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Draw Down Experiences and Recovery

  • #41
  • Nov 14, 2009 9:37pm Nov 14, 2009 9:37pm
Quoting Inf.Investor
But whats for certain is, you will struggle, you will hurt, you will endure great psychological pain before succeeding, but thats not just Forex, thats life.
Well said. I lost a 60% chunk of my account and I definitely learnt alot from that experience. It has taken a couple smaller relapses since that to really sink in but I think I finally got the risk management lesson pounded into me. Sometimes I think about losing $9k on one trade & I want to cry but then again I think about it in the vast scheme of my life and it seems about like stubbing a toe...

...those dudes that lose $$$millions on one trade, though, wow. Where do you get the steel ballz to do that...??
"If The Fool persists in his Folly he will become wise." - William Blake
  • #42
  • Nov 14, 2009 11:24pm Nov 14, 2009 11:24pm
Unacceptable draw downs occur because you didn't follow your entry or exit rules.
  • #43
  • Nov 15, 2009 12:35am Nov 15, 2009 12:35am
Quoting Inf.Investor
Please share the worst you’ve experienced and further elaborate on the mental and physical recovery process that got you back in the game, not just relative to when you began trading as a newbie but the failures and mental stress you endured after being the hard core successful trader you are.
Firstly, let me just say that I don't consider myself a big fish or a hard core successful trader but I can share some experiences.

I started trading forex in 2004. It's a little difficult to remember quite how naive (and stupid) I was but I over-leveraged, I hedged, I didn't know what money management or fundamentals were, I didn't use stop losses, I didn't even know they had news releases (I thought it was the City of London boys coming back half-cut from a liquid lunch) I didn't know what an MA, Stoch or RSI were. I didn't even know that you could set a stop loss when your trade was in profit. Yep, that's how stupid I was.

I made pretty good money in my first few weeks and then the market taught me a lesson and I took a big loss. Got straight back on the horse though and over the next couple of years made just as many mistakes. I have held onto losing positions for up to two years and have closed most of them in profit. I have been in drawdown (on a few occasions) well into five figures. There were days when I couldn't face opening the trading platform because of the drawdown. One good thing about being highly leveraged though is that it is a very good weight loss system - stuff paying for liposuction The only things that saved me were the ability to pump more money into the account and my determination not to let the market beat me. It took me about 2.5 years to actually turn a profit.

Trading is a little easier nowadays and I seem to learn something new every day. I now trade low leverage and generally longer time frames although I do enjoy the odd scalp. No more sleepless nights or knots in the stomach and I'm happy to take whatever the market feels fit to give me.

One thing I have discovered is that the longer I trade the more respect I have for the market. I find that it's usually the opposite in everyday life - the more familiar I am with something, the more blaze I become. I can always count on the market to knock me for six when I become blaze though.
Nothing worth having is easy.
  • #44
  • Nov 15, 2009 1:09am Nov 15, 2009 1:09am
Quoting The Fool
So, is it pretty much necessary for a successful trader to have experienced significant drawdown, ruined accounts, margin calls, etc....???

I seem to see that often here on the boards - "yup, blew out n accounts before I became consistently profitable..."
Hi Fool, (funny you wrote n accounts)

I think it depends on the person off course but why are girls more likely to be successful?

I think that we all come in to the Forex market thinking that it is a Casino. Those of us who stays realizes that this is a business, those who doesn't--> Have to leave broke and with a damaged ego.

A couple of years ago my girlfriend and I were in a casino in the gold coast. I changed 75 bucks to chips and started to gamble on black/red with a modified martingale system (doubling with a loss). 75 bucks was always on the table, if I had more I pocketed the chips.

Standing there for around 1 hour my girlfriend came and I still hadn't lost my 75 playing bucks, pocketing 150 or so. I Went to the toilet giving my girly clear instructions on how to play. When I came back she had 50 bucks and had only played once with a loss She didn't use the system. Why? emotions took completely control...

Conclusion: I reckon she could never be a trader because she is too emotionally attached to loosing money (but she is really good at saving money ). I wonder if that can be changed or is this genetical?

This also raises the question, will she be better than me as gambling is definitely not her thing, she would maybe look into the forex market as a business straight away. Wow! I said that I haven't met a wise person before maybe she is wise?
  • #45
  • Nov 15, 2009 4:18am Nov 15, 2009 4:18am
Things to Remember:

 

  1. Forex is a business, being a full time trader I take it rather seriously.
  2. Growing an account does not necessarily mean that you should take HUGE risks, there is no free food here.
  3. Risk should be calculated at the amount you are willing to throw, as in burning the money.
  4. A popular saying is drop by drop fills the ocean, buckets tire you fast.
  5. Always do your home work well before trading, keep spying on what others are thinking, business means you should always have the upper hand.
  6. Finally, the most important aspect " the mere size of the forex markets demand TEAM EFFORT ", this is the reason behind starting International Crow United. We crows, look at the trends from every angle, work out the fake outs and then go in and milk the markets.

  • #46
  • Edited 12:10pm Nov 15, 2009 10:20am | Edited 12:10pm
So, is it pretty much necessary for a successful trader to have experienced significant drawdown, ruined accounts, margin calls, etc....???

No. It's a question of position sizing. My first live trades (after demo trading for a year) were 1 and 5 units (yeah, a full lot is, 100k units)

Never blew an account and never had more than 5-7% DD with multiple positions in the red. And I rarely use more than 10-20 % of my margin for all positions.

It's quite possible to harvest one kilopip a month which is 10 % of profit if I size my positions 100 pips = 1 % capital.

All my friends that were going for 10-20 pips profit with 1-2-5 % of capital (or more), are ... gone with the wind.

People should first learn to collect pips or points consistently, for months, then increase sizes.

Oh no, if they did, whose money would we be pocketing in this zero sum game?
forget about tomorrow, just steal away into the night
  • #47
  • Nov 15, 2009 12:00pm Nov 15, 2009 12:00pm
Quoting spekitox
So, is it pretty much necessary for a successful trader to have experienced significant drawdown, ruined accounts, margin calls, etc....???

No. It's a question of position sizing. My first live trades (after demo trading for a year) were 1 and 5 units (yeah, a full lot is, 100k units)

Never blew an account and never had more than 5-7% DD with multiple positions in the red.

It's quite possible to harvest one kilopip a month which is 10 % of profit if I size my positions 100 pips = 1 % capital.

All my friends that were going...
very correctly said

position sizing is the key to success, nothing else matters.

people confuse position sizing with leverage, not realizing that the per pip return is the same, no matter what the leverage is.
  • #48
  • Nov 15, 2009 4:02pm Nov 15, 2009 4:02pm
Quoting The Fool
Well said. I lost a 60% chunk of my account and I definitely learnt alot from that experience. It has taken a couple smaller relapses since that to really sink in but I think I finally got the risk management lesson pounded into me. Sometimes I think about losing $9k on one trade & I want to cry but then again I think about it in the vast scheme of my life and it seems about like stubbing a toe...

...those dudes that lose $$$millions on one trade, though, wow. Where do you get the steel ballz to do that...??
Funny you should mention that lol I use that expression really often when referring to this industry. Hence all wise and seasoned professionals concur "NO EMOTION". Its like with life, you'll regret a lot of impulsive and irrationally emotional decisions you make but here it happens a lot quicker and you will hurt. Rotter actually took off for a month to get himself emotionally toned to handle that pressure again, he DEALT with it. When asked how he deals with that pressure he says "I take a lot of vacations". All of us might not have that luxury so we just need to find what works for us.

So to answer your question, you dont just get em you earn them or they evolve.
  • #49
  • Nov 15, 2009 4:18pm Nov 15, 2009 4:18pm
Quoting Patience
Firstly, let me just say that I don't consider myself a big fish or a hard core successful trader but I can share some experiences.

I started trading forex in 2004. It's a little difficult to remember quite how naive (and stupid) I was but I over-leveraged, I hedged, I didn't know what money management or fundamentals were, I didn't use stop losses, I didn't even know they had news releases (I thought it was the City of London boys coming back half-cut from a liquid lunch) I didn't know what an MA, Stoch or RSI were. I didn't even know...
You've come a long way then, you've faltered, you've fallen, you've hurt and you've endured but you still got back up, you survived and sustained!

Let me ask you this:

How exactly would you quantify your success after what you've endured and now that you've come out stronger? Are you seeing consistent profits now that your seasoned? Is it enough to make a living?
  • #50
  • Edited 4:41pm Nov 15, 2009 4:26pm | Edited 4:41pm
Quoting Larseg
Hi Fool, (funny you wrote n accounts)

Conclusion: I reckon she could never be a trader because she is too emotionally attached to loosing money (but she is really good at saving money ). I wonder if that can be changed or is this genetical?
That one para said it all. Tons of adages and profound explications about this realm were just abridged right there!
  • #51
  • Nov 15, 2009 4:29pm Nov 15, 2009 4:29pm
Quoting forexlion
Things to Remember:
[list][*]Forex is a business, being a full time trader I take it rather seriously.[*]Growing an account does not necessarily mean that you should take HUGE risks, there is no free food here.[*]Risk should be calculated at the amount you are willing to throw, as in burning the money.[*]A popular saying is drop by drop fills the ocean, buckets tire you fast.[*]Always do your home work well before trading, keep spying on what others are thinking, business means you should always have the upper hand.[*]Finally,...
Very Intriguing indeed, wish we could all keep those pointers on the forefront while trading.
  • #52
  • Nov 15, 2009 4:35pm Nov 15, 2009 4:35pm
Quoting spekitox
So, is it pretty much necessary for a successful trader to have experienced significant drawdown, ruined accounts, margin calls, etc....???

No. It's a question of position sizing. My first live trades (after demo trading for a year) were 1 and 5 units (yeah, a full lot is, 100k units)

Never blew an account and never had more than 5-7% DD with multiple positions in the red. And I rarely use more than 10-20 % of my margin for all positions.

It's quite possible to harvest one kilopip a month which is 10 % of profit if...
You seem like a seasoned trader now and have been through the paces and survived, how consistently are you banking profits today? Yes the chances of survival when risking more than 2% of your account size is minuscule and its statistically proven.
  • #53
  • Nov 15, 2009 5:25pm Nov 15, 2009 5:25pm
Heres an excerpt from Paul Rotters Interview:

q: any kind of mental preparation?
a: nothing specific. actually I am motivated all the time...I see trading more as a sporting challenge and try to erase the thought of the money.

If you can do that, you've won a major battle.
  • #54
  • Nov 15, 2009 5:33pm Nov 15, 2009 5:33pm
Quoting Inf.Investor
I see trading more as a sporting challenge and try to erase the thought of the money.

If you can do that, you've won a major battle.
I think that is helpful, too. I do better when I ignore the equity total while I am trading & focus on # of winners/# of pips....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #55
  • Nov 15, 2009 8:47pm Nov 15, 2009 8:47pm
Quoting forexlion
Things to Remember:
Finally, the most important aspect " the mere size of the forex markets demand TEAM EFFORT ", this is the reason behind starting International Crow United. We crows, look at the trends from every angle, work out the fake outs and then go in and milk the markets.


What is the International Crow United Trading room? Could you provide a link?

Thanks.
  • #56
  • Edited 3:48am Nov 16, 2009 2:42am | Edited 3:48am
Uh-oh. Appearances can be deceiving. Started demo'ing some 2 years ago and went live only about a year ago.
Far from being seasoned. My profit objective is a 5-15% monthly on average, which I managed to achieve this year. Not all months were in profit, but on average, I did it. No secret method, mostly simple lines and S&R play you find in the No brainer thread.

Just look at the charts, there are hundreds of pips to be made every day or at least every week. Don't have to put on large trades to earn some money. Just don't be obsessed with making a living off forex. Treat it like a profession. You need many years of experience in ANY profession to make a good living and it's no different with trading.

Just a friendly tip: don't focus only on how much you can make. Pips, dollars, percents...
Look at how many hours of work you have to put in it. I never been asked how much time I spend staring at charts. Nobody asked if I spend a couple of hours every day, sometimes including weekends, looking at charts over and over and over again.

Quoting Inf.Investor
You seem like a seasoned trader now and have been through the paces and survived, how consistently are you banking profits today? Yes the chances of survival when risking more than 2% of your account size is minuscule and its statistically proven.
forget about tomorrow, just steal away into the night
  • #57
  • Nov 16, 2009 6:55am Nov 16, 2009 6:55am
I've counted cards, hustled online casino bonuses, bet on sports, played poker and trade, and have had quite a few large drawdowns and busts. Each one has been character building, and the benefits gained have ranged from extreme emotional stability, to unwavering confidence in ability without regard to results. I think I've learned things that I wouldn't otherwise have learned. It feels like it has been a long road, and I've made many mistakes, but I don't regret any of it. These lessons weren't just about becoming better at gambling or trading, but great lessons for life. Many questions have been answered, and I feel it was as much as anything a journey of self-discovery. I don't know what else there is to learn, but there is always something .
  • #58
  • Nov 16, 2009 8:13am Nov 16, 2009 8:13am
Quoting The Fool
So, is it pretty much necessary for a successful trader to have experienced significant drawdown, ruined accounts, margin calls, etc....???

I seem to see that often here on the boards - "yup, blew out n accounts before I became consistently profitable..."
Dear Fool,

Success in this market is determined by your ability to manage pain. No matter how well you think you can withstand pain, the market will find new ways to challange you and push you to a breaking point. Pain comes in diffrent forms: 1) Illogical price action 2) drawdowns 3)losing streaks 4) broker problems 5)black swan news events.... you get the picture, we could list more! No one can manage all of that and come out victorious on the other side without first experiencing the heartache and pain that each of these market variables can bring. Yes, you may be lucky and start out very successfully for a short time.... but sooner or later some combination of the above mentioned variables will find you. When they do, they will test your pain threshold. They will probe your mind and your equity for any weakness that can be exploited. Until a trader is battle tested over many months, even years, and has a good sense of how to manage all of these variables, I advise to trade with small amounts of money so when you blow your account, it won't hurt that much. Notice I said "when", not "if". That little piece of advise cost me many thousands of dollars to attain...but I offer it here for free!

Regards,
  • #59
  • Nov 16, 2009 10:08am Nov 16, 2009 10:08am
Thanks, FX-Petra.

Trading/Masochism - there's a topic.....lol.

I agree, though. The pain is ubiquitous.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #60
  • Nov 16, 2009 2:15pm Nov 16, 2009 2:15pm
Quoting The Fool
Thanks, FX-Petra.

Trading/Masochism - there's a topic.....lol.

I agree, though. The pain is ubiquitous.
Yes and it perhaps has a numbing effect eventually. Kinda like a warrior who cant possibly fear death before going into battle, you cant fear loosing and even if you experience a series of losses (drawdown), you need to trust your system and continue to adapt. James16 outlined how important it is to treat a loss as a module of the path to success, whether its a single loss or several back to back ones. Evaluate your system over a period of time. A professional trader once said, you eventually transform into a machine, NOT necessarily in terms of following the rules but in terms of emotions, they dont really impede your progress, when you loose, you oust the thought, absorb the lesson, and put on the next trade, period!
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