Lost 40K in 2007 - Traders weigh in | Forex Factory

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Lost 40K in 2007 - Traders weigh in

  • #1
  • First Post: Feb 6, 2008 11:09am Feb 6, 2008 11:09am
I lost 40K (blew my account) in 2007, due to poor MM which seemed to get worse and worse after each loss. I am now trading demo accounts until I can become profitable and getter a better handle on my emotions (usually the cause of why my trades blew up) All in all i was trading in the right direction, but because of poor money management i was over leveraged and rushing in and out of positions.

I have been trading FX for about 18 months. Now I am re-evaluating myself, my strategy, and frame of mind before I enter the market again.

I know I can be successful but I have to overcome the emotional side of being a trader, and aim for realistic long term returns as opposed to the get-rich-quick or even worse, make it all back mentality that put me in this hole.

I started this tread for positive advice and truthful discussions from successful and unsuccessful traders on their experiences handling losses so that others (and ourselves) can hopefully learn from our mistakes
  • #2
  • Feb 6, 2008 11:18am Feb 6, 2008 11:18am
A Simple Money Management..
If you see 50 Pips Against you.. Close the position.. step aside and then evaluate where its going.. And find the spot, enter again
If you see 30-50 Pips profit.. Book it.. And then if you see the direction is still continuing.. enter again, and this positions should be HALF of the previous one.. this should be booked after 20 pips.

Step aside, think.. what to do.. and go for it again.

You should have guts to book your losses.. or you will just keep thinking it will reverse, and by the time you cut your loss, it would be worse..

So simply.. when you enter a trade, setup in your mind that after what amount of pips you will close position if in loss and what amount if in profits.

Dont be greedy.. markets wont end ever..
  • #3
  • Feb 6, 2008 11:35am Feb 6, 2008 11:35am
Quoting smmcintyre
I lost 40K (blew my account) in 2007, due to poor MM which seemed to get worse and worse after each loss. I am now trading demo accounts until I can become profitable and getter a better handle on my emotions (usually the cause of why my trades blew up) All in all i was trading in the right direction, but because of poor money management i was over leveraged and rushing in and out of positions.

I have been trading FX for about 18 months. Now I am re-evaluating myself, my strategy, and frame of mind before I enter the market again.

I know I can be successful but I have to overcome the emotional side of being a trader, and aim for realistic long term returns as opposed to the get-rich-quick or even worse, make it all back mentality that put me in this hole.

I started this tread for positive advice and truthful discussions from successful and unsuccessful traders on their experiences handling losses so that others (and ourselves) can hopefully learn from our mistakes
Overtrading:

This is one of the hardest things to overcome. I went through a spell of that. Making six trades on the same pair within an hour, losing them all, and the worst part? Price is right where it was when I started.
I used to take a week or two off when this happened, and I usually would use better sense when I came back.
Another thing that helps when you have a trade open is this: Walk away for a while, then come back and look at the chart as if it is the first time you've seen it. Ask yourself, "Based on my rules, would I enter this trade now?"

Also try to look at your chart from the opposite side of the trade. You might be missing something.
These few little things helped me out.
  • #4
  • Feb 6, 2008 11:43am Feb 6, 2008 11:43am
Trade on higher TF's.

Start here: http://www.forexfactory.com/showthread.php?t=63072

Good Luck!
Humble Lifetime Member
  • #5
  • Feb 6, 2008 12:04pm Feb 6, 2008 12:04pm
Dude, sorry to hear about your losses.

Get your focus back together, reevaluate your trading plan, and don't give up.
Just trying to make some dollars and sense...
  • #6
  • Feb 6, 2008 12:24pm Feb 6, 2008 12:24pm
Here is my experience. I demo traded for about 1 1/2 years. I did not constantly traded, just traded for a few months, the took some time off. Read some here, read some there. Went back to demo account. After I had a strategy I felt good about, opened a live account (that was two weeks ago) and, even when I know that even at 2% risk I can trade bigger, I am trading $0.01 per pip. I have not had a winning trade so far (this has been a hell of two weeks for the USDJPY 4H timeframe). But given that I only lost $2.5 so far, I can give myself the luxury of losing more without going nuts about it. Meanwhile I am refining my own psycology. I understand the losses I am taking have about 10% to do with my system, 70% market (specifically USD/JPY) and about 20% to do with my own psycology.

There is two things that, while demo trading, I did not take very much into account:

1) I trade 4H chart, so there is 30 candles in one week. When I would back test my system I would lose count of time. when I forward tested on demo, I would let the trades develop because my focus was in the end result. I had no interest on seing how the market would get me there. Now, when trading live, I find myself constantly checking the charts to see how is going and I start realizing how long it can take for results to show and it seems like the market moves sooooo slow. Its nerve racking!!!. Not enough to make mistakes though. Given the small amount I am trading I am able to stick to my rules. Will see what happens when I start trading bigger.

2) The second thing is, I thought I could trade the news. Dumb mistake. Because I though I could, I started keeping track of new reports almost everyday. Well part of the money I lost this past two weeks, was an attempt to do just that. i.e. If you have been looking at the USD/JPY last week, it hardly moved, all eyes were on the Fed interest decision. So you would think (off course, being a newbie) that as soon as the announcement was made you would see something like a 200 pip move (given the expectation)... and what happened? nothing much. Same for last fridays NFP. All the USD/JPY had been doing since Monday of last week is range about 100 pips

That is my experience so far. I still have a lot of faith on me... and some on my system. Time would tell if it should be the other way around.
Please pull my head out of my ass, I am running out of oxygen...
  • #7
  • Feb 6, 2008 12:26pm Feb 6, 2008 12:26pm
Sorry to hear about your loss. Did you start with demos, or had you traded any other markets, prior to risking $40k in FX?

Most of us who have been trading for years have had our blowups early on, before grinding down our methods & ultimately coming out ahead. It can be a costly educational experience.

My recommendations - trade smaller, don't revenge trade, don't go all-in (try pyramiding into positions), use stops, and have patience, patience is priceless (I can give 1000 examples).
  • #8
  • Feb 6, 2008 12:46pm Feb 6, 2008 12:46pm
Quoting smmcintyre
I lost 40K (blew my account) in 2007, due to poor MM which seemed to get worse and worse after each loss. I am now trading demo accounts until I can become profitable and getter a better handle on my emotions (usually the cause of why my trades blew up) All in all i was trading in the right direction, but because of poor money management i was over leveraged and rushing in and out of positions.

I have been trading FX for about 18 months. Now I am re-evaluating myself, my strategy, and frame of mind before I enter the market again.

I know I can be successful but I have to overcome the emotional side of being a trader, and aim for realistic long term returns as opposed to the get-rich-quick or even worse, make it all back mentality that put me in this hole.

I started this tread for positive advice and truthful discussions from successful and unsuccessful traders on their experiences handling losses so that others (and ourselves) can hopefully learn from our mistakes

40K is too much money (atleast for me). Sorry to hear that you lost a big chunk. I also lost some money in forex, not a lot, but good enough to make me realize that if I keep on continuing like this, I will loose all. I am demo trading now for 2 months. Surprisingly, I am doing good on demo. Good luck to you. Hope you will see greenary again.
  • #9
  • Feb 6, 2008 1:29pm Feb 6, 2008 1:29pm
lose all excitement when trading, forget about $'s, trade to make winners, know what a winning trade looks like before it happens, whatever size you are trading cut it in half. do not hesitate to execute. revenge doesnt work, fear doesnt work, being a fool doesnt work.

One of the Market Wizards in Schwager's New Market Wizards said something like this:

"When you are in a winning trade, do not hurry to take profits, you need to think of a move against your position as a retracement, but when a trade is not in the money and going against you, you need to think of it as a move in the other direction and the loss must be cut quickly without hesitation"

Know the relationships between whatever you are trading and other markets and know how to use them. Know when they're out of wack, know when theyre just right.

best of luck
  • #10
  • Feb 6, 2008 2:03pm Feb 6, 2008 2:03pm
we all loose,...thats the part of the game,...if u dont love the game, quite immediatly...
its just money
  • #11
  • Feb 6, 2008 2:22pm Feb 6, 2008 2:22pm
you know what, i am in a state of awe how rich some of you guys are on this forum. People with accoutns 10k, 50k or over 100k. I mean what do you guys do for a living prior to this??

I'ts unfortunate that you lost 40k, but daaayumn 40k!?!??. I wish I had that much to trade with.
  • #12
  • Feb 6, 2008 2:25pm Feb 6, 2008 2:25pm
Quoting hilmy83
you know what, i am in a state of awe how rich some of you guys are on this forum. People with accoutns 10k, 50k or over 100k. I mean what do you guys do for a living prior to this??

I'ts unfortunate that you lost 40k, but daaayumn 40k!?!??. I wish I had that much to trade with.
Ha no kidding.
  • #13
  • Edited 2:40pm Feb 6, 2008 2:29pm | Edited 2:40pm
Quoting hilmy83
you know what, i am in a state of awe how rich some of you guys are on this forum. People with accoutns 10k, 50k or over 100k. I mean what do you guys do for a living prior to this??

I'ts unfortunate that you lost 40k, but daaayumn 40k!?!??. I wish I had that much to trade with.

People come from a variety of social and professional backgrounds, is that new? We have Saudi princes on FF, we have all sorts :>
  • #14
  • Last Post: Feb 6, 2008 3:14pm Feb 6, 2008 3:14pm
I was in your shoes not too long ago, not nearly as much as 40k, but enough to notice a problem. What I found to help me was analyzing the charts on the weekends when the market was closed. I use Fibonacci and MA's on the 4 hour, daily and weekly charts. All three have to be lined up for me to make the trade. I look for patterns, became patient while waiting for those patterns to happen, then execute. I usually target 50 pips, and get out, then look for another trade. Sometimes there are no "safe" trades during the day, and thats ok. Just find a system that works for you (theres all kinds on FF) and practice it on demo, until you see an increase in your balance, then start small with a mini account. Good Luck. Like someone else mentioned, the market will always be here.
Jeff
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