How to Lose Your Money Currency Trading or How Can I Be So Stupid

[vanazzi]

Hi Grogy, All forex statistic calc tend to zero.
I know you filling, many people not will bealive in you, but with time all will know about this observation forex is a game.

IBFX is a excelent broker.

If you are playing yet, plase take my skype com.vini to trader toogether and change experiences.

Thanks for talk about real risk, So lets play the game.

[MoneyNVRSleeps]

Not being rude, but if you think Forex is a game, its your hobby.

Forex is a business, to me anyways..

I plan to Make Billions, and not Monopoly Money,

If you have the " roll the dice" mind set, and plan to make this your Last Career, your setting yourself up for failure.

Just sayin,

[Grogy]

I know that I am preaching to a choir and that's fine. Two years ago I was in the same boat as you. I learned everything that I could about currency trading, money management, etc., lost my as-s and now I'm trading options. For those who think that what I said is hogwag, I wish you the best. Just don't trade with your rent money.

[Master Tang]

I know that I am preaching to a choir and that's fine. Two years ago I was in the same boat as you. I learned everything that I could about currency trading, money management, etc., lost my as-s and now I'm trading options. For those who think that what I said is hogwag, I wish you the best. Just don't trade with your rent money.

You can learn everything in the world about a subject, except for how to actually do it. I know all the rules for football. I know what the backfield should be doing, what the defensive back's roles are, how and why the offensive line runs stunts, the value of a patient quarterback, when to look for a blitz, and on and on. But you know what? I would never in a million years head down to the Raiders headquarters, and try to play a scrimmage with them.

Why? I lack the actual playing experience. Not to mention I'm afraid. I'm no small guy, but the thought of getting run over by a 6'5" inch 300 pound defensive lineman that is bent of killing the quarterback is terrifying.

It's the same with trading. You can know all about what makes the market move. You can understand the principles, and mathematics that make up moving averages. You can study support and resistance, you can identify good trade opportunities. You can fully understand money management (although that is by far and large the least visited part of trading for 95%). BUT, when push comes to shove, you're afraid of losing, so you still lose money. Why? You don't have the skill sets that make a trader successful. They can be acquired, but that part takes as much time as actually learning all the stuff you would no longer use if you were a successful trader. And unfortunately that's why most people hang up their trading cleats.

The assumption is, if they know all there is to know about the market, they should be successful. That is not, nor will ever be the case. Good traders have a fearless mentality, aren't concerned with win/loss ratio, could care less if they were were wrong the previous trade, and have an identifiable edge for entering the market that they patiently wait for. And they could give a flying flag if a RSI is in an overbought condition.

We all focused on the wrong things to start, myself included. It's only after realizing that you know everything, but truly understand nothing that you can identify what needs work. And all that really takes is a mirror. That's not some Tony Robbins self help mumbo gumbo, it's a fact. How many times do you look at a chart, and innately say, it's gonna go down, but you buy hoping for a retrace? We are wired for thinking every action results in an equal and opposite reaction. That is true in physics, but not in trading. It's tough to overcome that line of thinking, and to stop shooting yourself in the foot, but it IS doable. And for the record, it's not IBFX that is killing your account. They have been awesome for me

And you're right. One should NEVER trade with their rent money.

[Nikitafx]

Firstly, let me congratulate you. You knew when to call it quits.

Well some might say quitting after loosing money is not what one would call knowing when to quit, but than you wouldnt have quit if you were making money and you were ahead of the market.

Now why do I congratulate you? Because you understood that trading forex market is just not your cup of tea. The logic behind why you came to that conclusion might be dodgy, but rest assured its the right one. Its good to know that you have moved on to options and you find options trading more up your alley. The same might not apply to the next person.

I have a friend who plays poker for a living. His day starts at about 6 pm and by 9 pm he is practising his trade and he calls it a day around 3 am, about 3 to 5 times a week. He lives comfortably, has no debts and I can say he is doing much better than many who hold a nine to five day job. He once offered to teach me all that he knew. I thanked him and moved on.

Why did I do that? Because I asked myself, playing poker for a living. Do I believe I can do that? Answer was a resounding no. So I gracefully declined.

I lost alot of money in forex because of a disease that afflicts all newbies, especially those who have never traded anything in their lifes other than maybe baseball cards and they discover forex. The disease is called GET RICH END OF THE MONTH. I was afflicted by the same. Had a chart, had my projection and I was dreaming of which two door car I would own at the end of that year.

In my case, the losses were made even worst because 1USD was 3.7 Ringgit than. So my damage was nearly 4 times more per pip. And couple that with the fact that employment here pays you one third of what the guy across the border would earn doing the same thing means I lost about 6 times per USD compared to someone who was earning in USD. I practically lost everything. That was in the first two years.

When I started forex, and I mean really really just started, I googled forex and a combination of words with forex. I came across a website by a guy who swore that forex was a scam. He had a lot of "information" on his site and "proof" of how the market is actually controlled by a few people and they just took your money. PERIOD. The site even had flashy warning thingy. Imagine me, who didnt even know how to place a trade on a demo account reading his site. He recommended that anyone planing to trade should trade oil as that is the real deal. The reason why he says so? He was making money trading oil but lost it all on forex.

Sounds familiar?

Now why did I, who suffered such horrendous losses in the first two years of trading did not sniff out anything sinister permeating from the market? Because I knew I could do this. I believed. I knew I was missing something.

I had a guy who was doing well trading teach me online. He would come in the evening and we would chat about trading and the market until he was done trading around 4 am my time. He did his best to try to get me to see what he saw. He would take a trade and it would be profitable. I would attempt the same using the same things he thought me and I would loose money. Consistently.

The reason why I stuck through was because I always firmly believed that the market can pay. Its me who is missing something. Its not the guy who was teaching me. I always kept telling myself look, see, analyse. You are missing something.

Remember, trading the market is about you playing against your biggest foe. Yourself.

Eventually, I started learning. Boy did I realise that I was not missing something. I was missing a whole lot of things. Today, I am proud to announce to the world at the top of my lungs that I AM STILL LEARNING!

Yes. you never stop learning in forex. But you do not need a Phd to make money in this market. You just need to know one thing that works and you keep hammering it again and again and watch your money multiply. If you ask me whats the difference between a ECN broker or the other variates, well my answer is I dont know.

Why? Cause I really dont need to know. Knowing, or not knowing these things do not give you an edge to trade profitably.

You could have read everything that was out there. Its useless.

One of the first things I learned trading the markets were support and resistance. I read babypips and many other sites. They mentioned that support broken becomes resistance. Resistance broken becomes support. Logically how else could it be?

But it took a few years before it sunk in one day. The AHHAAAA moment. It just came out of the screen and screamed at me. I suddenly saw where I could enter and exit safely, improving my chances, cutting down my risk and so many more.

Suddenly, money management looked so different. My returns started going through the roof cause I was no longer trading breakouts. I waited for the price to come back to me. By doing so I cut down on my SL tremendously. My returns became much healthier. Than a few months later, the risk, reward ratio decided to reveal itself for what it was.

I knew risk to reward ratio. But I never understood why cutting down a trade that is yet to mature will kill your account on the long run.

So you see, we can say that we know everything, been there done that, but do we really understand ? My case was a classic example. Like a parrot, support broken, becomes resistance la la la. How do you use it real time trading?

To cut a long ramble short, its in you. You either have it or you dont. If you dont, its not a negative. Its not a bad thing. Its just not the thing for you.

Trading any markets is not something that would come to everyone. The hours that you put in play a vital role. But the difference between not loosing money, making some money and being very successful in doing it comes back to not what you know or what you have seen or what you have experienced.

It lays in on whether you know yourself.

Not sure how to title this: “How To Lose Your Money Currency Trading,” or “How Can I Be So Stupid?” Over the past two years or so, I have lost more money than I care to think about by trading currencies with Interbank FX and their new owner/partner TradeStation. By the way, the previous owner of Interbank FX is now heading up currency trading with Tradestation. (the fox moved to a higher-class hen house) <--- Trading is about being methodological in our approach. You cannot say blast it, I will plunge head on and expect to come out of it tops. How much did you loose? More than you care to think about? In just the last two years? Not a good approach.


Because of space limitations, I will attempt to use an analogy to illustrate my point. If you go into a casino and play the roulette wheel, you will notice that there are 38 possible slots that the ball can land on. If you play one of the basic 36 numbers; this leaves the house with a 6.3% statistical gain (36/38). This presumably will keep them in business even though they are paying out 93.7% of the bets. Now as you may know, most of the currency traders, such as you and I, have winning trade’s percentages of around 25% (or less). This means that someone is receiving 75% of so of your money. That could the banks, the brokerage firms, discretionary traders, etc.
Now let’s return to the casino table, and you pick any block of numbers (9 or 10 numbers) representing 25% of the 38 possibilities, thereby leaving you with roughly a 75% or so, chance of losing your money ------ would you do it? That’s one chance out of four of winning. Sounds like a pretty dumb bet to me, but that’s what the typical currency trader like me and maybe you, are doing. And remember, these are random bets, no manipulations or skill involved. So if there’s a 75% chance of you losing, let’s face it, you are going to go broke. <--- Again, if a newbie comes into forex thinking that its like going to the casino, than I would tell that newbie to look for another source of income even before he has had a chance to mess around with a demo. You are just not going to make it. The example of odds that you are talking about above does not reflect the edge of a casino has over its clients. It sure does not even remotely reflect how a leveraged account and an experienced trader would go about controlling and eliminating risk and compounding their earnings. Finally, casinos dont make a meagre 25 or 30% of the total that goes in there. They basically take the lot.

Let’s talk about manipulations: trade going against you until it hits your stops, or trade going against you until you are margined out and then immediately changing course.

<------ been there done that. Was so lousy at picking stops because I thought SL was something that you just arbitrarily put, telling myself that hey this is how much I want to risk. Just like in the casino. It does not work like that.

Trade reversing course just as you reverse your trade, re-quotes, internet problems. I’ve had them all happen. Here’s one that really confuses me. When the trade is going against me, it is nothing to see it move 20-30 or more pips in practically no time at all. However, when the trade is moving in my favor, it takes forever to even move 5 pips. Very strange, indeed. I can think of many times that I have been down $100-$150 within 30 minutes or so, but never up $100-$150 in the same time frame. Do these things happen? What do you think?

Again I have pondered this many times when I started out. For a moment I did think that I was either unlucky or someone was messing with me.

One of the reason why that happens is whatever timeframe that we are trading, will show us a buy or a sell, and we will sell or buy accordingly. Its called visualization. In other words, monkey see, monkey do. You see the chart going up and you want to run with the bulls. You enter, it shoots up a yard more and than collapses like a house of straws. So you panic. Cut your losses cause someone told you that trading means taking losses like a man and you go contra. But ofcause by than it turns around and goes back your way.

So what do you do? You swear that someone is watching you and taking your money away.

But the fact of the matter is you are buying high and selling low. This is another concept that you most probably know. You might even be able to give a lecture on the subject. The difference between the banks and the ordinary joe is the banks buy and sell wholesale, the ordinary joe buys and sells retail. Sounds so deep. But I can assure you that if you were asked to point out how we incorporate it into our charts so that we take minimal risks for maximum returns and you would not be able to.

Its not your fault. Its just the way we have been conditioned since young. We look at a chart and point out the obvious. Hey its going up. Well yeah. But you dont want to be entering when its already on the way up. Our minds, in most cases cannot adjust to this simple fact.


Let’s talk about skill. If 75% of traders or losing, obviously their skill level leaves much to be desired. The 75% who are winning must know a great deal more about currency trading than the rest of us.
What’s the point of this assessment? To put it bluntly, I believe that for the average Joe, currency trading is nothing but legalized robbery and furthermore, none of the regulatory agencies are doing anything about it. I’m no longer trading currencies, but waiting for a class action suit. Get busy lawyers.

z<---------- The average joe is unfortunately born and brought up to be just that. Average. Go to school, get a job, slog your entire life, and hopefully retire with enough savings to last average joe before he kicks the bucket. The world is such. Imagine if everyone was an employer. Who the hell is going to do all the work? The same goes to the market. The market cannot exist if everyone profited from it every other time. Its a market. Not a currency printer.

So to cap it, its not easy. Especially when you start out. The odds are stacked against you at every turn. You not only need to learn about the market, but you also need to learn about yourself.

Controlling ourselfs and our perspective of things related to the market is the key on whether you make it or you dont.

[Joepippin]

This is not true, trading is a Zero sum business, less the spread.

Just because a trader has a winning percentage of 25%, it does not mean that they are losing 75% of their own bank roll. Your assuming this on a dollar for dollar ratio.

Now assume on my winning trades which as you said have a 25% win rate are geared to a risk:reward ratio of 1:4.

Lets say I decide to risk 1% per trade to keep the figures simple.

25/100 trades = Win = 4% Gain Each = +100%
75/100 trades = Loss = -1% Loss Each = -75%

Now I have a Net Gain of 25% ROI, and I only have a win rate of 25% as you said previously.

I suppose what im trying to get at here is that the win rate is totally irrelevant on its own merit, it has to be combined with the Risk and Reward ratio that you are using within your trading.

Spot on. Couldnt have said anything better

[luiz]

I guess all you do is trying to catch top and bottom ( My assumption is most people do that). You think you gonna be a hell of a trader catch the move right at the top/bottom; therefore, the move against you happen to be very fast.

Nothing to worry, it's very typical for average Joe.

[Brian76239]

This Market is NOT Forgiving. This is the High Trapeeze and there is NO Net. Every store bought EA has 47 pages of Disclaimers for a REASON. Look at it this Way. You ended up Here. This is one of the BEST places to LEARN without
getting BURNED. Take Advantage of what is available on this Site. Yes. Taking a Loss HURTS. Take a Break for a While.
Come back when you Feel better and start Again. Take the lessons and the tests BEFORE you go back to Live Trading.

[cipneccipnec]

Question to Grogy: Do you think that if you throw your money down the window, and others pick it up, it's also legalized robbery?
Because ALL brokers have a disclaimer warning you about potential loss, and every trading 'school' advices, even imposes that you start with a demo account and go live only after you're consistently winning. At least be comfortable with trading (and losing) before investing your rent money (pretty stupid if you did that!!).
Yes, those who are winning, and there are way less than 25%, do know more about the market. But that knowledge doesn't come from a mystic or esoteric source, not even from a big conspiracy. With A LOT of patience search the web, read everything you find, sort the junk from the truth, filter out the noise, understand why and how the market is moving and most importantly keep you head cool, and you'll see what I mean. And don't give me that BS about "I learned everything that I could about currency trading, money management, etc.", because it's very clear that you haven't! "Trade reversing course just as you reverse your trade" is solid proof of that! That's just pure crap! The trend doesn't go bullish because you shorted a position, or vice versa. This is a very narcissistic and egocentric way of thinking, and it's WRONG! Yes, there are market manipulations, but you can find information on that too, so you can at least avoid them if not profit from them. But that takes time, patience and experience.
I do believe that you read some (maybe even extensive) material about trading, but you missed the most important part of all : develop a system and stick to it!!
Another thing: most (>99%) traders went through what you're feeling, but most (again >99%) did NOT join the 'elite few' that spill their guts on the internet, blaming everyone. They understood that it's not the market's fault, it's theirs.
Best of luck in your new venture! However, if you bring your current mentality don't be surprised if, in a while, you'll find yourself (yet again) blaming everyone and everything, except you, of course, because you lost your money (yet again).

P.S. I know I said 'best of luck', but do the smart thing and don't rely on that!

[bonds724]

Hi Grogy,

There's an old story about a gold miner back in the 1800's during the Cali gold rush. The miner dug and dug for gold only to find gold here and there but never the big nuggets of gold he was seeking. Finally he gave up went back to town sold his equipment and the area in which he was digging to a carpenter. The carpenter knew nothing about gold digging, but quickly sought the advice of someone who knew about gold digging. A month later the carpenter went digging with the information he had learnedand struck gold three inches from where the original gold miner left off. Point of the story is. Don't give up because you can be three inches from striking gold.