Hi everyone… I need some help with this… i need the main reasons that can lead you to blow your account?
Bad risk management?
Trading higher time frames with a not so huge account?
High leverage?
I need your opinion.
Jmc. Hi. In my opinion risk management. How much are you willing to risk per trade?
Hie. I can say that money management as per your trade may be the reason to blow your account. When ever a person trade must consider money management first so that he can earn profit and do not blow his account.
Money management is one of the most important matter in trading,without obeying money management policy,you have to suffer a huge loss .
First of all, go through the School of Pipsology, then learn some good money and risk management, and you have a pretty good chance not to blow your account.
Ohh definitely… for you… is loosing 50% of your account blowing your account? because it is really hard to recover from that… i believe that you can also blow your account if you like to trade in revenge…
Best way of blowing up an account is trading with your EGO, it is very difficult to for some one to risk 50% of their account on a single trade from the start, even for the very risk tolerant folks that would be insane. A more likely event is risking 5-10% and then not letting go the loss, so it snowballs into 20-30%. A couple of those in a row and you are out of business. It is hard to cut your losses, only to see the market turn in your favor. But don’t trade on hopes, trade with a plan. If your plan is wrong, then it is wrong, it might of been right at another time but that would make it a different plan.
I offer five of them (subjectively, and with a general comment or two, for four of the five) …
-
[I][U]Not having a genuine edge[/U][/I] (for which a common reason is reliance on inadequate, defective or mistaken “information”: aspiring traders quite commonly seek short-cuts, imagining that if they just copy something that “works”, they’ll be able to bypass most of the actually-required education and experience phases);
-
[I][U]Confusing entry-methods with trading systems[/U][/I] (for which a common reason is the deeply mistaken - but widely-held - impression that if one enters at a good time, everything else will somehow, magically “work out well” even without specifically considering trade-management subsequent to the entry);
-
[I][U]Under-capitalisation[/U][/I] (for which a common reason is a misguided belief-set about what’s typically achievable and over what time-frame: most people significantly overestimate what they can achieve quickly and easily, while significantly underestimating what they could achieve slowly and with difficulty);
-
[I][U]Excessive position-sizing[/U][/I] (for which a common reason is just a general lack of statistical/probabilistic knowledge - most people aren’t mathematically gifted, and it’s really, really difficult to make a success of trading without some real understanding of the statistics and probabilities involved);
-
[U]Lack of patience, discipline and “psychological aspects”[/U] (on which I’m far too Aspergerish to be able or willing to comment at all, myself).
These five may overlap, to some extent.
I can’t prove a word of it, needless to say, but I [B][U]very[/U][/B] strongly suspect that combinations of these five reasons, collectively, probably account for about 99% of all “aspiring trader failure”. (Use of high leverage [I]in itself[/I] isn’t relevant, other than as it tends to overlap with a couple of the aspects mentioned above, in my opinion).
Hello…
Lexy’s answer is the best there is…
10 Reasons You’re Not Making Money Trading by Nial Fuller
full article is here
10 Reasons You’re Not Making Money Trading » Learn To Trade
My favorite is number 10, that sums it all up nicely
- You’re over-trading
- You are not managing risk properly
- You aren’t preserving trading capital for good trades
- You trade the news
- You read too many websites and opinions
- You’re trading with too small of an account
- You aren’t placing stop losses properly
- You aren’t disciplined enough
- You aren’t patient enough
- You don’t know what you’re doing
1 Like
Many reason axcuse as loss, lack experiernce, lack knowledge, greedy, trade blindly etc, maybe if any trader they can understand when time to enter in the market that giving highest opportunity to making profit hence they can reduced loss possibility, so from now learn how to understand with the trend market behviour if you can
u are not alone if u end up blowing your account, i mean even my hotforex account had its share of bad trading when i first started and its normal, many factors might come to play here, like over trading, risk management, lot size, leverage, and plain bad trading bad strategy, emotions, fear, greed etc. just stick to a basic strategy and never over trade. and remember a no trade is not a lose trade.
Right, there are so many newbie who are doing the same and blowing their account too. Most important thing is controlling your self for over trading and managing your money.
Totally agree…control your emotions,be disciplined and manage your account properly.
You can not blow your account if you use stop loss and small lot size compared to your account size. Also, that alone won’t stop you blowing up your account in the long run. That is where a good trading strategy comes in.
Hi Lexys,
Can you help me out with No 4. I use a position size calculator and keep my risk at 1% I have some mathematical knowledge (I think). But what do you mean by “understanding the statistics and probabilities”? Do you mean position sizing should be a function of the expectancy of a system? Or am I making thinks to complicated?
simole answare
learning
practise
experience
those are the only ways to not blow accounts
she meant “not knowing the market”. for example gold can have a movibg range of 300-500 points over days then like a storm moves 3000-5000 points in one single day.
standard deviation calculatio is very important to calculate how much you commit to a trade.
Kind of, yes … and probably when I said that I was thinking partly of my own system/methods, for which position-sizing gets pretty complicated, since I have distinctly more than dual outcomes (i.e. “either you win ‘x’ pips or you lose ‘y’ pips”) available.
Working out position-sizing well does call for some statistical thinking, though?
Even expectancy alone can mislead, in some cases: for example, it’s easy to envisage a system that, although it has an overall, fixed expectancy for each trade taken, would rapidly lead to huge problems if you tried to derive position-sizing from expectancy alone? I’ll try to offer an example of the kind of thing I’m envisaging (this is off the top of my head, though): suppose you had a system with a win-rate of 20% (not my taste, but some people do), in which the winning trades average +30 pips each and the losers average -4 pips each, but with a variance from -1 pip (commonly) to -60 pips (very rarely indeed). Out of every 100 trades you take, your wins average +600 pips and your losses average -320 pips, so you have a perfectly respectable profit factor of 1.875. You still have to be aware that at some point you’re going to have three or four trades out of ten consecutive trades each losing 60 pips. In other words, you need to be aware of “standard deviation”, too, to avoid re-arranging the deck-chairs on the Titanic at some unspecified and unpredictable future point?
Which is where things like Van Tharp’s SQN (“system quality number”) can be so helpful: sounds “fancy” but really it’s no more than that the SQN for “n” trades in any given system is equal to the square root of “n” multiplied by the average P/L expectancy of “n” trades over the standard deviation of “n”.
There may be position-sizing calculators that are based on such concepts - I don’t know.
No; probably I am! Turbo answered more succinctly than I, anyway, just above. [I]Sorry[/I]. :8:
PS … And another thought: trading frequency matters, too: you could easily be making far, far more money from a system with a PF of 1.5 that trades ten times a day than one with a PF of 3.5 that takes a trade about two or three times a week? 