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  • #21
  • Dec 23, 2005 10:05pm Dec 23, 2005 10:05pm
MarkR, I wouldn't worry about what other people do. Just make sure you are doing the right thing.

If I had to venture a guess, I would say that most people that blew up with real money after successfully trading a demo, did not treat thier demo trading experience like they would treat real money, they only thought they were.
If you are demo trading, take it seriously, working on fine tuning your methodology, to the point where you know how you are going to trade, how your going to react to situations, events, happenings. What types of trades your in, and trades your not in. A written plan. It becomes second nature. And when you are consistently profitable, then go live with a small % risk per trade, and build it as you grow your confidence.

I think way to much has been made of this 95% people lose business. That is because IMO, a lot of people try it. A lot of people are attracted to it for the obvious reasons, but they simply don't have a clue as to how to get it done, nor the wherewithal or drive to make it happen over the long haul. It takes a lot of sacrifice and can be painful. And as you probably know, most people want the easy money. When they find out it ain't easy turning yourself into a consistently profitable trader, they quit. Hence the large number. Although, having said that, look at the results of the poll started by Iso. The largest grouping is traders up over 50% last year. Interesting.
  • #22
  • Dec 24, 2005 12:02am Dec 24, 2005 12:02am
That's encouraging Insider and I appreciate the response.

Thanks!
  • #23
  • Dec 24, 2005 12:24am Dec 24, 2005 12:24am
Weird, from what I understand from Elder's books. He says that those that fail need to learn from their mistakes in order to avoid failing the next time they trade. Does this mean that those that fail the first time will never be able to be successful the next?
  • #24
  • Dec 24, 2005 1:15am Dec 24, 2005 1:15am
Quote: Howtotradeforex

….I've just lost a tremendous amount of money over the past few weeks. My plan is to make my money back one pip at a time, then two pips, then three pips and so on until I'm back to even. I think pips and money go hand in hand…..



Lets make an assumption: Before you started to trade you engineered a method, by which you could make a profit from these markets. This method is made of entry/exit “signals, money management and risk management. You tested your theory, found it produced a net profit and thus you where 100% convinced of its effectiveness. As such, you then started to trade for profit.

Assuming your testing was accurate and your method valid, at some point in time, you either have had a series of losses or one big one which has left you at a net loss. As a result it appears, based on what you say, that your thinking has shifted slightly.

Your plan, you say, is now: Quote: “ to make my money back one pip at a time, then two pips, then three pips and so on until I'm back to even.” So what happened to your original plan? The one you tested and the one you know works?

Do you not think your mind set has changed? You have stopped trading for profit and started trading for break even therefore you have stopped trading the market and started trading your P&L. You now want to make your money back only that money isn’t yours anymore. Let it go. You know that you already have an effective method that produces a positive result. Why not trade it?

At any given time you will be up, down or flat but your objective should always remain the same; you should always consider yourself flat and trading for profit.

You may wish to analyse what brought you to this point. More often than not the its caused by not trading by your rules.

By the way, you are not alone. I also had a serious issue with this and it took me more than a year to control it. It never really goes away and still a struggle for me.



Steve
I was here, here I was. Was I here? Yes I was!
  • #25
  • Dec 24, 2005 2:47am Dec 24, 2005 2:47am
sterling post steve
another INTP
  • #26
  • Dec 24, 2005 5:44am Dec 24, 2005 5:44am
Howtotradeforex, a trading system, model or strategy which doesn't produce a drawdown doesn't occur in the first place...Always keep in mind that EVERY trading system, model or strategy MUST have drawdown...You never know when or for how much exactly the drawdown will come...You can expect the max drawdown through backtesting, but the actual max drawdown will deviate from this calculations (Because you will be trading your system into the future and not into the past), so this historical estimate will just be a guide to your max drawdown in the future...

As to when the drawdown will occur, nothing in the whole universe will tell you when are you going to have your max drawdown (Or even have a drawdown at all), it's totally random...Most systems produce drawdowns in the beginning before the equity curve catches up and heads north, but some systems will go into positive territory, and then head back down to negative, produce your max drawdown and then catch up once again to positive....So there is NOT a way to tell when your max drawdown will happen, it's totally random as long as you are a system trader trading a profitable system...

Don't worry Howtotradeforex, if you have done everything the way it should be done, you should be comfortable with the drawdown you produce...On the other hand, I assume that you still have some missing information in your formula, because you won't be worried unless you deviate wildly from your expected max drawdown...For example, if you expect a max drawdown of 35% plus or minus 5% error factor, then if you see a 70% drawdown, then there is something wrong and you need to re-consider the whole thing from the very beginning...But if you see a 35% in reality inline with your expectations, then nothing wrong, everything should be on track...


Thanks,

Nader
  • #27
  • Dec 24, 2005 9:49am Dec 24, 2005 9:49am
I was also a little startled by the post from Howtotradeforex in his admission of losing a tremendous amount of money over the past few weeks.



The quote “lost a tremendous amount of money in the past few weeks” implies a few things to me.



 

  1. There is no fixed risk % per trade or at least pre-determined risk.Or those rules were ignored.
  2. There is no overall stop loss to protect the account on a monthly basis, or weekly. Elder says in his latest book 6% of equity should be the pre-determined number for a monthly loss, upon hitting it, you get to the sideline. I happen to think that’s a little low, but still a necessary and important rule.

One thing about Howtotradeforex’ attitude that is great is that he is in it for the long term. If you are truly in it for the long term, and you lost 10% of your account, and you had to sit out trading for a few weeks, would you care? Of course you wouldn’t, you’re in it for the long term. Everybody knows, or should know, that unless you have completely and unequivocally bought into the fact that there is a random distribution of winners and losers, and even still, that a losing streak will effect your trading, probably negatively. Therefore it is wise to have in place protectionary measures for the long-term health of your account.





It would hardly seem to me that a 10% loss could be “tremendous amount of money” to a trader who is learning to trade forex. It may feel like the end of the world, and the pain in the midriff is nonetheless great, but how could it be tremendous?



A tremendous amount of money would be more like 25-50% of equity or more. And for that to happen, if using a fixed % risk per trade, or at least having the risk pre-determined, you would have had to have gone on a losing streak that was so horrific, that every trade you made was losing, and in that case, you were obviously effected by the losses and were no longer objective and should have been on the sideline anyway.



You must not let “one big one” even have the chance to get you. Because it will eventually get you. This sounds to me like one or two major losses were taken that did most of the damage, as opposed to flawlessly executing a trading system/plan that encountered a very bad spell. Only Howtotradeforex can tell us.



I intended to post about this reading I had recently done in a separate post but it fits very well here. I put down temporarily my normally mundane trading related reading and decided to re-read The New Market Wizards for fun over the holidays. It had been a long time since I read it, and I was hoping that I would find the big currency trader guy, the guy with all the screens all throughout his home. Bingo. The first interview. In this interview, Bill Lipschutz recounts a trade he was in that was going wrong. He was short 3 BILLION US dollars, and some unexpected news went against him. He was down 30 million in 8 minutes. The market was to illiquid for him to get out with that size in the late afternoon in NY. He had to wait for Tokyo. He felt he could take the starch out of the market by selling a hundred million and kind of cap it. He sold 300 million more US dollars. And the market went right through it. (Can you imagine? He himself was trying to cap the market so he could liquidate his larger position later, by selling 300 million more. Think about that the next time your trading your mini account and your perfect setup goes to crap, and your wondering why) Anyway he ended up getting out after being down 70-80 million at a much smaller loss. You must read the interview, but to sum up what he learnt, he felt the envelope was pushed to far and he needed risk control, and he had gotten himself in a position where the risk was unacceptable, and he had gotten himself in a position where there was no control. That this as the trade that would finally catch him with a bullet to the back of the head. This is from a market wizard! Certainly an aspiring newbie can learn from this.



And the second guy, Randy McKay has an unbelievable consistency track record of making millions year in and year out. He has a principle he follows and here is a great quote he said, that backs up what I was saying. “ When I get hurt in the market I get the hell out. It doesn’t matter at all where the market is trading. I just get out, because I believe that once you are hurt in the market, your decisions are going to be far less objective than when you are doing well.”





Good point by Sterling, to just get back to what you know works, instead of doing something else. That is of course, that you possess something that you know works. If you don’t, then obviously what you did doesn’t work, and why were you risking a tremendous amount of money on something you did not know worked? The next time, risk small amounts of money to find out what works.



It will be very interesting to hear from Howtotradeforex on exactly what happened, and how it happened. A lot of traders can probably benefit from that experience Howtotrade, so I hope you post about it here.



All the best, and happy holidays.

  • #28
  • Dec 26, 2005 12:25pm Dec 26, 2005 12:25pm
First and foremost, I appreciate all of the feedback. You guys are all great and that's why I come here.

Now, I'll tell you exactly what happened. Getting it off my chest will be good for me and hopefully others will benefit. I pulled my IRA @ $7000.00 and said to myself, "With that much in my account, how could I possibly lose?" But instead of doing ALL of the things I've learned, I was throwing darts at the charts. No money management, no stops, trying to get rich quick. I was trying to double my money. For every loss I made I just kept trying to gain more. Well, I'm sitting on $408.00. But the main reason behind my original post was to encourage myself and maybe others that this does not make me a failure. Feel pretty stupid maybe but not a failure. I've just started Mark Douglas's book The Disciplined Trader. He talks about losing his home, bank accounts, etc. I know there are many who have lost more than me, but to me I lost a tremendous amount. Anyway, I'm not giving up, film at eleven.
Because helping each other is a good thing.
  • #29
  • Dec 26, 2005 12:29pm Dec 26, 2005 12:29pm
Quoting howtotradeforex
First and foremost, I appreciate all of the feedback. You guys are all great and that's why I come here.

Now, I'll tell you exactly what happened. Getting it off my chest will be good for me and hopefully others will benefit. I pulled my IRA @ $7000.00 and said to myself, "With that much in my account, how could I possibly lose?" But instead of doing ALL of the things I've learned, I was throwing darts at the charts. No money management, no stops, trying to get rich quick. I was trying to double my money. For every loss I made I just kept trying to gain more. Well, I'm sitting on $408.00. But the main reason behind my original post was to encourage myself and maybe others that this does not make me a failure. Feel pretty stupid maybe but not a failure. I've just started Mark Douglas's book The Disciplined Trader. He talks about losing his home, bank accounts, etc. I know there are many who have lost more than me, but to me I lost a tremendous amount. Anyway, I'm not giving up, film at eleven.

Read on MAN, go ahead...I know it must have been hard, but it could have been much worse..Just thanks GOD that it stopped there and you are getting back to school to see what went wrong...

Wishing you the very best with the book....


Thanks,

Nader
  • #30
  • Dec 26, 2005 1:39pm Dec 26, 2005 1:39pm
Wow !!! Wow !!! Wow !!!

Amazing.

Well you have at least one major thing going for you howtotradeforex, and that is, what you did yesterday and the day before are virtually irrelevant, it’s what you do today, tomorrow and the next day, from here on out, that matters. Consider yourself a reversal pattern.

I have a lot of thoughts, but I’m gong to keep it as simple and short as possible.

I would definitely suggest you do some serious self-analysis, if you have not done so already, to find out why you ignored all the things you have learnt and went the get rich quick route. This is not a simple analysis, probably. I don’t think it has anything to do with smart or stupid. It has much more to do with personality, IMO.

Secondly, I read a post by you some time ago that really threw me, and for some reason I always remembered it. The thread was about demo trading vs. real, and you said near the end of your post “ it takes courage to trade the forex”.


That threw me because if you think about it, if you were using quality money management, and risking 2% of your account, on an idea that you objectively observed as a potential profit opportunity, and you pre-determined the risk, to be 2%, heck even 3% of your account, where is courage necessary to put on that trade?


I don’t see that as requiring courage, just a trader taking a business mans risk, to find out if that particular edge is going to work or not. (I just basically combined Elder and Douglas). This little shift in your thinking may help you. From thinking that risking 2% of your account on an idea objectively identified requires courage, to, it absolutely does not require courage, it just requires a normal acceptance of pre-determined risk.

Now, yes it takes courage to risk 2 or 3% after you have just lost 10 trades in a row, but this is why, especially as a discretionary trader, that you have measures in place to protect your overall account, especially if you are prone to blowing yourself up from time to time.


I think the real courage is in making the decision to derive your sole income from trading. Now that’s courageous!!!


I think you are going to greatly benefit from Mark Douglas’ book. It is an awesome work. I read the 5 fundamental truths, and 7 principles every day.

But even still, you must obtain the desire to act in your own best interest. Without that, nothing can help you. You have to truly want to help yourself.

I would suggest obtaining and reading the pdf by Larry Levin, the Secrets to Emotion Free Trading, and take particular interest in “acting in your own best interest”, which is discussed by Mark Douglas also, but you will enjoy this to, probably. (I am not Larry Levin) It is available on the web somewhere. Isn’t google great?



Peace and good luck!!!!!
  • #31
  • Dec 26, 2005 1:52pm Dec 26, 2005 1:52pm
Quoting howtotradeforex
Well, I'm sitting on $408.00. But the main reason behind my original post was to encourage myself and maybe others that this does not make me a failure. .... Anyway, I'm not giving up, film at eleven.
Hey dude. Just remember there are a lot of newbies who start with less than $400 and no experience. You are way ahead of the game at this point. Keep on truckin'.
Nolite dormiens pungere ursum. -- Latan Proverb.
  • #32
  • Dec 26, 2005 3:45pm Dec 26, 2005 3:45pm
Quoting callmaster
Weird, from what I understand from Elder's books. He says that those that fail need to learn from their mistakes in order to avoid failing the next time they trade. Does this mean that those that fail the first time will never be able to be successful the next?
No, of course not. Surely you've tried something new before and didn't get it, but learned from your mistakes and were able to succeed thereafter. Haven't you?

Initial failure is not permanent failure, unless you simply lack the aptitude for the thing you are attempting to do.

Perhaps I'm not fully understanding the intent of your post.
sxaxlxvxaxtxixoxnxbxyxgxrxaxcxexdxoxtxoxrxgx
  • #33
  • Dec 26, 2005 5:08pm Dec 26, 2005 5:08pm
Quoting SterlingTDR
Ninety five percent of you who start to trade will fail. (I remind myself of this fact daily) If you last more than 6 months you are in the top 10% and you owe yourselves a pat on the back. Some, after blowing their accounts will return to try again and 95% of those will again fail.

These markets are brutal and unforgiving and you are always only one trade away from wiping out. You have to perform at your best day in day out and that performance is measured in cash.

There is, of course, a certain amount of irony in this. Trading is all about making money but if you focus on that money, you’ll almost certainly lose. On the other hand, if your focus is on trading well, the opposite is true and the by-product money. In order to trade well you really have to love it. It has to be a passion. Is it one of yours?

Trading is 95% a mind game and success therein, 100% self determined.
For those who succeed you will be bloodied and bruised but all the better off for it. The rewards you can receive go far beyond money and the lessons last a lifetime.

To those who fail, I encourage not to become embittered. You as a person are not measured by your success or failure in this or any other game. We all have God given talents and you will find that once you’ve identified yours, in whatever area they are in, you will have more enjoyment and satisfaction that you thought possible. You may even find you get on your knees and thank your Creator that you never went any further with this silly little game called trading.

To all I wish a very happy Christmas.
May God shine His Light on you and yours.

Steve
Thank you for talking to me! I couldn't agree more. But I am in this for the long term too. I had some training, which I thought was pretty mediocre, and got going on a live account three months ago. Since then, I think I've discovered something that traders should really know. So I wrote a book on it. It is a way of seeing where the money is going in the short term that works pretty well 100%, and is great for scalping.

This may sound like a plug, and I don't want it to. As a relatively new trader I'd really like to know what traders think of what I am doing.

If the moderators think this is not how I should do it, I respect their judgement in chucking this post out!

Happy new year to all!
The framework is there; we just have to work on our frame of mind.
  • #34
  • Dec 26, 2005 6:48pm Dec 26, 2005 6:48pm
Quoting howtotradeforex
First and foremost, I appreciate all of the feedback. You guys are all great and that's why I come here.

Now, I'll tell you exactly what happened. Getting it off my chest will be good for me and hopefully others will benefit. I pulled my IRA @ $7000.00 and said to myself, "With that much in my account, how could I possibly lose?" But instead of doing ALL of the things I've learned, I was throwing darts at the charts. No money management, no stops, trying to get rich quick. I was trying to double my money. For every loss I made I just kept trying to gain more. Well, I'm sitting on $408.00. But the main reason behind my original post was to encourage myself and maybe others that this does not make me a failure. Feel pretty stupid maybe but not a failure. I've just started Mark Douglas's book The Disciplined Trader. He talks about losing his home, bank accounts, etc. I know there are many who have lost more than me, but to me I lost a tremendous amount. Anyway, I'm not giving up, film at eleven.
Hello Howtotradeforex, you are going to be just fine in my opinion. When I see someone like you that is able to share this story, I think of just how secure you must be with yourself. As long as you keep learning and stay focused, you will be an even better trader over time. Just wanted you to know it took a lot of courage to share your story. And I admire you for it.
Steven
  • #35
  • Dec 26, 2005 8:45pm Dec 26, 2005 8:45pm
Quoting niceguy777
Thank you for talking to me! I couldn't agree more. But I am in this for the long term too. I had some training, which I thought was pretty mediocre, and got going on a live account three months ago. Since then, I think I've discovered something that traders should really know. So I wrote a book on it. It is a way of seeing where the money is going in the short term that works pretty well 100%, and is great for scalping.

This may sound like a plug, and I don't want it to. As a relatively new trader I'd really like to know what traders think of what I am doing.

If the moderators think this is not how I should do it, I respect their judgement in chucking this post out!

Happy new year to all!
You're a marked man..
Please read the forum rules...
  • #36
  • Dec 26, 2005 8:56pm Dec 26, 2005 8:56pm
Quoting eastmaels
You're a marked man..
Please read the forum rules...
Aaargh! Which of those smiles should I take seriously? The Avatar or the smiley?
The framework is there; we just have to work on our frame of mind.
  • #37
  • Dec 26, 2005 10:17pm Dec 26, 2005 10:17pm
Quoting niceguy777
Aaargh! Which of those smiles should I take seriously? The Avatar or the smiley?
Oh, I think I may have given you a wrong impression..
Don't mind the avatar..

Anyway, if you still haven't read the the forum rules, here's the link..

http://www.forexfactory.com/forexfor...ement.php?f=11

Hope this helps.
  • #38
  • Dec 26, 2005 10:28pm Dec 26, 2005 10:28pm
Quoting SterlingTDR
Hi eastmaels,
I didn't say it was simple and niether did I say that it was about attitude.
Positive thinking or attitude is not going to make you a winner in this game. Anyone who tells you that is incorrect. It may help you but its contribution, relatively speaking, overall is quite small.
What I said was that your success is self determined.

Regards,
Steve
Ok, thanks again for the correction and the insight...
Self-Determined... Well, I guess that's the end of the discussion for me..

I'll be back..
  • #39
  • Dec 26, 2005 10:42pm Dec 26, 2005 10:42pm
Quoting eastmaels
Oh, I think I may have given you a wrong impression..
Don't mind the avatar..

Anyway, if you still haven't read the the forum rules, here's the link..

http://www.forexfactory.com/forexfor...ement.php?f=11

Hope this helps.
Thanks very much for the friendly treatment! I've adjusted things as necessary!
The framework is there; we just have to work on our frame of mind.
  • #40
  • Dec 27, 2005 1:18am Dec 27, 2005 1:18am
Quoting howtotradeforex
First and foremost, I appreciate all of the feedback. You guys are all great and that's why I come here.

Now, I'll tell you exactly what happened. Getting it off my chest will be good for me and hopefully others will benefit. I pulled my IRA @ $7000.00 and said to myself, "With that much in my account, how could I possibly lose?" But instead of doing ALL of the things I've learned, I was throwing darts at the charts. No money management, no stops, trying to get rich quick. I was trying to double my money. For every loss I made I just kept trying to gain more. Well, I'm sitting on $408.00. But the main reason behind my original post was to encourage myself and maybe others that this does not make me a failure. Feel pretty stupid maybe but not a failure. I've just started Mark Douglas's book The Disciplined Trader. He talks about losing his home, bank accounts, etc. I know there are many who have lost more than me, but to me I lost a tremendous amount. Anyway, I'm not giving up, film at eleven.
Let me say this, I appreciate your humility and honesty. These are rare qualities and for someone to put himself or herself out there, for all to scrutinize, deserves the highest level of respect. As such, I’m willing to get involved and help you as much as I can. Months ago I started a thread in the members lounge which will shed light as to why I would do this and remove any doubts you may have regarding my motivations.

The only conditions that would apply are as follows.

 

  1. Communications between us must take place in a public forum; such as a thread in the journal section, whereby others can benefit and anything that I communicate can be publicly scrutinized.
  2. You understand that my time is limited and I can only post once, perhaps twice per day.
  3. You are willing to think things through and work.

If you are interested let me know. If you would rather go it alone, I understand this too and am not offended.



Best wishes,

Steve

I was here, here I was. Was I here? Yes I was!
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