How many veteran traders here blew out their first account?

Beginner Questions
47

You are applying the general rules of society to your trading.

Society tells us if we lose we are a failure and if we win we are a success.

[B]Get rid of it! It is counterproductive for your trading performance.[/B]

[B]The first thing I got taught when I started trading is to reward myself if I had a loss and do nothing if I had a winner.[/B]

To this present day I follow this rule without exception. With the result that I have never blown my account and my largest drawdown was 21,3%.

In any case, I am by no means giving up. This is what I want to do for the rest of my life. [B]I am reloading the account[/B]

I wouldn’t do that.
You are setting yourself up for your next blown account.

Your experience and feelings of personal failure need to be addressed.
You need to [B]reward[/B] yourself for your “failure”.

[B][I]After that you need a template and strategy worked out for your risk management with specific rules that are set in stone.[/I][/B]

One of the questions that you need to answer is what do I do if I have two losers in a row?
and
What is the max. drawdown of my account I can tolerate and what do I do when that happens?

Without answers to these questions you will most likely set yourself up for your “next personal failure”.

And after that you will be most likely part of a vicious cycle and you don’t even realize what is happening to you.

48

This is good advise I think in the long run if you can’t handle a bad trade you are going to fail(blow up an account) over and over. Understanding the importance and difficulty of this for some ,my self included is vital to long term profit. When you get it right you deserve a pat on the back.

49

Two Years Ago I start with $ 2,000 USD and blow up my account in two weeks.

After this, inmediatly I start again with $ 3,000 USD and blow up in [B]10 DAYS[/B].

Then, i do this:

1.- Open a DEMO Account (my second) and trade like this account was live account
2.- LEARN about [B]Myself[/B]
3.- LEARN about FOREX
4.- Learn about MM
5.- Learn about Risk Management

This help me to understand than my trading style was a catalogue of BIG mistakes.

Now I have my third live account and each month my balance is bigger ( I only trade mini lots)

Why ? Because now i know what kind of trader i am (A combination of Swing and Day Trader) and never trade without S&L

Regards

50

You need to protect yourself so it isn’t going to happen to you.

If it has happen to you already, it is of paramount importance that you put mechanism in form of rules in place that make a repeat [B]impossible[/B].

Please note the word [B]impossible[/B].

A user here on Babypips posted his experience a while ago. He/She build his acount from something like 400 to 30.000 (I can’t remember the exact numbers) in the space of a couple of month because of consistent and good trading.

All of a sudden he/she did something you [B]never[/B] do if you want to stay in this game for long, focus on the money you want to win.

He/she placed a trade with above mindset.

The trade was a loser!

50% of his/her account balance got burned in the process.

This experience will take a long time to heal. It might never heal and influences his/her way of trading for the rest of his/her life.

We as traders need to protect ourselves from experiences like that because they are anchored in our memory and influence the way we trade on a subconcious level.

We do protect ourselves with one rule: You [U]NEVER[/U] BREAK THE RULES!

And to enforce this rule you need to have answered one question to yourself:

What do I do if I break the rules?

My answer is written out on paper: [U]I have to stop trading for three month![/U]

It is tough because I would loose my income for three month. And because I know this I have never broken this one rule of mine so I never had to stop trading for three month as “punishment”.

A lot of people tend to think that successful trading needs the paying of dues in form of lost money and labelled as “experience” afterwards.

Nothing could be further from the truth. Experiences like that will stop you realizing your full potential as a trader unless you do the work and make sure that it will NEVER happen again to you.

51

Tanking your account is a hard lesson to swallow, but a good one if you don’t let it make you quit.

As many above have already posted their are many lessons you can learn the hard way from tanking an account.

The best lesson I learned from tanking an account was that profit or loss is all the traders fault and responsibilty. It shows very starkly that you can lose or make a lot of money ( % of your account) in forex.

When it comes down to it you can’t ultimately blame your method, the markets or your broker for your losses or gains. Those are just factors which have pull on the outcome. You can have the best of all pulling factors, but if you don’t have strict consistency with yourself, tanking an account is almost inevitable.

52

When you say make it impossible, you mean big catastrophic losses right? I mean no one wins 100% of their trades? right? small losses are going to happen even to the best traders.

53

Trading is about Win and Loss.

YOU control Loss.

YOU [U]don’t[/U] control Win.

YOU have rules in place to control Loss so it is [B]impossible[/B] to lose more what you can tolerate.

The most important rule of all your rules is ONE rule:

[B]YOU do not break the rules.[/B]

54

ok, I understand. Just wanted clarification. But you have some control over profit too don’t you? if you use a take profit? But I don’t usually because I don’t like to limit the profit side.

55

if you use a take profit?

You place a GBPUSD BUY order.

Your GBPUSD BUY order get’s filled at 1.6141.

You set your TP at 1.6171 = 30 pips.

The market takes price as far as 1.6169 and turns around to go all the way back to 1.6141.

[B]Where is YOUR control over YOUR profit?[/B]

YOU [U]do not[/U] have control over YOUR profit.

The market has control over YOUR profit.

What YOU can do is profit management by moving your stop or using a trailing stop to protect yourself by locking in YOUR partial profit.

But that is profit management of whatever profit the market is giving YOU.

[B]Profit management is [U]NOT[/U] the same as control over profit.[/B]

56

Failure is the best path to true success. With that said…use a micro account to learn…it puts skin in the game and teaches you to use a platform and if for example your stop-loss is 50 pips, then you lose a whopping 5 dollars and if you cant afford that over and over…then your in the wrong place to begin with.

If your first account is your learning account…then your first real account has a fighting chance at survival.

57

Well, I did very well on my first $:£ trade - think it was over £1,000 but have recently been down £300 on a £:PLN trade but I hope to recoup some of this once the PLN weakens even further to around 5.3. I was able to build my house when the £ = 7.00 PLN (this was in 2004 and was the weakest the PLN has been) so very lucky in that respect!

You win some, you lose some!