LOSS is a massive part of trading

You are both right that it is our own fault if we keep repeating the same mistakes - but “mistakes” and “losses” are not the same thing at all. And that, I think you will come to find, is going to be one of the conclusions of this thread! :wink:

Mistakes may certainly result in losses (and, for some reason, usually do! :joy:) but they can just as easily (sometimes) even result in a profit!

The point here is that a loss is NOT automatically always a mistake. Losses are an entirely acceptable, inevitable and integrated part of the trading process. You cannot gain without a trade, and the outcomes of all trades will (mostly) be either minus or plus. The key issue then is not trying to eliminate losses but learning to control the frequency and size of the minus trades compared with the plus trades. Three steps forward, one step back, on we go.

The mistakes are not the losses, it is in the negligence or ignorance that leads to taking trades that result in excessive losses. Over exposure, greed, impetuousness, revenge, correlation, and so on. These are the ghouls in the brain.

I remember reading something about this in Trading in the Zone, I shall try and find it again. But the core issue is that the outcome of each individual trade is unpredictable and of no consequence psychologically to the experienced trader - it is the pattern of result over a period of time that counts. As Mark Douglas put it, the casino is not concerned with each individual win by the client, they gain their profit consistently, month after month from the overall edge in the rules of play.

Whilst I hate to infer that trading is similar to gambling, our trading rules are also our edge and the outcome of each individual trade is not a mistake if our rules are applied. These rules cover risk management as well as direction/entry/exit.

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200 is plenty in the operating room

The large room gives the impression that it’s part of an abandoned hospital. In the middle there is an operating table, obviously very old, it has a steel frame with brown leather restraining straps and oversized wheels. There is nothing else in the room. There are no windows, the only light is provided by the glow of a projection of a giant 5min EUR/USD chart on the ceiling above. As the current candle moves there is a flicker. There is no sign of a projector or any other technology in the room.

There are no staff in the room, no voices in the distance, banging doors or any of the noises you would expect to hear in a hospital, in fact there is no sound at all. If you you put you hands over your ears and press as hard as you can and then remove the “worrring”, thats whats lack of sound feels like.

You didn’t even see that there was a figure on the operating table did you?

Slight pause

You: It’s me isn’t it?

How can it be you? You’re reading this on baby pips.

You: I don’t know how. i just know.

The lone figure seems to be oblivious to the restraints and the 5 min chart on the ceiling above him. He’s staring at it but it’s doubtful that he sees the 5th candle forming a range above the 00 big figure, or the 97% margin used warning.

You: That’s my account isn’t it, it’s my money?

Equity £202.16

You: I’m feeling really uncomfortable, i’m actually really starting to feel ill. Lets stop this.

That’s not how this works i’m afraid. You see those 2 doors to the left? Sometime between now and the end of today that operating table will wheel itself through one of them. Look at the floor, see how most of the marks lead to the door on the left? It’s a direct access point to the Account graveyard. That’s game over you wont see a penny.

You: But it’s my money! What about the door on the right… wait a minute who are you, are you even human? Stop this, i feel sick!

The door on the right is convalescence.

You: Why isn’t someone helping me, where are the doctors? If my account is on the ceiling then someone obviously has access. Shut the trades down, that’s £200, the accounts still alive, CUT THE LOSS!!!

There are no doctors, The Algorithm is projecting your account. The Algo decides which door you go through. It’s decision is always 100% final and 100% correct.

You: What kind of a sadistic being are you? Look! The range is going to break, my money!

The range doesn’t matter, the EUR/USD doesn’t matter, the trading and study don’t matter, more importantly what you want means nothing, not in this room. This room is way beyond all of that.

Pause

Before you entered this room there was a pause, in that lobby you were already beyond your limits but you had just enough consciousness and strength to execute one decision, one single decision, shut it down or let it run. Your decision was let it run. After that you were so far beyond your limit and your capacity that your brain shut down to protect you from the pain that you are not feeling right now.

You: This isn’t real i’m just reading a thread on babypips but i feel like i’m going to vomit. This is mad.

So now you are going to act tough or are you going to go the i’m too intelligent or too disciplined for any of this nonsense route?

In every industry there are rooms just like this one and there are men and women strapped to operating tables in all of them. No? OK, i’ll prove it.

How many retail store chains can you name that were around for decades but no longer exist? How many airlines which flew thousands of passengers around the world and employed thousands no longer exist? Politicians…Ok, ever heard of a guy who became president of the most powerful country in the world and then got himself impeached over a “cigar”? Athletes, doping, stripped of their titles, . What about manufactures that employed whole towns that went bust ???

At one point there was a pause, men and women like you were in the lobby, over the limit of what they could personally bear but with just enough left in them to make just one more decision. They all let it run, hoped they would get back to where they were…and tehn stepped into an operating room just like this one. From then on the Algo took over and the Algo is never wrong.

Authors comments: To get to the operating room an individual will have gone through many rooms, all with various options and challenges.I hope we will discuss those in this thread (The lobby is next)

I introduced personal limits in this room but we will discuss that more in other rooms. For now i will just say that in my opinion we all have different limits when it comes to the ability to handle pressure and stress. Once those limits are exceeded by enough you are no longer in control. I believe those limits can be increased through deliberate practice, increased knowledge and understanding but like most things we all have a genetic limit as to how far we can improve in that regard.

The operating room is beyond all of that anyway. Whatever your individual limits are once they are surpassed by enough, that’s it. This is not a room that you practice for or an environment that you try to conquer. If you think that is what profitable traders are doing day after day you are wrong.

Most of us have been there at least once on our journey but suppress the memory. I try to keep the memory fresh enough so that if i should find myself in the Lobby at any time in the future and there is a pause, it may influence my actions.

For those of you who made it to the end and hoped for a happy ending, the operating table went through the left door…this is not Hollywood!

I could be wrong but I detect sarcasm. I wasn’t trying to be a smart Alec. I’ve had the rug pulled out from under me on some fundamental long held beliefs in the past so now I seek to get clarity and an understanding when I’m confused by something someone says. What I know for sure is that my perspective is not always the right one and that I do not possess more than the average intellect. Therefore, I’m constantly seeking to gain a better understanding of things.

Thanks for the explanation. I see now why you might exclude options. :+1:

Not at all, @QuadPip! I meant it with all sincerity. Really!

I am always very pleased whenever anyone bothers to read anything I post - and you not only read it, but you also thought about it and asked a very relevant question - and I really appreciate that.

I often feel that people skip-read forum stuff especially when posts are too long (something I am always guilty of!) and that it is all just a waste of time - and so it is reassuring to find people who read thoroughly and critically of what is posted! Thank you! :slightly_smiling_face::+1:

Hey @WinPsych

I’m afraid you have lost me with the “operating room” it is a bit too subtle for my poor brain cell :thinking:

But I do recall one situation in my early days when I realised I was helpless to do anything with my position and I remember the feelings associated with that!

I was a day trader and rarely left positions open even overnight let alone over a weekend. But I had a position open in SP500 on a Friday afternoon and was watching it into the close ready to close it out. I was also reading something on another site and missed the market close.

That weekend was probably the longest of my life. wondering where it would open on Monday. Even having a stop was no consolation as the market could easily gap past it. As it happened all was ok on Monday but that was a big and permanent lesson in staying in control of exposure risks!

But that operating room? No, can’t say as I recognise having been there at all!! :laughing:

What about others here?

Glad to hear it :rofl:

I was going to write something humorous but thought something uncomfortable, weird even, may be more apt and perhaps linger in the mind.

Let me ask you a few questions instead.

  1. Up to now what has been your absolute worst trading experience?.

  2. How often do you think you could handle going through a similar experience? Daily , weekly,monthly, once every 3 years, at what point would you say that’s too much i just cant do it anymore, it doesn’t make sense?

  3. Remember the Swissy thing a while back? If you woke up that morning and owed your broker £70k would you trade your other account that day, that week or that month? Would trading be on the agenda at all?

  4. Do you know where your breaking point is mentally, in trading and perhaps in life, if so how? Do you even believe there is a breaking point?

  5. If you lost your job, your house, savings and your wife decided she fancied a change and thought she would “spend some time at her sisters for a bit” what would be your biggest concern? What would be your plan of action? Do you already have a plan for this? If on top of that your PSA reading on a blood test came back a bit high how would you adjust for that…? All hypothetical of course.

  6. Can you list 6 realistic reasons, 3 of which would be your own fault and 3 that were not your fault at all that could blow the Manxx premiere trading account?

  7. What makes 1 person in a critical condition respond to treatment whilst his brother with the exact same illness medical history and thankfully parents doesn’t?

Lets say all of the above is contained in one room. Would you want to go in that room even once in your lifetime ? How do you think you would get on?

If by some miracle you survived that room and could actually remember what your name was and 1 week later you were back there again, would you think it was part of life and that everyone else seems to be handling it pretty well so you should just press on, or would you think there was something drastically wrong? What would your next move be?

There is a point to this all this hahaha

Look forward to your reply :wink:

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That is quite a set of scenarios, @WinPsych! :joy:

But if you are looking to draw parallels between trading pressures and “the human experience”, I don’t think I am the right person for you.

Since most of my career has been spent in both retail and commercial banking (including my forex training) and with a specialist leaning towards risk appraisal, I have always naturally understood the meaning of not trading with more than you can afford. For example, I tried really hard to think of “my worst trading experience” and after several minutes realised that if I have to think about it that hard then there is nothing serious enough worth mentioning! Of course I have had set backs etc but nothing noteworthy.

Even the Black Swan events, were not particularly scary since I was a day trader then and even if I had left a position open it would have been in the right direction according to my charts at that time - so I wasn’t left with any shell shock feelings about those.

It has never been my intention to be a full-time trader with my lifestyle entirely dependent on the “next trade”. Trading has always been just a capital builder. It is a profit generator and those profits are then moved elsewhere.

The worst thing that could happen in trading that would really irritate me would be, as happened to one other friend here on BP; that hackers got into my account and stole my trading equity. But I think “irritated” does not qualify for the “operating room”

Regarding “experiences of the human condition” I don’t see how that relates to losses on a trading account. But I would say that anyone who has lived long enough will have gone through at least some shock treatments. Some much more than others! But nowadays much of what we find traumatic pales close to insignificance if we compare it with the experiences of millions through the two world wars and, indeed, in wars and violence and human exploitation anywhere.

So, in comparison with the abject depths of despair that can arise in and from the"human condition" I still don’t see the same trauma in the traders operating room - unless, of course, it is the loss of one’s total assets that has led to such a condition - but that should not occur whilst we observe that most golden of golden rules, “don’t trade with what you cannot afford to lose”.

Am I still way off track here with where you are going with this?

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I’m almost 100% sure if we sat down and had a conversation it wouldn’t take us very long to get on the same page.

I do understand your response and will just have to accept it and leave it at that.

Time for some well earned rest :sleeping:

Good morning,

I’ve had an idea that might get us on the same page.

Imagine you have been sent a video. The video is of the day an intermediate trader blew up his/her account. On the video you can see the trader, the room he/she is in and the traders screen.

Your only job is to go through that video and see if you can find a segment on it where before the account was margin called the following happened:

1)The trader wasn’t making any decisions at all
2)The trader appeared to you to be behaving in an apathetic manner.

Can you you imagine such a scenario and if you can what would you name that segment of video?

Knowing you to be a person who chooses his words carefully, I have to assume there is a purpose in your use of the word “intermediate” here.

So we have a trader who has been trading for some some, is familiar with the market, is comfortable with his/her method, has previously enjoyed some success, is confident about his/her trading future.

It is the moment that I would call Involuntary Cataclysmic Illumination.

The moment when the mind, independent of any rational thought process, instantaneously recognises the inevitability, inescapability, irreversibility, absolute finality, and total destructivness of the catastrophy that is about to happen.

Whilst the mind is crystal clear with the enormity and finality, the body is struck numb and immobile.

Any nearer?

Correct

So, you have named this segment of the video.

For now we are only concerned with this segment of the video.

Can you describe in enough detail for people who do not have access to the video to get an idea of what you are seeing:

What the room looks like?

What the person looks like and what they are doing?

What is on their screen?

OK, from my imagination, that is!

For me, as a third party observer on the sidelines, the same as it looked yesterday. But for the trader, I would guess that it has dimmed around the edges and transformed into a somewhat translucent, ethereal, unreal, irrelevant and very distant backcloth…

Probably leaning back in a typical body-language detachment from the issue, mouth open, maybe even covered with one or both hands (although this maybe comes later, after the event and not whilst recognising the inevitability of the event still to imminently occur), eyes staring and sharp and peripheral vision retracted from the normal 170 degrees to around 10 degrees and focused entirely on the moving tip of a forming candle.

I don’t know, but probably a chart with various technical lines, which is currently showing price doing something strongly opposite to what those technicals had predicted! :smiley:

You haven’t described anything physical, anything real. Is it a bedroom, a home office, a living-room, kitchen? Is it messy, tidy, shabby, opulent. Does the room look modern, classic, dated? What are the predominant colours? Wouldn’t these things give us a clue to the identity of the person?

Male, female, age? Wearing pyjamas, a suit, T shirt and shorts? We want to see who you are seeing.

How many charts are open, how many pairs are being monitored, what time frames?
How many positions are open, how much margin is left, what is the current total loss, how much equity is left?
Is there a news feed, squawk box, music streaming site open?

What are you seeing?

No, i don’t think so.

What is the point in creating a specific make-believe character, location and scenario?

We know that a blow out can hit anyone at any stage in life and with any kind of lifestyle/background - if their trading rules and risk/money management criteria are absent or inadequate?

… Or is that what you are driving towards her?

I can’t assume to know what you are thinking or what you are seeing unless i ask. I previously wrote about a room that you couldn’t relate to. I then asked some questions that were not relevant to you.

By you building the specific scenario yourself i believe it would be one that you found relatable, interesting and engaging which would only benefit our discussion and dialogue…

Up to this point you seem more interested in getting ahead of questions than answering them. I don’t say this with any malice or acidity, so please don’t take it as such, it’s just an observation.

I don’t want any of my questions to be leading so have thought this through and decided to ask them one at a time. This also allows you to consider, confirm or re confirm your own thoughts before replying.

Of course this may not be something that you want to do and that’s fine.

I don’t think so. I have answered your questions - just maybe not in the manner you were hoping for! Since these questions are clearly intended to lead in a pre-conceived direction, then it seems perfectly natural to ask along the way if I am on board. And you have already confirmed that I am not entirely on the same page - hence the questions!

Afterall, you did comment earlier to another poster that:

So either you do have an agenda here or it is being created as we go along.

Either way, there is clearly no great value being created here by my responses with respect to the topic of this thread so maybe I will leave it to someone else more creative than I!!

Unfortunately, I and my family are all blighted with the same genetic ailment - we are all engineers by nature, you know: logic, cause and effect, objectivity, sense and nonsense, gain or loss, plus or minus, reason and conclusion, concretivity and tangibility, fact over fiction - and a total lack of abstract imagination!

This is not my world, I’m afraid! :smiley: But I hope it is someone else’s because I am interested in seeing how the plot ends…

Ouch :rofl::rofl::rofl:

I have an old Engineering degree in a box up in the loft somewhere. We may have more in common than you think.

No problem at all.