I keep blowing up accounts

Trading Discussion Risk Management Practices
7

Hi mate ,

For a start I don’t believe the above is true . Everyone on this site is different.Some will have blown many accounts and are now profitable ,or not.Others that would nt enter their minds and may, never even have a margin call, that two sides of the spectrum.

Regarding trading I think in a way losing or even blowing accounts can be part of the process to success .Many actions to be successful in trading is doing the opposite to what you did originally when losing. Though people trade for different reasons this could be for the buzz and excitement of winning or possibly the fantasy of winning and will always lose,probably till they eventually give up.

You are the only one who can change the situation,if it’s having a detrimental effect on your well being

Good luck and keep posting.

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8

Unfortunately you aren’t disciplined at all. You can’t even fight the urge to do more deposits to your account although you are constantly loosing money. And this after several years of trading. This is addictive behavior.

Ask yourself why you don’t follow your risk and money management rules. I made huge improvements after i analyzed my behavior, what caused it and found ways to deal with it.

Some traders meditate before their session starts. I can’t watch the charts while i am in a trade. Work hard on this and you will find your way too.

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9

Hey, I have to agree that it sounds rooted in an addictive tendency somewhere from how you’ve described it. Even if you are disciplined 99% of the time some part of you is allowing 1% to go mad, EVEN when you know the consequences COULD blow up, but in your head you think “I’ll chance it and throw in more deposit”. At that moment, when you have already lost doing this, you are not processing the impact of previous losses, which ought to keep you in check, and at least help you to be more mindful. LIKE: Stop, take a moment, count to 20 and then ask yourself if you still want to do it. Is it wise?

How about you just do a test ? A test of 2 months where you run 1 month allowing yourself to do as you do, and 1 month where you stick 100% to the rule and only after both months of experiencing you reflect and write down what you learned. I reckon you’ll be surprised at how capable you are of sorting it yourself, and you won’t need an app or a limit once you go through the motions of acting from a place of self care…

I wish you all the best, I believe in you! :slight_smile:

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10

Thank you all for your input and support.

Yes, I am exhibiting compulsive, addictive behaviour (which is why I have closed my account).
Yes, maybe I am not as disciplined as I tell myself.
Ture, not all people have the tendency to go on tilt (although I would argue it’s a small minority).
Yes, I have read the Disciplined Trader by Mark Douglas, but it was a long time ago, i will revisit it, thanks.
No, I haven’t considered trading demo as I don’t feel I’d experience the true emotions of trading, but maybe it could be good to get back onto an even keel.
Yes, even if I had a limit or circuit breaker, I would probably find a way around it.

We could talk about discipline all day, but for the sake of argument let’s start with the assumption;

"It is not possible for an individual to adhere to money management criteria over **
** the long term."

If that is the case then;

Can I get an external third party to manage my money?

If trading for a firm I imagine there would be a risk department monitoring and cutting positions, a separate department with more objectivity. Can a private trader replicate this environment with their broker or bank?

Would a trading partnership be desirable?

I notice most successful businesses consist of more than one person. Why would the business of trading be any different. Rarely will one person will have all the skills required for succuss. One founder may be more creative while the other more operationally driven. At the very least you would have a partner who understands your business, whose opinion you respect enough to listen to in times of stress. I know investing by committee has its drawbacks too, but consider Soros and Druckenmiller, Buffett and Munger etc, perhaps there is merit in trading in teams. Sometimes 1+1 = 3. Perhaps a supportive spouse of family member would be enough to keep you accountable.

Would a prop firm be desirable?

I have never tried for a funded account, I see people messing around with them for years and I don’t believe the payout stats are great (although probably in line with the general market). But maybe that would be a good form of external governance. The entry tests might be a good way get back on track, and if I ever was to get funded at least I would not be risking my own money.

Why don’t brokers provide more functionality around the issue?

Not in their interests. Happy to peddle the line that you are weak, when in fact you might just be being human.

Anyway, just thinking aloud. Any thoughts appreciated. Just considering the alternatives as I can’t continue the way I have been.

11

Can you look into practising a method of turning off? Get hypno therapy. you’ll be surprised how easy things can be when you reprogramme your mind. i have over come 3 addtcions myself in life through this. I’m still addicted to chocolate but it’s the lesser of all the evils. Good luck, I hope you overcome it in yourself, because you can, you just don’t have the tools to do it yet, but you’ll find them if you trust in yourself.

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12

Thanks EFT,

Good to know I’m not the only chocolate addict here.

I have not tried hypnotherapy, but am open to it. Thanks for the suggestion.

I have overcome addiction too, but with abstinence. In the case of gambling, it’s an vice you are trying to control, not abstain from. For some this may be impossible.

Some people can drink or smoke socially, but won’t have the desire to do so every day. Others can’t stop at one drink. Of course the goal is to be able to control the drug, but if you can’t do that you need to stop entirely.

With experience (ie enough hangovers) I have learnt to use alcohol responsibly. My hope was that I would mature in the same way with gambling, but as yet that has not happened. If anything my patterns have become worse and more ingrained. I don’t crave gambling. I don’t gamble on sports or anything other than trading. I am not even trading now. But at times when chasing losses I can’t stop. I may have to accept it’s a drug I can’t control, and that I simply don’t have the temperament for trading.

13

Your never going to change the Core of who you are.If you have the tendency to be obsessive, compulsive ect, though you can channel these traits with positive behaviour patterns.

Life I believe to have sanity, you need variety and “balance”. Tommorro touched on other activities outside of trading .Changing negative behaviour wiil have an overall effect on your outlook (sounds obvious)though it is more difficult for some .

Look up a guy

Called Tom Hougard he a trader who had problems with alcohol (still about change ),he has free stuff on the web

Good luck

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14

Thanks Greenscorpio, i’ll look him up.

15

hahahaha. These guys have written long encouraging messages. And you disregarded everything. You don’t want to take responsibility for your own actions and prefer to outsource your accountability.

Do whatever you want. Next time, you should just take a loan from the bank and bet your entire account on a single scalp trade. That’ll show the market who’s boss!

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16

i think a much better step is to learn to be your own “risk manager”

it’s the single most important thing to learn, if you want to trade

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17

It’s great that you recognize the importance of managing your money and have identified the challenges of doing so on your own. It’s not easy to remain disciplined all the time, especially in a field as volatile as trading.

Outsourcing money management is a smart idea, and it’s good to see you considering external circuit breakers to prevent losses beyond a predefined limit. It’s a good risk management strategy that could potentially save you from devastating losses.

It’s understandable that you’re having a hard time finding a forex broker that offers such a service, as it’s not in their best interest to limit your deposits. However, you could explore other options like setting up a separate account with your bank that you can use solely for trading purposes. You can then set a deposit limit on that account or work with your bank to see if they have any other options available to limit deposits.

Another option is to work with a financial advisor who can help you manage your money and enforce the risk management strategies you set in place. They can also act as an external circuit breaker, preventing you from making trades that exceed your predefined limits.

It’s essential to find a solution that works for you and your trading style. If you’re unable to sort this out, it might be best to take a break from trading until you find a viable solution. Remember, trading is a long-term game, and managing your money effectively is crucial to your success.

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18

Thank you Flamingoproxy,

That certainly seems to be the conventional wisdom, but why? Why is it frowned upon to seek the help of others or alter your environment to reduce or even eliminate risk?

Imagine a situation where if you are more than 100g of chocolate per day you would get sick and possibly die. Would you;

A: stock the house full of chocolate and trust your willpower to never exceed 100g/day, or

B: devise a system that ensured there was never more than 100g of chocolate in the house on any given day.

Of course “A” is an option, but I would argue B is preferable as it requires ZERO willpower and completely ELIMINATES the risk of death.

To me this seems more logical than white knuckleing it with willpower. If there is help at hand, take it, why make things harder on yourself. Take some of the responsibility off the individual and place it on the external environment I think seperation of powers in this way could provide valuable protection in this dangerous game we play.

That is not to say we still won’t need discipline. Of course we will in terms of execution, position sizing, adhering to stops etc, but what I am referring to is a means of ELIMINATING the risk of financial ruin by making it impossible to wagering more than your predefined limits or what you can afford to lose.

19

OMG, thank you so much Genbadilebedev, you get it!

I hadn’t thought of using a financial advisor, that’s a great suggestion. I would happily pay someone to provide the service I’m looking for.

Agree about not trading, I actually haven’t been for the last month, and won’t until I can sort out a safe structure. I’ve made some good insights in the last couple of weeks, often the way when you step away and get some space.

Everyone is different. I’m good at running up small amounts, but horrible with a large balance haha. I basically need to start from scratch each day, so would need funds deposited just prior to London session, and any open positions closed NY market on close. I’d then need all funds withdrawn from the trading account, with a fresh deposit going in the next day.

This would curb my upside a bit as I couldn’t gear up as the account would never grow that big, but if it meant survival that is a compromise I would take. I could then review on a quarterly basis the amount getting deposited each day.

Anyway, that’s where I’m at for now, still a way to go but starting to take shape. Thanks so much for your comprehensive and practical response.

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20

Thank you for sharing your money management challenges @DarthFader It was a powerful reminder to me, that we come to Forex with ‘who we are’ and try to find methods skills and ways to succeed. I hope you find your way with the many ideas and suggestions given. Good luck and hope to hear how you’ve succeeded :blush:

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21

From your remarks it looks like you should stay away from the shorter time frames. Anything less than the hourly chart should be avoided. There is too much noise, unless you have a solid methodology. Let me know if you would like some ideas. Good luck with your trading going forward.

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22

Possibly. It would certainly slow things down and allow more time for better decisions. As would lower leverage. I actually do use weekly and daily candles as directional filters, but yes, I do execute on the smaller timeframes.

But I believe there is noise over all timeframes, proportionate to that timeframe. If you are a swing trading using daily candles and holding for weeks, you can still get stopped out on noise from NFP, CPI etc, just as day traders trading 1 minute bars can get tagged on market opens or smaller news events.

I find it hard to reconcile that technical analysis works on the longer timeframes, but not on the shorter (assuming adequate liquidity). Either it works or it doesn’t. To be fair, I don’t think you are saying this. You do qualify by saying “unless you have a solid methodology”. Perhaps you are right that I am just trying to drive a car that is too fast for my current skill level.

Unfortunately the choice of timeframe and leverage is a function of account size. Ideally I’d have millions in the account and be trading longer timeframes with no leverage or stops. Small accounts push one out on the risk curve. Of course this is dangerous, but it does come with the benefit of increased incidence if looking to forward test or gain more frequent exposure to trading psychology decisions.

Personally, I don’t see the benefit of trading longer timeframes on smaller accounts, unless trying to establish a track record. I feel you need to take on more risk with smaller accounts, knowing the risk of ruin is high, in the hope of catching fire and building account size, and which point you can pare back the risk. The problem is often that you never do that haha, you can’t adjust and end up dancing with who brought you.

This has been my problem over the last year. Still swinging hard as the account and position size grew. 4 or 5 times I built meaningful amounts and went for the jugular. I was wrong every time lol. I’m sure there was an element of greed involved. I am ok that I took the risk (perhaps one day I will be right), but I was unable to admit when I was wrong and threw good money after bad at a losing idea. This is what I am trying to prevent. I also need to get better at laying down hands no matter how invested. The sunk cost fallacy is killing me.

23

You have to be introspective ,this is alot of BULL :ox: . Regarding timeframes,you need to change your psychology and money management.

Probably most accounts are blown because new traders place a trade without a stop or removing the stop(possibly adding more to their loss)Without having enough experience or know how.

24

I’ve always been thinking about this.

I’ve heard that 90% of new traders lose 90% of their capital in the first 90 days of trading.

What if there was a way to enforce strict trading?

where you set rules in place to help you stay committed to being disciplined in the market

25

Consider utilizing automated trading systems or managed account services to enforce predefined risk limits and mitigate the impact of lapses in discipline during trading.

26

That’s why many brokers separate wallet from trading accounts. You can set daily or monthly limit by yourself using that separation. However if you can’t stick to your limits then it’s a gambling problem and you should train your discipline instead.