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Break-even phase before becoming profitable?

  • #1
  • First Post: Nov 23, 2011 10:18am Nov 23, 2011 10:18am
Question to all profitable traders:

Is it normal after having many account blow-outs, to go through a phase of breakeven before becoming profitable?

Or is it more expected to turn from losing straight into being profitable?
  • #2
  • Nov 23, 2011 1:37pm Nov 23, 2011 1:37pm
I don't think every trader's experience will have been the same.

Long story short, after 2+ years trading I was down ~20% on my initial balance. From my last trade of 2010 on, I have been profitable and am up ~35% from the balance low/start of the year, and up about 8% from the initial balance.

There was never really a sideways period for me. The losing streak on the way down was about as close as it got to sideways for me, it was a steady, slow seesaw of wins and losses, with losses slightly beating profits.

I would say it really depends on what turns you from losing to profitable. If you are mentally, physically, and psychologically prepared to trade, then it could be as simple as finding the right system. If you have a profitable system but are losing due to flaws in your personal behavior, then it may be more of a slow turnaround to profitability as the kinks get worked out.
  • #3
  • Nov 26, 2011 1:47pm Nov 26, 2011 1:47pm
I agree that it will be different for everyone. It really depends on what it was that was causing your losses. As already mentioned if it was simply the system and you were psychologically then of course finding the correct system would push you from losing consistently to making profits.

However for the majority it is not the system causing the losses but the trader and in these circumstances it would be a gradual curve from losing to hovering around break even to consistent winners.

The best thing you can do is to thoroughly test a system so that you know that it makes money! Then your job is to learn to trade and control your emotions.

Nexas
  • #4
  • Nov 26, 2011 2:28pm Nov 26, 2011 2:28pm
Yeah. You start losing less and winning more. But "breakeven", would mean small + - %, depending on your luck and market conditions, not a big zzzero % of course.

Quoting andys0506
Question to all profitable traders:

Is it normal after having many account blow-outs, to go through a phase of breakeven before becoming profitable?

Or is it more expected to turn from losing straight into being profitable?
forget about tomorrow, just steal away into the night
  • #5
  • Nov 26, 2011 2:58pm Nov 26, 2011 2:58pm
Same with me. I looked over my shoulder and noticed with surprise that I was actually making more than I was losing. There was no period of breaking even, but for the roughly six months prior I was having more frequent 'winning streaks'.

Rob
  • #6
  • Nov 26, 2011 3:07pm Nov 26, 2011 3:07pm
It's really hard to quantify a trader's edge. In general, a trader's negative expectancy originates from trading costs and bad money management. Ignoring the money management part, a trader's negative expectancy is rather small, given that these days we observe spreads of no more than a few pips.
Therefore, noticing the transition from a slight negative expectancy to a positive expectancy is rather hard, and probably requires a great number of trades in order to be statistically significant. Then, identifying whether there was a break-even period inbetween, probably is an even bigger challenge.

Given the difficulties of this quantification, we could approach your question from a different perspective. If the process of obtaining a positive expectancy is gradual, then yes, one would pass through a break-even phase (assuming we started off with a negative edge). Alternatively, a trader could "see the light", so to speak, and instantly make jump to profitability.
My guess is that both ways are possible, and therefore that experiencing a break-even stage is possible, but not necessary.
The nail that sticks out gets hammered back in
  • #7
  • Nov 26, 2011 3:25pm Nov 26, 2011 3:25pm
Quoting andys0506
Question to all profitable traders:

Is it normal after having many account blow-outs, to go through a phase of breakeven before becoming profitable?

Or is it more expected to turn from losing straight into being profitable?

I think you answered your own question already. If you are breaking even after many falls then bravo. Well done. The first goal is survival. Everything takes time and these phases take years. First you lose money, then you learn to lose less money, then you reach breakeven. Phase goes "on and on and on" and you might think something ain't right, it's normal. The key is not to give up, 'cuz this is where the real learning starts. Welcome to the next level. Now, you learn to make a little money, and only then, we can talk about making big money...

Regards.
  • #8
  • Nov 27, 2011 2:23am Nov 27, 2011 2:23am
Quoting andys0506
Question to all profitable traders:

Is it normal after having many account blow-outs, to go through a phase of breakeven before becoming profitable?

Or is it more expected to turn from losing straight into being profitable?
you either have an edge or not. So you either lose / break even or you win.
  • #9
  • Nov 30, 2011 5:27pm Nov 30, 2011 5:27pm
The most difficult part is to find a way of trading that is compatible with you.
Find it, under a form of a system or whatever and you will make money.
Don't fight against yourself you will loose anyway, cos it' just a matter of time to become yourself again.
Rien ne sert de courir il faut partir à point.
  • #10
  • Nov 30, 2011 5:50pm Nov 30, 2011 5:50pm
Yeah, like everyone said... it's an individual thing. But it's all a relativity thing in terms of time frame. I go through small periods of b/e or even small loss, but over the grander scheme I'm almost always up because that's the nature of my money management scheme.

I actually went from small loser to blow out loser before I became consistently profitable. And then it was just one trade at a time to establish better habits and discipline and before I realized it my account was growing consistently with little draw down. I never really went through a loser to b/e stage.
  • #11
  • Dec 2, 2011 8:58pm Dec 2, 2011 8:58pm
Backtest your system to 2 years and see how profitable your system could be by break even trades it may take you longer to be profitable.
Find your Favourite Pattern
  • #12
  • Aug 23, 2018 1:52am Aug 23, 2018 1:52am
Quoting andys0506
Question to all profitable traders: Is it normal after having many account blow-outs, to go through a phase of breakeven before becoming profitable? Or is it more expected to turn from losing straight into being profitable?

Many people fail to realise the 'real' journey to becoming a successful trader. The first thing you must understand is that you need to be on the right path, in otherwords, you need the correct guidance from a mentor who has already established themselves. You do not want to accumulate the 'wrong' type of experience as this will mean you are stuck for years and years trying to succeed.

However, with the right type of experience, dedication, and thousands of hours of screen time and 'time in the trade' developing your skills, your journey should go something like this:

Losing a lot (Year 1) - Losing less (after 18 months) - Breaking even (after 2 years) - Making a little money but inconsistent (2.5 years) - Making a little money more consistently (3 years) - Making regular large amounts of money - (4-5 years).

The above timeframe is just a guide, and could be more or less depending upon the individual and how dedicated they are to trading. Be prepared to lose a lot in the early phase of your training. This is unavoidable, and you will continue to lose for at least 1 year, but most likely 2 years. Learn from your losses, and you will get there. Be patient but persist and it should all come together. Most people drop out after the first 2 years.
  • #13
  • Nov 7, 2018 8:37am Nov 7, 2018 8:37am
im trading with money since february 2016. so far i only had a month of growth, the rest was more or less drowning slowly and blewing account after account. now since july/august 2018 im in a break even phase. I do make money, but i give it back. im actually in the same situation like you. i see it as positive, starting to gain survivability in the markets, but im not pleasured with this. im also clueless if and when it will end, but i will keep trying.
  • #14
  • Nov 8, 2018 3:37pm Nov 8, 2018 3:37pm
Took me 8 years and I still don't take my profitability for granted, though it has been consistent this year. Biggest thing that helped me is widening stops and looking at the bigger fundamental picture of each trade & market sentiment. Still use techs to enter & exit though. Good luck!
  • #15
  • Nov 9, 2018 9:38am Nov 9, 2018 9:38am
Quoting andys0506
Question to all profitable traders: Is it normal after having many account blow-outs, to go through a phase of breakeven before becoming profitable? Or is it more expected to turn from losing straight into being profitable?
My take, based on my experience across all the traders I've met, is that a breakeven phase is the norm because it is the part of the learning & experience curve where you've understood enough not to be screwing up and losing all the time but there are still parts of the profitable trading jigsaw yet to be mastered. And the lack of expertise in these elements prevents you going materially forward.

So you yo-yo around breakeven for while, getting some things right and some not. If you continue to improve you'll move into steadier profits, but as the later elements tend to be the more difficult and personal emotional/psychological factors rather than the easier technical/method oriented factors, it's not a sure bet you will complete the course and ever move into steady profitability.

That said, just getting to consistent breakeven is a real and important achievement because it means you can start to lose the fear of failure; you begin to get comfortable and confident with the idea that you will at least be OK in the markets and be able to hold your own. From that platform you can work with more confidence and expectation (rather than with just blind or stubborn hope) towards figuring out what you need now to improve upon to get to the next level of more consistent profitability.
  • #16
  • Nov 11, 2021 10:49am Nov 11, 2021 10:49am
I start trading 3 years ago. but a consideration that I have to say to upgrade from breakeven situation to Profitable trader is dedicated more time and smart effort and backtest let you pass this level faster than the norm, only don`t give up and persist until achieving your goal, YOU CAN BUDDY!!
  • #17
  • Nov 18, 2021 11:23am Nov 18, 2021 11:23am
Quoting Oldtraderman
{quote} My take, based on my experience across all the traders I've met, is that a breakeven phase is the norm because it is the part of the learning & experience curve where you've understood enough not to be screwing up and losing all the time but there are still parts of the profitable trading jigsaw yet to be mastered. And the lack of expertise in these elements prevents you going materially forward. So you yo-yo around breakeven for while, getting some things right and some not. If you continue to improve you'll move into steadier profits,...
You who have already lost everything and are looking for a way to get your money back, stay away from all the EA’s, indicators, softwares as Metatrader, Jigsaw, Sierra, Bookmap and all other. Understanding the options on the futures is the only thing that will help you efficiently.
  • #18
  • Nov 22, 2021 1:07am Nov 22, 2021 1:07am
If you are talking about break-even on each trade separately, I don't think it’s necessary that every trader goes through that phase. However it is possible that on a few consecutive trades your overall profits and losses are equal. I think it’s a big deal in itself to be able to preserve what you have before heading onto making gains.
  • #19
  • Nov 22, 2021 6:02am Nov 22, 2021 6:02am
It’s different for different traders. I don’t think there are traders who lose a series of trades and then suddenly start making it big on upcoming trades. Losses are detrimental for a trader's self-confidence. To be able to rebuild it, they have to start small once again. If they reach the level where they break-even, it can have a positive impact on their psychology.
  • #20
  • Dec 1, 2021 7:26am Dec 1, 2021 7:26am
I think it's an unique thing for everyone. I think what holds traders back is trusting themselves. The sooner you trust yourself when you found a system that works, is when you become profitable. Losing creates a negative feedback loop and creates doubt. Doubt can be the biggest detriment to being profitable.
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jonflores67