I keep blowing up accounts

Trading Discussion Risk Management Practices
#1

Does anyone have any ideas on outsourcing money management? By that I mean some kind of external circuit braker to prevent one from losing more than a predefined amount.

After years of trading I’ve come to the conclusion that I cannot trust myself to stick to my money management rules 100% of the time. I am not ashamed of that. I am a very disciplined person, but I believe most people will go on tilt at some point, even if for only a short time, and the damage can be huge.

I actually think it’s irresponsible for a retail trader to have control over their own money management. You need a risk “department” to cut you off when you overstep predefined limits.

I need some external way to stop me from draining my bank account when I get on tilt. Some way to physically stop me when I am unable to stop myself.

Some online casinos offer a function where you can set a daily or weekly deposit limit. If you want to change that limit it may take a day or a week to get authorized, by which time you may have calmed down. It’s not perfect, but it’s something.

I can’t find a forex broker that offers such a service, understandably, as it’s not in their interests to stop you depositing funds. Perhaps you know of one?

Does anyone have any ideas on how I might create a daily or weekly deposit limit? I have made enquiries with my bank, but they are unable to place a limit on deposits to a particular account (my broker).

Another alternative might be to give power of attorney to a family member and set up some kind of daily deposit function, but mixing family and money like this is not generally a good idea.

Any Ideas would be appreciated. If I can’t sort this out I think I will have to stop trading.

Thanks.

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#2

I understand the issues with self-discipline. But is it just a trading fault, or is it a life fault?

Surely your whole life is not undisciplined and random behaviours that cause yourself harm? Is there no single area where you exercise great self-discipline and are very successful? If not now, then at some point in the past? IT skills? Sports? Academic study? Exams? A work project? Property? Exercise? Diet? Musical talent?

Surely you have mastered self-discipline in some area. Look at what you have done and achieved. Draw the general principles out from what you did in detail. Think through those principles as they could be applied to trading as strategy rules. Set up a demo account and practice until they are instinctive.

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#3

You shouldn’t be in this position because you shouldn’t trade with real money until you have at least stopped loosing money and trading breakeven in demo account.

You have to earn to trade with real money. This is the way to sort this out.

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#4

Thanks for the response tommor.

The great thing about trading is that is has forced me to improve my discipline over the years, to the point where I know think of myself as a disciplined person. Yet even disciplined people waver once in a while. A musician my skip practice, someone on a diet eat that little more, often with what they think is reasonable justification at the time. However in both these examples the consequenses are not huge.

But with trading, particularly on shorter timeframes with high leverage, short lapses in discipline, even a couple of hours, can be devastating. It’s just too dangerous if trading with life savings. To me it just makes sense to seek some kind of external emergency circuit breaker as a backup.

I understand your sentiment of applying discipline from other areas of my life into trading, believe my I have tried that, and have done it 99.5% of the time, it’s the 0.05% that is the problem lol.

I guess I am really just putting my hand up and saying look, I’ve tried, I have even improved, but it’s still not enough. I don’t feel safe and I need some outside help.

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#5

A great question

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#6

Are you really? I bet if you just stick to your money management rules just 70% of the time, you’ll do much better.

We all have shortcomings. Discipline doesn’t have to mean you’re perfect. It just means you do your best to stick to a routine.

Honestly, I suggest you read the Disciplined Trader by Mark Douglas. It’s a very common book. It’s not a magic pill to fix your problems, but it will open help open your eyes to the nature of your problem.

What makes you think you won’t flip the switch back on again? And again, and again?

I agree.

I traded live and it didn’t go well at all. I kept waiting for a big win to offset all my losses. But that big win never came, so I went back to demo. Since going back to demo, my demo account margin has dropped to almost nothing.

If it were real money, I’d have lost it all. But fortunately, I stopped trading live, and my remaining real money is sitting in the bank waiting for me to go back to live trading.

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#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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