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How to lose money

  • #1
  • First Post: Jan 17, 2019 11:14am Jan 17, 2019 11:14am
I am starting this thread to help me and other fellow traders deal with losing periods.

I must start by saying that one of the delusions we have as traders is the believe that one day we will find that magical strategy that works all the time and deliver consistent, painless profits to us. Well if you are still in that delusion, let me break it for you. The truth I have realised after 6years in the market and probably upward of 10000trades executed is this: you will lose money.

I have learned to deal with loses with having a hobby aside trading. You need to learn to get away when you are getting smacked. Or have a dairy where to talk to yourself about how this week you are getting killed and how you feel like quitting the strategy or even trading altogether.

I think the most important thing in trading is learning how to deal with losing and often so consistently. I think the alpha problem with us traders is that we have been programmed to avoid pain. By trying to avoid losing, you lose. You need to accept the reality of trading: when you take risk, yes you have the upside but you can also get your *** handed to you.
When you see it, BET big.
  • #2
  • Jan 17, 2019 11:24am Jan 17, 2019 11:24am
I feel sometimes that the market test us, just to see if we are worthy of it's delights. I have had periods where I had 20 straight winning days and then bam. In 2-3days give away half or more of all those wins. In some cases I increased my size in a drawdown, drawing from the overconfidence my recent wins have given me. Sure I have sometimes found myself giving it all back and being deep in my pockets.

What I recommend in a drawdown is to keep trading the same size or very close to that size at which the drawdown started. If you believe in the genuineness of your strategy why reduce your size when a turn around is close by.
When you see it, BET big.
  • #3
  • Jan 17, 2019 11:25am Jan 17, 2019 11:25am
Awesome thread. I got my ass kicked so bad in December that I've been basically paralyzed for the last couple of weeks. I've reduced my lot size by 80%, and am just waiting to be comfortable entering a trade. Looking for one of those "can't pass this one up" trades to get back in the game.
  • #4
  • Jan 17, 2019 11:30am Jan 17, 2019 11:30am
Never ever, ever ,ever quit your strategy until you are broke. This advice goes to people that have back tested their strategies and know pre-implimentation that it works. A strategy should be like a successful marriage, it's a do or die thing. Believe in your strategy so bad that you are willing to die for it. That's the kind of believe u need to succeed in this business.

This is what I believe and I am willing to die for it. This is how trading must be done and this is the only thing that works.
When you see it, BET big.
  • #5
  • Jan 17, 2019 11:32am Jan 17, 2019 11:32am
Quoting Pipfu
Awesome thread. I got my ass kicked so bad in December that I've been basically paralyzed for the last couple of weeks. I've reduced my lot size by 80%, and am just waiting to be comfortable entering a trade. Looking for one of those "can't pass this one up" trades to get back in the game.
It's ok Pipfu, you will be back soon and hopefully get them.
When you see it, BET big.
  • #6
  • Edited Jan 18, 2019 12:02am Jan 17, 2019 11:46am | Edited Jan 18, 2019 12:02am
Quoting Rennaissance
I am starting this thread to help me and other fellow traders deal with losing periods. I must start by saying that one of the delusions we have as traders is the believe that one day we will find that magical strategy that works all the time and deliver consistent, painless profits to us. Well if you are still in that delusion, let me break it for you. The truth I have realised after 6years in the market and probably upward of 10000trades executed is this: you will lose money. I have learned to deal with loses with having a hobby aside trading....
Honestly, that strategy you have confidence in will ALWAYS work... if you use it under the right market conditions.

I have so much confidence in how I trade that whenever I see my signal, I KNOW it will work... so I bet big. I don't follow the "only risk 1-2% of your account" nonsense.

When your strategy DOES NOT work, it's because you applied it under the wrong circumstances. It's all about waiting for the right moment. Of course there is the risk that it might not work out even under the right conditions (because you never really know where price will go) but you have to be willing to listen to your intuition and take that risk.
  • #7
  • Jan 17, 2019 11:49am Jan 17, 2019 11:49am
A very good point that all who want to succeed in this business should come to terms with. Many of us deceive ourselves to think otherwise.

KP


Quoting Rennaissance
...The truth I have realised after 6years in the market and probably upward of 10000trades executed is this: you will lose money...By trying to avoid losing, you lose. You need to accept the reality of trading..
Do your homework, follow the footprints of smart money
  • #8
  • Jan 17, 2019 12:02pm Jan 17, 2019 12:02pm
Quoting Chart1st
{quote} Honestly, that strategy you have confidence in will ALWAYS work... if you use it under the right market conditions. I have so much confidence in how I trade that whenever I see my signal, I KNOW it will work... so I bet big. I don't follow the "only risk 1-2% of your account" nonsense. When your strategy DOES NOT work, it's because you applied it under the wrong circumstances. It's all about waiting for the right moment. Of course there is the risk that it might not work out even under the right conditions (because you never really know...
I dont believe you can know the right conditions. Again we come to trader's problem. Trying to avoid losses and curve fitting perfect strategies. There are times you will make and times you will get cooked. It's the nature of the business.
When you see it, BET big.
  • #9
  • Jan 17, 2019 12:07pm Jan 17, 2019 12:07pm
Quoting KeenPips
A very good point that all who want to succeed in this business should come to terms with. Many of us deceive ourselves to think otherwise. KP {quote}
Yeah, we indeed deceive ourselves. The sooner you accept the nature of risk. The shorter your learning curve. You can't have the upside without the downside. Those bad times are inevitable. Plus go nowhere times, inescapable. In trying to escape and curve fitting, you will find yourself at the very spot you dont want to be.Losing.
When you see it, BET big.
  • #10
  • Edited 2:14pm Jan 17, 2019 1:52pm | Edited 2:14pm
Quoting Rennaissance
{quote} I dont believe you can know the right conditions. Again we come to trader's problem. Trying to avoid losses and curve fitting perfect strategies. There are times you will make and times you will get cooked. It's the nature of the business.
Hey thanks for replying. I can see what you're trying to say, but I would have to disagree. You can definitely know the right conditions... If you don't read the current market condition, that would mean you'd pull the trigger on every "setup" you see... That's why there are such things as "bad setups" and "good setups". Entering a position on a BAD setup would mean that you aren't really considering all the other components that is currently happening in the market, you're just solely fixated on what your setup looks like.
(ex: price hitting major support, pin bar is there and all that good stuff. It looks like a good setup..... but momentum is not slowing down) <--- bad setup.

Think about what you said.

"There are times you will make money and times you will get cooked"

Why is it like that? Why do you make money sometimes and lose sometimes if you are applying a profitable strategy?

It just means you didn't recognize what the conditions of the market is, and applied your strategy at the wrong time...

This is where some traders arrive at the conclusion, "man, my strategy isn't as good as I thought it would be"

No, it's a great strategy. You just applied it at the wrong time.

That's just what I think though! We all trade differently.
  • #11
  • Jan 17, 2019 2:18pm Jan 17, 2019 2:18pm
Quoting Chart1st
{quote} Hey thanks for replying. I can see what you're trying to say, but I would have to disagree. You can definitely know the right conditions... If you don't read the current market condition, that would mean you'd pull the trigger on every "setup" you see... That's why there are such things as "bad setups" and "good setups". Entering a position on a BAD setup would mean that you aren't really considering all the other components that is currently happening in the market, you're just solely fixated on what your setup looks like. (ex: price hitting...
Or that you are dealing with the random nature of the markets. The only way to know that a market condition doesn't fit your strategy is in hindsight. Hindsight is always 50/50. Some traders stop trading after they start losing or reduce their trading size, it's subjective. The next trade is always unrelated to the previous ones.
When you see it, BET big.
  • #12
  • Jan 17, 2019 3:06pm Jan 17, 2019 3:06pm
Quoting Chart1st
{quote} Hey thanks for replying. I can see what you're trying to say, but I would have to disagree. You can definitely know the right conditions... If you don't read the current market condition, that would mean you'd pull the trigger on every "setup" you see... That's why there are such things as "bad setups" and "good setups". Entering a position on a BAD setup would mean that you aren't really considering all the other components that is currently happening in the market, you're just solely fixated on what your setup looks like. (ex: price hitting...
So by your logic you can theoretically avoid losses?
  • #13
  • Edited 3:31pm Jan 17, 2019 3:19pm | Edited 3:31pm
Quoting hilmy83
{quote} So by your logic you can theoretically avoid losses?
What do you mean, "by your logic", lol. Over time, with more exposure you're supposed to figure out if a setup is "good" or "bad".

Just saying, when you make money on a certain setup, that setup will show itself time and time again. Markets will always repeat the same patterns (I am a technical trader, not sure how that works with people who trade the news)

Excuse me, losses WILL happen. OP is right about that. But what I'm saying is you can reduce the number of losses greatly if you don't pull the trigger on every "setup" you see... Take the best setups.

Loss of money also happens when the individual creates it (entering too early, freaking out, and then closing the position. Or entering too big, getting nervous, and then closing the position. etc. etc.) but if you know specifically what to look for, the losses shouldn't happen too frequently.

I'm not looking for an argument, this is why I typically avoid forums. Just trying to help, maybe someone will get something out of my posts.
  • #14
  • Jan 17, 2019 4:35pm Jan 17, 2019 4:35pm
Quoting Rennaissance
I am starting this thread to help me and other fellow traders deal with losing periods. I must start by saying that one of the delusions we have as traders is the believe that one day we will find that magical strategy that works all the time and deliver consistent, painless profits to us. Well if you are still in that delusion, let me break it for you. The truth I have realised after 6years in the market and probably upward of 10000trades executed is this: you will lose money. I have learned to deal with loses with having a hobby aside trading....
Pain should be excepted as part of your trade plan or it will crush you..If excepted, it stops being pain and becomes an exceptable uncomfortable realty of business with the markets ..

Maybe look at the Environment > and become experienced in what environments benefit your system, this might help you have some form of longevity and longer profitable periods. Different trade models for different environments.. If it doesn't suit your trade model, dont trade, i.e. If you trade a trend model you might wait for high directional volatility before you start trading that instrument..

Good luck ..
Memories caught in time but never forgotten
  • #15
  • Jan 17, 2019 4:47pm Jan 17, 2019 4:47pm
Quoting Chart1st
{quote} What do you mean, "by your logic", lol. Over time, with more exposure you're supposed to figure out if a setup is "good" or "bad". Just saying, when you make money on a certain setup, that setup will show itself time and time again. Markets will always repeat the same patterns (I am a technical trader, not sure how that works with people who trade the news) Excuse me, losses WILL happen. OP is right about that. But what I'm saying is you can reduce the number of losses greatly if you don't pull the trigger on every "setup" you see... Take...
ok, first of all, relax. we're discussing, nobody's arguing

i always thought that once you define a positive expectancy setup, you take ever one of them. maybe i misunderstood your post about good vs bad setup. why would anyone take "bad" setup? or what is a bad setup?

and if i take good setups and it loses, are you saying that its possible to know all the factors that cause it to lose? so then you'd be able to choose when to take it and when not to to minimize losses?
  • #16
  • Jan 17, 2019 4:59pm Jan 17, 2019 4:59pm
Quoting j4d
{quote} Pain should be excepted as part of your trade plan or it will crush you..If excepted, it stops being pain and becomes an exceptable uncomfortable realty of business with the markets .. Maybe look at the Environment > and become experienced in what environments benefit your system, this might help you have some form of longevity and longer profitable periods. Different trade models for different environments.. If it doesn't suit your trade model, dont trade, i.e. If you trade a trend model you might wait for high directional volatility before...
The fact that a market is trending gives no clue as to whether it will continue trending. Left side trending get in, right side choppy or vice versa. Again and again and I can see that we all are looking for the goose that lays the golden egg. Which is very disturbing psychologically, cause you haven't conditioned yourself to accept that you are going to get your butt kicked sometimes.

There are only two ways of making money (Technically)-of course we have other ways like fundamental analysis, etc. To those involve in esoteric charting and astrology, you haven't even asked the right questions yet, let alone having answers.

Trend trading and range trading. Trend followers are like the bulls in bull markets and range traders are definite bears. In other words you can bet that the right is going to look like the left or that the right will be completely different from the left. A bull will make money in a bull market and get crushed when the down-turn occurs. A bear will make money in a bear market and get crushed when the markets keep going up. It's impossible to know who will predominate in the next session. Trend followers or range traders(mean reversion). That's why when the other side is in control, they will bleed you. Make sure you get them when it's your turn.
When you see it, BET big.
  • #17
  • Jan 17, 2019 5:00pm Jan 17, 2019 5:00pm
Quoting hilmy83
{quote} ok, first of all, relax. we're discussing, nobody's arguing i always thought that once you define a positive expectancy setup, you take ever one of them. maybe i misunderstood your post about good vs bad setup. why would anyone take "bad" setup? or what is a bad setup? and if i take good setups and it loses, are you saying that its possible to know all the factors that cause it to lose? so then you'd be able to choose when to take it and when not to to minimize losses?
hilmy83 that's what I have been saying, may be am using the wrong words.
When you see it, BET big.
  • #18
  • Jan 17, 2019 5:42pm Jan 17, 2019 5:42pm
Quoting Rennaissance
I feel sometimes that the market test us, just to see if we are worthy of it's delights. I have had periods where I had 20 straight winning days and then bam. In 2-3days give away half or more of all those wins. In some cases I increased my size in a drawdown, drawing from the overconfidence my recent wins have given me. Sure I have sometimes found myself giving it all back and being deep in my pockets. What I recommend in a drawdown is to keep trading the same size or very close to that size at which the drawdown started. If you believe in the...
I embraced Turtles' money mgmt rules that I decrease risk by 20% for every 10% drawdown in my equity.
Keep alive a genuine winning attitude
  • #19
  • Jan 17, 2019 7:00pm Jan 17, 2019 7:00pm
Quoting hilmy83
{quote} ok, first of all, relax. we're discussing, nobody's arguing i always thought that once you define a positive expectancy setup, you take ever one of them. maybe i misunderstood your post about good vs bad setup. why would anyone take "bad" setup? or what is a bad setup? and if i take good setups and it loses, are you saying that its possible to know all the factors that cause it to lose? so then you'd be able to choose when to take it and when not to to minimize losses?
Sorry, I know you guys aren't trying to start an argument. I've just always associated forums with toxicity because most of the time, it really does seem like everybody is condescending and wants to start a fight or something. Like c'mon, you know how forums can be!

I know what you're talking about. Over the years I've heard that same exact thing from many people, "backtest your strategy for x amount of years and if the outcome is positive, it's a good strategy" That would mean you'd open a trade on every "setup" that appears, right? Well let's say you take 10 consecutive signals... not every single one would be a "good" setup. Maybe on the 3rd, the 7th, or 8th trade you experience a loss...

Guess what? You can avoid it. The answer is: just don't take those trades. So instead of being right 7/10 on your picks, you could be 7/7... sounds good right? Maybe one of the setup was super tricky and you decided to take it, and it ended up being a loser. So you were right 6/7... still, I rather be right 6/7 than 7/10 on my picks.

How would you know and why would anyone take "bad" setups? Well it's just how fluent you know your strategy... and how well you understand the structure of how markets move. A lot of trading IS intuition. I've seen many people reiterate this one thing... and it's very true. It's screen time. I KNOW most of you have heard of that... (see there are good information that floats around on FF, the lot of you just decide to ignore it). Your INTUITION can only be improved with SCREEN TIME...
In my personal opinion, this is where a lot of people start to back off and rethink their decision to trade. They're not ready to commit to something like that.

Yes, there are such things as "bad" setups. Yes, if you enter on a "good" setup, and it turns out to be a loss, then yeah you can find the reason why it didn't work out (most of the time, anyway. Maybe there are really rare moments where it didn't work out like it should have).

Cheers
  • #20
  • Jan 17, 2019 7:56pm Jan 17, 2019 7:56pm
Quoting Chart1st
{quote} Sorry, I know you guys aren't trying to start an argument. I've just always associated forums with toxicity because most of the time, it really does seem like everybody is condescending and wants to start a fight or something. Like c'mon, you know how forums can be! I know what you're talking about. Over the years I've heard that same exact thing from many people, "backtest your strategy for x amount of years and if the outcome is positive, it's a good strategy" That would mean you'd open a trade on every "setup" that appears, right? Well...
That means you can predict the markets. With all due respect I think the market is unpredictable. You can't know in advance which setup will work. You can control your money management but you can't control the markets.
When you see it, BET big.
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