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Sorry. But you all need it.

  • #1
  • First Post: Nov 20, 2006 1:00am Nov 20, 2006 1:00am
FUCc,..
I can't believe it.
How many times have I read advice being doled out suggesting that "You have to lose money" Or "Blow an account.", before you really understand this extrermely complex market.

Upppppp,Downnnn,Waffffffle Upppppp,Downnnn,Waffffffle,Upppppp,Downnnn,Waffffffle Upppppp,Downnnn,Waffffffle,

Get It?

Quit trying to figure out the world. All you want to do is save a few bucks for your retirement.

Gonads.
  • #2
  • Nov 20, 2006 1:27am Nov 20, 2006 1:27am
I tend to subscribe to the teachings of Booker in this area of Forex -- why do you need to drop a cigarette on the carpet and burn your house down in order to learn? Whoever invented the saying that you should be prepared to only use money you can afford to lose should be shot.
Mr. Trend
  • #3
  • Nov 20, 2006 1:31am Nov 20, 2006 1:31am
The times I've lost money on my account its made me take a step back and think about what I'm doing. I'm not saying I've ever blown out my account just that I've made a bad trading decision or two, but then who hasn't?

I get a lot of time to watch the market which is both a good and bad thing.
Good coz it keeps me away from the pub and loose women, bad because at times I don't give a trade enough time to move in my favour significantly.

I always figure though that while there is a market there is an opportunity to trade so even if I make a few pips less I'm still pretty happy. I tend to instantly forget each trade after I've cashed out of it for better or for worse and just focus on what I want to do next.

I'm always amazed when people say they have been trading for 1, 2, X+ years and are still losing money. What motivates them to even keep trying?

So I'm with Bemac on this one.
Get a more positive philosophy on trading, get into the right mindset and you'll probably do a lot better than worrying about failing on your next trade.
  • #4
  • Nov 20, 2006 5:50am Nov 20, 2006 5:50am
just reading a book,....why we wont u to be rich..., rule number 1,...never give up, thats why.
its just money
  • #5
  • Nov 20, 2006 9:52am Nov 20, 2006 9:52am
you never experience anything when your in demo. you like "hey this is cool. i press some buttons and make 1,000 dollars. but when you go live and you lose say 10 bucks its a big change. for me i only trade at dime pips. and even when i opened my account and hadnt traded it yet i still felt different. i took some blows to the chin but im making it back.
  • #6
  • Nov 20, 2006 11:45am Nov 20, 2006 11:45am
hey bemac, I understand fully what you are saying, but unfortunately, figuring out when the market goes up or when it goes down or when it waffles is the main obstacle and causes losses in money for me at least. I know that the market only moves in 3 directions but I can't figure out when it wants to do what which is why I am losing in my demo account. I admit that you don't necessarily have to blow an account because there might be some very talented people out there, but from what I read, the majority will blow account after account until they get it. I dont think they are mutually exclusive. The understanding for me will come from failure after failure and learning from those failures.
  • #7
  • Nov 20, 2006 2:15pm Nov 20, 2006 2:15pm
The minute a trader has the markets all figured out and doesn't worry about losing is when they really have failed. Every trade should be thought of as a potential loser. Yes loser. Because then you are always protecting your ASS.

I never question the idea of losing it all. Goggle Victor Neiderhoffer or Long Term Capital Management or more recently Amaranth Advisors LLC. All "too big" to be taken down?
  • #8
  • Nov 20, 2006 2:56pm Nov 20, 2006 2:56pm
Secret: It is not possible to know where the market is going to go next. No one can do that. Not you, not me, not anyone, so quit trying to do the impossible. You have to learn to trade without knowing where the market is going next. You must trade with uncertainty, because you will never have certainty.

We may not have certainty, but we do have probability. But probability cannot be traded randomly, or with gut level feelings. It must be approached in an organized systematic way. The only way to get probability to work in your favor is to apply a consistent method to your charts, looking for the same setup every single time, and trading it the same way every time.

Confidence in a repeatable methodology only comes from having traded the methods setup over and over for hundreds if not thousands of trades. A lot of this can come from MANUALLY backtesting the method one bar at a time. Automated backtesting that spews out statistics in a few minutes has its place, but only manual backtesting can impart confidence into your soul. Once you have confidence in your method, you will trade it the same way ever time regardless of how you "feel" about the market. Once you have confidence in your method, you wont CARE whether a particular trade is a winner or a loser. You wont care because you will have learned that it doesn't matter, and that the outcome of individual trades is meaningless. Only when you have attained to this mental state can you trade with consistent repeatability. And this consistency, over time results in compounding, and compounding leads to riches.

Not that long ago, I too subscribed to the idea that it was inevitable that a trader blow out a couple of accounts in order to learn to trade. I no longer believe this. With the advent of micro lots and sub-micro lots, the only way anyone can blow out an account is through sheer stupidity.

Good thread Bemac!

Dial
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  • #9
  • Nov 20, 2006 3:20pm Nov 20, 2006 3:20pm
Hi Dial,

As i'm new to this and after reading your last post. Can you give me any info on Micro and Sub lots or even point me in a direction that i can read up on it?

Thanks in advance

TMCCFC
  • #10
  • Nov 20, 2006 3:47pm Nov 20, 2006 3:47pm
Quoting tmccfc
Hi Dial,

As i'm new to this and after reading your last post. Can you give me any info on Micro and Sub lots or even point me in a direction that i can read up on it?

Thanks in advance

TMCCFC
When you place a trade, you have to enter your position size in "lots". A standard lot is 100,000 units, a mini lot is 10,000 units and a micro lot is 1,000 units. Anything less than 1,000 I refer to as sub-micro.

Since 100 units is equal to one cent on any XXX/USD pair that means if you place a trade with a postion size of 1 micro lot (1,000 unit) then your pip value will be 10 cents. If your trade moves against you 100 pips, you will have lost $10. However, if on that same trade you had traded 1 standard lot (100,000 units) then the 100 pip loss would cost you $1000!!

So, by trading live with real money, but only using micro lots or smaller, you give yourself the experience of trading real money, but with minimal risk to your trading account.

Does this help?

Dial
sxaxlxvxaxtxixoxnxbxyxgxrxaxcxexdxoxtxoxrxgx
  • #11
  • Nov 20, 2006 4:09pm Nov 20, 2006 4:09pm
Quoting diallist
...you give yourself the experience of trading real money, but with minimal risk to your trading account.
Keep in mind there is often a correlation between the two. Sometimes if you don't have the "risk" you don't get the true "experience". Of course this isn't with everybody, but generally the more you lose, the more you learn. Sad story.
  • #12
  • Nov 20, 2006 4:56pm Nov 20, 2006 4:56pm
"If man want to learn how to shoot gun then man must use real gunpowder."
  • #13
  • Nov 20, 2006 5:19pm Nov 20, 2006 5:19pm
Quoting diallist
Secret: It is not possible to know where the market is going to go next. No one can do that. Not you, not me, not anyone, so quit trying to do the impossible. You have to learn to trade without knowing where the market is going next. You must trade with uncertainty, because you will never have certainty.

We may not have certainty, but we do have probability. But probability cannot be traded randomly, or with gut level feelings. It must be approached in an organized systematic way. The only way to get probability to work in your favor is to apply a consistent method to your charts, looking for the same setup every single time, and trading it the same way every time.

Confidence in a repeatable methodology only comes from having traded the methods setup over and over for hundreds if not thousands of trades. A lot of this can come from MANUALLY backtesting the method one bar at a time. Automated backtesting that spews out statistics in a few minutes has its place, but only manual backtesting can impart confidence into your soul. Once you have confidence in your method, you will trade it the same way ever time regardless of how you "feel" about the market. Once you have confidence in your method, you wont CARE whether a particular trade is a winner or a loser. You wont care because you will have learned that it doesn't matter, and that the outcome of individual trades is meaningless. Only when you have attained to this mental state can you trade with consistent repeatability. And this consistency, over time results in compounding, and compounding leads to riches.

Not that long ago, I too subscribed to the idea that it was inevitable that a trader blow out a couple of accounts in order to learn to trade. I no longer believe this. With the advent of micro lots and sub-micro lots, the only way anyone can blow out an account is through sheer stupidity.

Good thread Bemac!

Dial
wow Dial how true this is. Great great post!!!!
  • #14
  • Nov 21, 2006 8:17am Nov 21, 2006 8:17am
there is a vast difference between stupidity and inexperience. I might blow an account...not because of stupidity, but because I do not understand the market. I understand that no one knows where the market is headed and that you play probabilities, but someone new to forex will have to adapt his mental outlook in order to understand the probabilities. Even using the demo account is a humbling experience to me. I do not think of it as stupidity...but more as knowledge that I can probably try and discern some wisdom from. I think the agony of losing is a very big and required part of trading. I do not think that you have to necessarily blow an account to understand because if you understand whats going on..then you wont necessarily have to blow an account.
  • #15
  • Nov 21, 2006 8:58am Nov 21, 2006 8:58am
I blew out my first account. It was what I deserved as I was trading for the excitement. What an eye opener it was for me. I had to ask myself if I truly wanted to be a success at this business or just a 'gamer'.
I created a business plan, a trading plan, and the other paperwork that will make you a success. It was tough but success in this business demands it.
In trading, there is no bullshit. You either make money or you don't.
  • #16
  • Nov 21, 2006 10:07am Nov 21, 2006 10:07am
Quoting vder
I might blow an account...not because of stupidity, but because I do not understand the market.
Can you rephrase this?
  • #17
  • Nov 21, 2006 10:12am Nov 21, 2006 10:12am
I do not understand what I need. I do not see download file.
  • #18
  • Nov 21, 2006 10:22am Nov 21, 2006 10:22am
Quoting vder
there is a vast difference between stupidity and inexperience. I might blow an account...not because of stupidity, but because I do not understand the market. I understand that no one knows where the market is headed and that you play probabilities, but someone new to forex will have to adapt his mental outlook in order to understand the probabilities. Even using the demo account is a humbling experience to me. I do not think of it as stupidity...but more as knowledge that I can probably try and discern some wisdom from. I think the agony of losing is a very big and required part of trading. I do not think that you have to necessarily blow an account to understand because if you understand whats going on..then you wont necessarily have to blow an account.
You are correct that there is a vast difference between stupidity and inexperience, but I wasn't relating those two. I was referring to the stupidity of losing one's entire account because they failed to educate themselves in one of the basics of trading; that of the availability of different lot sizes and how they relate to leverage and potential damage to one's account. That information can be obtained very quickly by reading, for example, the money management thread of the beginner's forum. No experience is required to obtain that basic knowledge. Anyone who dives into trading headfirst without even taking time to educate themselves on the basics deserves to lose their account.

Learning about lot sizes and leverage and percent risk is easy because it is clear cut and math based. But, as you have correctly pointed out, grasping the significance of dealing in probabilities rather than certainty is something that one must learn from experience. Just reading about it is not enough. Because we are wired to think in certainties, it will take time and exposure to the markets to reprogram ourselves to go with the flow of probabilistic trading. During the time it takes to learn how to go with this flow, beginners will lose money. This is inevitable and unavoidable. Even so, it is still no excuse for losing most or all of one's account. By trading very small position sizes, the learning trader can gain experience in dealing with probabilities while preserving their account.

Unfortunately, new traders get into this business because they want to make money. They don't want hear that they need to forget about making money and focus on learning to trade first. Instead they have to learn the hard way, through painful experience, that they need more education.

So, you are right in the end. New traders have to get burned first before they'll seek the basic knowledge of how to protect their account while they continue to learn.

BUT, once they've got past that initial burn, if they still refuse to learn the basics and subsequently lose their money, it is due to stupidity.
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  • #19
  • Nov 21, 2006 10:26am Nov 21, 2006 10:26am
"Trading like chess. One can learn the moves in a day but it takes a lifetime to master the game."
  • #20
  • Nov 21, 2006 10:31am Nov 21, 2006 10:31am
Since we're throwing one-liners out...

"Only when you can learn to balance a tackhammer on your head, will you be able to head off your foes with a balanced attack."
Mr. Trend
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