nikkei 225 contract on my X-Trader trading platform. I remembered holding 1,172 lots short at one time. I remembered seeing around S$100K loss in the beginning, and then around $200K loss later in the day and S$570K loss as I liquidated all my shorts at the close of the day trading session.

I remembered how I traded that day but I have no explanation why I traded the way I did. I find it extremely hard to accept that the person who traded that day was my true self.

Hope I answered your question.

My stomach starts aching when i read this....with all respect, but this sounds like self destruction. I know this, too, but never in that dimension. I don´t think that this is the question of using a hard stop or not. It´s obviously more the question to admit to be wrong in that special moment. But finding oneself in a "bubble" stops acting adequatly...
Is this solvable?? Have you find a way already?

Waiting, Discipline and Patience Pays!
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  #80 (permalink)
JacLau
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Big Mike View Post
In every situation you were short. I'm wondering what percentage of trades and overall profit is from shorts?

Sent from my phone

For the 2 "Near Miss" situations where my floating loss exceeded my trading capital before the market recovered, I was long.

I am more comfortable being short than long when I trade.

I do not track what percentage of my trades and overall profit is from shorts or longs.

I started trading futures in mid 2004 as a retail trader and became an SGX local around end 2004. I started tracking my daily profits from 2005 but I do not keep records of each trade.

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  #81 (permalink)
JacLau
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pipandrun View Post
My stomach starts aching when i read this....sounds like self destruction. I know this, too, but never in that dimension. I don´t think that this is the question of using a hard stop or not. It´s obviously more the question to admit to be wrong in that special moment. But finding oneself in a "bubble" stops acting adequatly...
Is this solvable??

Solvable? For myself, the answer is yes, if I stop trading altogether.

After I blew my account the second time, I have a program installed to liquidate all my position once the losses exceeds S$10K. I had it removed a few weeks later as I am not confident it will work and I don't feel comfortable trading with an automatic cut loss mechanism as futures prices can flash up and down momentarily.

Later I employed a trader who sits right beside me and told him to slap my face and kick my butt whenever I start to average losing positions. It didn't work as he only screamed at me to tell me to stop averaging my losers the day the Japanese stock market crashed during the morning break on 15 Mar 2011. I ignored him altogether and only stop buying more when my trading platform got locked out. When prices stabilized, I was staring at about S$900K floating loss which ballooned to touch S$2.5M at the peak when Nikkei 225 futures traded down to about 7800 from its 9230 morning open that day (1430 Yen drop from high to low), a few Yen from hitting the second limit down. I was trading from my broker's arcade at that time and the Manager came down from his office upstairs to my booth to ask me to get out of my position and take my losses. I shouted back a him and told him that I will either top up my account or cut my positions at the close. That action in the midst of the most frightening few hours or my life helped saved my trading account from being wiped out that day.

At the present moment I have set a limit of just 2 lots each on my trading platform for the MSCI Singapore and MSCI Taiwan index futures contracts, to stop me from blowing my S$100K account on them.

I know I can blow my S$100K trading account on the Nikkei 225 contracts anytime if I lose control again as I have a combined total of 120 lots on CME NKD/NIY & SGX NK.

Just last year I had a S$22K realized loss being long on 21 Feb 14 and a S$48K realized loss being short on 02 Jun 14, trading the Nikkei 225 contracts. My trading capital last year was about S$140K.

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  #82 (permalink)
 bobwest 
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dark pool View Post
Do you personally know any successful traders(years)who have never blown an account? I've been reading/studying for half a year now, and it seems that blowing up an account is an active choice on the part of the trader. You have to willingly ram your face into a streak of losses to actually end up at 0 or below. I really don't understand that. Or is there just several trades where the trader decides to risk it all?

I don't mean this at all negatively toward you, but if you have been studying for half a year now, it is time to stop studying and find out what trading is like by actually doing some.

When you have a stake in the game, it is completely unlike what it seems to be when you are just watching it. You will find that trading is mostly about the acceptance and management of risk, and the management of your own reactions when you have money on the line, and are either making it or losing it. Both success and failure have their own psychological/emotional pressures, both can distort your judgment, and learning to handle the issues that both give you is probably more than 80 or 90 percent of what real trading is about. The things that you are able to learn by studying the market are about 10 to 20 percent of the puzzle, if that. Really.

I think from your comments that you have not had to face this by actually being in the middle of it, and if you want to be able to trade, that's where you have to steer your ship, not reading and studying.

I absolutely am not trying to put you down, but getting into the market with some real risk on the line is the only way that you will ever understand anything at all useful about trading.

If you are financially unable to do this, then, for one thing, that is a very good argument against attempting to trade now. Build up a financial position and develop a personal life situation that allows you to have risk capital that you can afford to lose if you have to. By the way, you will lose at least some of it. Then you may understand the answer to your question.

If you need a clearer pathway, look at any of @Big Mike's posts, and read the 6 points he has in his "signature" -- the text that appears at the end of each post. Follow up on them, especially the "Where to start" webinar here:

If you aren't in the market and don't have something at stake, you are not really studying anything that is either real or helpful, and you really are not learning anything. Sorry to tell you that, but it's the simple truth.

There are many resources here that can help. If you can manage it, an Elite membership can be very valuable because of the many, many Elite-only threads.

Again, I'm not putting you down and not being negative, but you really should take some of this advice seriously, and then work with it in your own way.

It is not the easiest road in the world, as many have found out. But that's what the road is. Doing something else is going to take you somewhere else, but not to trading.

Good luck with this.

Bob.

Edit: this sounds like I am lecturing you. Please forgive that, but I can't think of a better way to say it. I hope something in it is helpful to you, and to anyone else in the same place as well.

Edit 2: I just saw in another thread that you have been trading live for a month now. Good for you. If my assumption about your experience was wrong, I apologize. However, a month is not long (), and the suggestions are still good ones, and will be, I suspect, for a long time. It is still trading psychology that will make you or break you. And you are probably going to have a lot of interesting experiences with it all.

Again, good luck and good trading.

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 dark pool 
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bobwest View Post
I don't mean this at all negatively toward you, but if you have been studying for half a year now, it is time to stop studying and find out what trading is like by actually doing some.

When you have a stake in the game, it is completely unlike what it seems to be when you are just watching it. You will find that trading is mostly about the acceptance and management of risk, and the management of your own reactions when you have money on the line, and are either making it or losing it. Both success and failure have their own psychological/emotional pressures, both can distort your judgment, and learning to handle the issues that both give you is probably more than 80 or 90 percent of what real trading is about. The things that you are able to learn by studying the market are about 10 to 20 percent of the puzzle, if that. Really.

I think from your comments that you have not had to face this by actually being in the middle of it, and if you want to be able to trade, that's where you have to steer your ship, not reading and studying.

I absolutely am not trying to put you down, but getting into the market with some real risk on the line is the only way that you will ever understand anything at all useful about trading.

If you are financially unable to do this, then, for one thing, that is a very good argument against attempting to trade now. Build up a financial position and develop a personal life situation that allows you to have risk capital that you can afford to lose if you have to. By the way, you will lose at least some of it. Then you may understand the answer to your question.

If you need a clearer pathway, look at any of @Big Mike's posts, and read the 6 points he has in his "signature" -- the text that appears at the end of each post. Follow up on them, especially the "Where to start" webinar here:

If you aren't in the market and don't have something at stake, you are not really studying anything that is either real or helpful, and you really are not learning anything. Sorry to tell you that, but it's the simple truth.

There are many resources here that can help. If you can manage it, an Elite membership can be very valuable because of the many, many Elite-only threads.

Again, I'm not putting you down and not being negative, but you really should take some of this advice seriously, and then work with it in your own way.

It is not the easiest road in the world, as many have found out. But that's what the road is. Doing something else is going to take you somewhere else, but not to trading.

Good luck with this.

Bob.

Edit: this sounds like I am lecturing you. Please forgive that, but I can't think of a better way to say it. I hope something in it is helpful to you, and to anyone else in the same place as well.

Edit 2: I just saw in another thread that you have been trading live for a month now. Good for you. If my assumption about your experience was wrong, I apologize. However, a month is not long (), and the suggestions are still good ones, and will be, I suspect, for a long time. It is still trading psychology that will make you or break you. And you are probably going to have a lot of interesting experiences with it all.

Again, good luck and good trading.

Thanks for the reply. It's good advice. My little time on this forum has already been invaluable. I imagined successful traders as brilliant, calculating logical machines-and come to find out it's just regular people like me. At its core, this game is about intelligence, skill AND knowledge-a combination of chess, poker and real time strategy. It's actually very easy if you are used to monitoring and regulating your emotional reality(which is apparently hard even for the best of them). What I'm lacking right now is the knowledge of individual instrument behaviour over time, and market reactions to announcements-which I suppose will come with time. Kind of feel like I taught myself to fish

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  #84 (permalink)
Skinchin
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2008 was the year I began to trade..
No Sim or anything, looked easy with a few simple sup/res lines!

Received a couple of big slaps in the face that year and didn't begin to trade live again for almost 6 years.
Although it was probably the worst year to trade for most in the last decade, it taught me an invaluable lesson, that anything can happen and a bear market will go lower than anyone expects and vice versa for a bull market.

It's hard to fathom how traders can be consistently profitable without hard stops as I saw a friend of mine blow up in 2008 after 5 years of profitable trading for not using a hard stop in the crash. He hasn't traded since!

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farmer55
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I've blown out 3 times. And quit 3 times. Once, never looking at a chart for 3 yrs. How does a person go from +$120k to -$22k in less than a month? It took 2 more blow outs to learn.

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 US Bond Trader 
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farmer55 View Post
I've blown out 3 times. And quit 3 times. Once, never looking at a chart for 3 yrs. How does a person go from +$120k to -$22k in less than a month? It took 2 more blow outs to learn.

Ouch! I hope you were able to turn it around.

Reminds me the saying "Want to know how to finish the year with 1 million dollars in your trading account? start with 5 million"

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 grausch 
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dark pool View Post
Thanks for the reply. It's good advice. My little time on this forum has already been invaluable. I imagined successful traders as brilliant, calculating logical machines-and come to find out it's just regular people like me. At its core, this game is about intelligence, skill AND knowledge-a combination of chess, poker and real time strategy. It's actually very easy if you are used to monitoring and regulating your emotional reality(which is apparently hard even for the best of them). What I'm lacking right now is the knowledge of individual instrument behaviour over time, and market reactions to announcements-which I suppose will come with time. Kind of feel like I taught myself to fish

I would add patience and discipline to your list of required traits. Some of the smartest people I know don't trade well at all, thus not sure about intelligence.

I never found "monitoring and regulating my emotional reality" easy, thus I doubt trading will ever be easy. However, with a certain amount of perspective, patience becomes easier and maintaining discipline also becomes easier. To put things into perspective, making 5% a month would yield returns of ~100% per annum. Most day-traders I know scoff at 5% per month and aim much higher, yet no-one accomplishes that. I wonder why?

Individual instrument behaviour - some traits may be noticeable. How you plan on making money off these traits would be a good question. Also, how can you be sure that the behaviour is not just random noise? However, I am not an expert at uncovering such behaviour thus will refrain from further comments.

Market reactions to announcements - depending on your time-frame this could be just noise. I would rather focus on my own plan should the market price reach certain thresholds.

I am no expert on markets, but most trading should be focused on the trader and the plan. We will set ourselves up for failure so often it is pretty scary. Analyse your past trades and see what you could have done better. I am not talking about finding better indicators...I am talking about "why did I enter?", "should I have waited for a better signal before entering?", "why did I exit?", "did I exit according to the plan?", "should I have held longer?", "why did I not exit according to plan?". You can add a lot more questions to the list. You will notice all of the questions focus on the trader. A lot of introspection needs to go into this. Remember you are your own greatest enemy.

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  #88 (permalink)
 dix173 
SD, California
 
Experience: Beginner
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Trading: ES, NQ
 
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JacLau View Post
On 15 Feb 2007. I lost S$191K trading SGX MSCI Singapore Index futures. After trading for 2 years, I had zero profits and about S$70K of savings left to support a family with 2 young kids. Lowest point in my life.

This part really scared me I have a daughter now (1 year old ) and trying to put aside some money for the families for sure. Now I have life insurance, some cash for at least 1 year's family expenses, some dividend play in 401k and looking to buy a investment property for her.

Best wishes to your trade!

EDIT: I'm just a retailer trader with most of my money in investment properties and really don't need that much money in future trading account. Our trading and money management could be totally different.
But anyway good luck trading!

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  #89 (permalink)
 dsdnaples 
Naples Florida
 
Experience: Intermediate
Platform: NinjaTrader
Trading: es, cl
 
Posts: 1 since Oct 2012
Thanks: 4 given, 1 received

I blew up my day trading futures account 3x's. The last time was in 2009 when I put on a few large ES shorts. Ready for this: moved my stops!! Total idiot move and I knew better. I lost 125K on a 150K account! Dumbass.

At this point I had 25K left, took a break for two months to try and figure out why I was able to make so much money and then blow it all much faster than I made it. I came down to simple math: trading too big too fast and cutting winners and holding losers! I realized I could not scalp the ES/NQ/YM/TF as it just wasn't for me. I'll leave index future scalp trading to other who can figure it out. I got my ass kicked! I accepted I was not a good index trader. But I committed to making one last attempt at trading when I was ready.

When I jumped back in late 2009 I had a totally different game plan that has worked every since. This strategy works for me and I'm not saying it's a holy grail. I am by no means a great trader...maybe average at best. I took the 25K and put on 1 lot CL swing trades. I traded nothing else then (or now). I never traded choppy days. I pre-set my stops and stuck to it. It took a few months, but I figured out a way to added to winners and cut the losers quicker. I think it took well over a year to build my account from 25K to 50K so I could add 1 or 2 more contracts. In 2012, I was able to start trading a lot bigger while using the same simple strategy.

Nowadays, if I see a choppy day in CL once the cash markets opening, I walk away and trade nothing. When I do trade, I can loose 6 or 7 out of every 10 trades just because price action revisiting levels after adding to winners. However, I am consistent in capturing nice profits on the 3 or 4 winners out of every 10 trades. I still track my performance on a "10 trade cycle". Don't know if this is right or not - it just works for me. If I start losing more or less than 6 or 7 out of 10 times, I know something isn't right. I constantly have to check myself because I have the tendency to trade larger than I should at times.

Am I am profitable? Extremely. But I still loose 60%-70% of trades. I love my losses because I know in my system I must have 6 or 7 losers out of every 10 trades. But I never have big losers because I need the losers to be only small losers in order for me to make any money! To me, accepting a losing trade means I'm actually right and its' time to move closer to a winning trade.

I trade using only simple price action, MA's and volume profiles - I abandoned the pure technical approach along time ago. I don't trade Wed. morning when inventory weekly reports come out. I use no other indicators. My strategy is simple: I stick my toe in the water with anywhere from 1-3 CL contracts and then add 5-7 contracts right around a profit area of +40 ticks. I'll do this maybe once or twice more. It keeps my overall break even/stop rather close, thus, I get stopped more often than not. But when I can catch a nice CL trend of a dollar and a half or more...I can capture monster profits. At the end of the day its no different than fishing and pulling in a bunch of baby carp before you eventually hook Moby Dick. I believe in "keep it simple stupid".

For me personally, I also had the advantage of having a spouse that worked and I did not have the "pressure" to generate income regularly. It gave me a rather large window of time to be a student and try to figure out a system that would eventually work. I think this was the most important factor and I would have definitely failed and never been profitable if I had to generate "x" amount each month to live and pay bills on. I think this is actually the biggest hurdle for new traders to overcome.

These days I don't know if CL will head into the 30's in the 2nd Qtr of 2015 or it we are now at the bottom in the 45-50 area. Don't know...don't care. I think once you start believing you understand the market and can anticipate moves - you then will go broke!

If it's said that 85% of traders pocket small profits and then get cocky and blow their accounts up by taking on just a few huge losses....isn't the inverse the ultimate goal? I know it's hard said than done...but "keeping it simple stupid" can work IMO.

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  #90 (permalink)
 program 
CA USA
 
Experience: Intermediate
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dsdnaples View Post
I blew up my day trading futures account 3x's. The last time was in 2009 when I put on a few large ES shorts. Ready for this: moved my stops!! Total idiot move and I knew better. I lost 125K on a 150K account! Dumbass.

At this point I had 25K left, took a break for two months to try and figure out why I was able to make so much money and then blow it all much faster than I made it. I came down to simple math: trading too big too fast and cutting winners and holding losers! I realized I could not scalp the ES/NQ/YM/TF as it just wasn't for me. I'll leave index future scalp trading to other who can figure it out. I got my ass kicked! I accepted I was not a good index trader. But I committed to making one last attempt at trading when I was ready.

When I jumped back in late 2009 I had a totally different game plan that has worked every since. This strategy works for me and I'm not saying it's a holy grail. I am by no means a great trader...maybe average at best. I took the 25K and put on 1 lot CL swing trades. I traded nothing else then (or now). I never traded choppy days. I pre-set my stops and stuck to it. It took a few months, but I figured out a way to added to winners and cut the losers quicker. I think it took well over a year to build my account from 25K to 50K so I could add 1 or 2 more contracts. In 2012, I was able to start trading a lot bigger while using the same simple strategy.

Nowadays, if I see a choppy day in CL once the cash markets opening, I walk away and trade nothing. When I do trade, I can loose 6 or 7 out of every 10 trades just because price action revisiting levels after adding to winners. However, I am consistent in capturing nice profits on the 3 or 4 winners out of every 10 trades. I still track my performance on a "10 trade cycle". Don't know if this is right or not - it just works for me. If I start losing more or less than 6 or 7 out of 10 times, I know something isn't right. I constantly have to check myself because I have the tendency to trade larger than I should at times.

Am I am profitable? Extremely. But I still loose 60%-70% of trades. I love my losses because I know in my system I must have 6 or 7 losers out of every 10 trades. But I never have big losers because I need the losers to be only small losers in order for me to make any money! To me, accepting a losing trade means I'm actually right and its' time to move closer to a winning trade.

I trade using only simple price action, MA's and volume profiles - I abandoned the pure technical approach along time ago. I don't trade Wed. morning when inventory weekly reports come out. I use no other indicators. My strategy is simple: I stick my toe in the water with anywhere from 1-3 CL contracts and then add 5-7 contracts right around a profit area of +40 ticks. I'll do this maybe once or twice more. It keeps my overall break even/stop rather close, thus, I get stopped more often than not. But when I can catch a nice CL trend of a dollar and a half or more...I can capture monster profits. At the end of the day its no different than fishing and pulling in a bunch of baby carp before you eventually hook Moby Dick. I believe in "keep it simple stupid".

For me personally, I also had the advantage of having a spouse that worked and I did not have the "pressure" to generate income regularly. It gave me a rather large window of time to be a student and try to figure out a system that would eventually work. I think this was the most important factor and I would have definitely failed and never been profitable if I had to generate "x" amount each month to live and pay bills on. I think this is actually the biggest hurdle for new traders to overcome.

These days I don't know if CL will head into the 30's in the 2nd Qtr of 2015 or it we are now at the bottom in the 45-50 area. Don't know...don't care. I think once you start believing you understand the market and can anticipate moves - you then will go broke!

If it's said that 85% of traders pocket small profits and then get cocky and blow their accounts up by taking on just a few huge losses....isn't the inverse the ultimate goal? I know it's hard said than done...but "keeping it simple stupid" can work IMO.

first post in 2.5 yrs? thanks for sharing, keep them coming

I have approximate answers, possible beliefs and different degrees of certainty of different things. But I'm not absolutely sure of anything and there are many things i don't know anything about.
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  #91 (permalink)
 lrfsdad 
milwaukee,wi, usa
 
Experience: Intermediate
Platform: Mobile TWS & mobile TOS. Dough.com
Broker: IB, TOS, FXCM
Trading: futures and options. looking into forex
 
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ron99 View Post
and I'm debt free.

Funny how money takes on a different meaning when u reach this point. Should almost be a prerequisite to trading on margin. Especially in futures.

I've blown an account or two. First was after a guy in a cowboy hat sold me a course buying 123 tops/bottoms. First trade was corn and I made money.(this was the late 90's so paper trading was the way to learn)$1200 profit I think. Easy. Then I lost that in pork bellies. "So the money is gone?" I remember asking the broker. Then I kept buying "deep out of the money options" (this is the opposite of how @ron99 makes his money) till the money was gone. Every time I had a couple hundred bucks laying around I would send it in to buy a lottery ticket.

There was also the time I took a $1000 acct to 10k then back to just over 1000. I closed the acct and decided I did better than if a savings acct. the wins were in cotton and I think cattle futures going with the trend. I probably ignored this fact when I placed the eventually losing trades.

Then there was the time not long after I was married, I opened a trade station account and traded live with a strategy after I optimized it. Yeah, that money is gone too. I remember watching $800 disappear in seconds cause I pushed the wrong button during the nfp report. I think I told my wife over the phone about that one.

Somewhere in this time line my broker convinced me selling options wasn't a bad idea. I did good during 07 08 selling es strangles in my Ira. Volatility was so high I remember collecting around $1000 for an es 500 or 600put. Ahh the good ole days.

I eventually lost my job due to the recession and pissed away almost 2 years trying to day trade on sim. Es only ticked up and didn't give many opportunities for back and forth trading so switched to cl. Never got successful with what I thought was a method. There was even a couple of times I felt so good about a setup that I took it in my Ira only to lose money.

Everything I do now is cash secured. I do a lot of options and stocks. I'm self employed and manage my accounts from my phone during the day. Using options I can for lack of a better term, "un fuck myself" from a losing position.

I should probably note that the drawdown ' s in my business account to pay suppliers, overhead, etc while waiting for payment has probably made me somewhat immune to drawdown ' s in my trading acct.

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  #92 (permalink)
 Yukoner 
Vancouver Island, Canada
 
Experience: Advanced
Platform: T4, IB, TD Ameritrade
Broker: Stage5
Trading: ES CL RTY Stocks
 
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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.

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

Mike,

First off this is an excellent topic and thread. I don't want to high jack it off topic, but based on your above response I would appreciate your feedback if this would also apply to taking a combine at Topstep where there is something on the line.

Thank,
Yukoner

Ps. My big blow up happened while living overseas trading full time ... Then 2008 hit... And not only did the markets go nuts, but I got sick and on drugs all the while trading, but losing an average of a couple thousand every day... Just watched my accounts shrink. Finally in a fit of frustration, I emailed my broker and had all funds in the largest account wired back to Canada... 45 mins later, I called them and cancelled it.

Went on to lose some more thousands... Finally, finally stopped trading... Left with about $25,000 in my accounts. Months later I went back and looked at history, and almost from the day of taking prednisone you could see the equity curve start to drop... Sad story.

Now, I am just working to build back my confidence as a trader and get over that 2008 trauma.

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  #93 (permalink)
 blb014 
Dallas, Texas
 
Experience: Intermediate
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lrfsdad View Post
Funny how money takes on a different meaning when u reach this point. Should almost be a prerequisite to trading on margin. Especially in futures.

I've blown an account or two. First was after a guy in a cowboy hat sold me a course buying 123 tops/bottoms. First trade was corn and I made money.(this was the late 90's so paper trading was the way to learn)$1200 profit I think. Easy. Then I lost that in pork bellies. "So the money is gone?" I remember asking the broker. Then I kept buying "deep out of the money options" (this is the opposite of how @ron99 makes his money) till the money was gone. Every time I had a couple hundred bucks laying around I would send it in to buy a lottery ticket.

There was also the time I took a $1000 acct to 10k then back to just over 1000. I closed the acct and decided I did better than if a savings acct. the wins were in cotton and I think cattle futures going with the trend. I probably ignored this fact when I placed the eventually losing trades.

Then there was the time not long after I was married, I opened a trade station account and traded live with a strategy after I optimized it. Yeah, that money is gone too. I remember watching $800 disappear in seconds cause I pushed the wrong button during the nfp report. I think I told my wife over the phone about that one.

Somewhere in this time line my broker convinced me selling options wasn't a bad idea. I did good during 07 08 selling es strangles in my Ira. Volatility was so high I remember collecting around $1000 for an es 500 or 600put. Ahh the good ole days.

I eventually lost my job due to the recession and pissed away almost 2 years trying to day trade on sim. Es only ticked up and didn't give many opportunities for back and forth trading so switched to cl. Never got successful with what I thought was a method. There was even a couple of times I felt so good about a setup that I took it in my Ira only to lose money.

Everything I do now is cash secured. I do a lot of options and stocks. I'm self employed and manage my accounts from my phone during the day. Using options I can for lack of a better term, "un fuck myself" from a losing position.

I should probably note that the drawdown ' s in my business account to pay suppliers, overhead, etc while waiting for payment has probably made me somewhat immune to drawdown ' s in my trading acct.

Thanks for your story. I trade cash secure options also and it has taken me years to work some of my positions back to break even from 2008. Using margin incorrectly and being over leveraged have attributed to many blown accounts.

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  #94 (permalink)
 ZarethKnyght 
Toronto, Canada
 
Experience: Beginner
Platform: Questrade
Broker: Questrade
Trading: Options
 
Posts: 99 since Apr 2013
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I blew up my account twice in the past and almost blew it up again just recently.

The first time, I didn't do any research at all. I had about $1500 and I just wanted to be in the stock market. I got exactly what I got out of it though as I used that money to help me learn more about the stock market. I learned well alright. I blew that account by not looking properly at the companies I was investing in. Bought a company that was well on its way down and when it went down, I bought more of it. It was only after it went bankrupt did I find out that they had a huge debt that they couldn't pay and they weren't making a profit on their business.

Second time was when I was still fairly new to options trading. I took a big gamble based on my biased view of a company and took a position that I couldn't exit if things went against me. Things went against me and I couldn't get out. Blew up $15-16k that I had managed to work my way up to.

I almost blew it again recently. I mean...I know that a lot of the markets I was going into had entered a consolidation phase and that for my trading style was a bad thing. But I ignored the signs and kept going in and making a lot of losing trades. And then for a bit, I just froze being unable to take action while I was sitting on a loser. Thankfully, the lesson I learned from busting the second time, saved me in time to still remain in the game. It also taught me a valuable lesson as well about getting a big head. Also I feel like if the market starts to consolidate again, I'll be more likely to stay out of it.

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  #95 (permalink)
JacLau