Losses after losses… after losses! Here's how this experienced UK trader bounced back from losing trades!

It’s been a while, but we’re back with another exciting feature!

Despite being relatively new to the community, UK trader @Johnscott31 has already contributed so many meaningful insights to countless discussions in the forums. This time though, it’s all about his trading knowledge and experiences! From recommended indicators to new traders’ biggest challenges – this Q&A is packed with all the good stuff.

With over fifteen years of experience trading multiple markets (from metals to forex), John has earned a level of trading wisdom and understanding that we’re all very grateful to have access to in the community. If you read through this Q&A though, you’ll find that those years weren’t exactly a breeze.

Countless hurdles and frustrations later, here he is today, generously taking us through his journey.

Without further ado, we give you @Johnscott31!


1. Tell us a little bit about yourself. Where are you from? What are your hobbies?

My name is John. I’m from the UK. Hobbies: I like to read about philosophy, politics, history.

I also like learning languages, currently struggling with Mandarin. Also try to keep on top of my fitness, but it’s a bit hit and miss. Lol

2. How were you introduced to forex trading? What were you doing before you discovered forex?

I made money on a property a long time back and was wondering where to invest it. I picked up a copy of Investors Chronical and saw adverts on Financial Spreadbetting.

I bought a small course advertised, opened an account with CMC markets and was hooked!

Before trading I was working in the hospitality industry and was growing to hate it. I was looking for a way out.

Where I worked was frequented by a lot of the guys working in the City of London. I got to know a few of them and realized they weren’t any smarter than me. In hindsight I doubt any of them were actually traders but I knew I wanted to do some work like they did.

3. You’ve mentioned that you’ve been actively trading Forex and CFDs since 2003, can you give us an overview of what you did over the first 3 years?

It’s hard to give you a rundown of all I have done in those years, but I spent many years trading just Silver, I was a big proponent that it was going to ‘da moon’. I was a full-on precious metals bug.

I’m still good at trading gold and silver, and to this date the best money I have ever made is on those big silver parabolic moves that happen from time to time, but that isn’t my main focus now.

In my years of trading I’ve tried it all. Day trading, Forex, Indices (still my favourite), Oil, must have also tried most technical methods as well.

4. Could you please describe a typical day in your trading life?

A typical day? Hmm

I usually wake up early, I live in Thailand much of the year so it’s a lot cooler when I wake up at 4.00am or 5.00am.

I try to fill my mind with something positive in the morning, some spiritual or metaphysics book and or meditation.

I then start reading all the latest goings on in the world, I follow a lot of the political goings on in the UK.

For me the markets don’t really get going until about 2.00pm in the afternoon, but I sometimes do look at what’s going on in China.

The only real set trading routines I have are monitoring the charts at 12.00pm and 8pm.

I trade a lot of 8-hour charts so those times are important. I trade specific price action strategies, and so it’s important to be there after each session completes.

But the rest of the time I’m just learning things, or working on my new trading blog.

5. What has been your biggest challenge in forex trading? How did you overcome it?

The biggest challenge was figuring out who I was as a trader. I flipped and changed my methods so many times.

But the biggest one was actually deciding to no longer take short side trades – this was massive.

I lost more money shorting than anything else, but occasionally would have these massive wins too. The big wins were actually detrimental, without them I would have given up the short side much earlier.

When I finally did my P&L sky-rocketed.

My head just can’t grasp both sides of the market.

6. How has trading changed your life and what have you learned about being a Forex trader?

How has trading changed my life and what have I learned? Great question.

Money aside, it has made me a much better person. It has taught me resilience, it has taught me how to be more stoic.

Overall I’m a much more confident, effective human being than when I first began.

Trading brings you face to face with your shadow, it’s an epic struggle but when you come out the other side you’re a changed person.

7. What would be your advice for someone just starting out in the market?

So my advice is for a beginner to recognize how unconsciously incompetent you actually are. You are complete cannon fodder for the market.

This might sound negative but it’s not. If you recognize this then it makes you aware, you don’t get nearly so overconfident in your own ability.

Read books like the Market Wizards series, Reminisces of a Stock operator at least once a year. Read Popular Delusions and the Madness of Crowds. Learn about performance psychology, books by Brett Steenbarger and Mark Douglas.

And don’t fall into the mistaken belief the more you trade, the more you make!

8. How do you handle the stress of a losing trade?

I used to handle the stress of a losing trade by having a beer. But you can imagine how that ended up!

I think that over time you just get used to having losers. As someone who once had about 50 losing trades in a row the occasional loser is nothing like those dark days.

In my earlier days I really came from a mindset of lack of abundance in my life. What you fear in life you tend to attract, and so adopting a mindset of abundance actually meant when I had a loser it wasn’t such a big deal. Consequently you become a better trader.

9. If you had to recommend just one book and one movie to a trader (either newbie or experienced), what would they be and why?

One book – Enhancing Trading Performance by Brett Steenbarger, man this taught me so much about the process of learning. It really put me on a new trading (and life) trajectory.

One movie – Hmm I’m going to say the Big Short. Because it shows how messed up things can be if you trade purely on fundamentals. The protagonist has the right idea, but the timing is wrong. He was so close to getting his company shut down. Lucky for him (and not for many) the market did actually catch on. Great movie.

Incidentally, the author also wrote Liars Poker – such a hilarious true account of the beginnings of the mortgage backed security market.

10. What non-trading activities are you into when you’re not trading?

I live in Chiang Mai and there are so many great spots outside the city for motorbiking, trekking, walking or just visiting. There is a real sense of peace when I do all that.

28 Likes

Thank you for the book recommendation, bought it yesterday let’s see how it will turn out :slight_smile:

@aak94

It’s a great book, but it’s not going to teach you specific strategies.

What it will do is equip you how to develop the skillset you need to trade

Good luck, all Brett Steenbarger books are excellent. Another title is the Daily Trading Coach.

He also runs a blog.

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Yeah, I am aware that it will not be about trading strategies or TA. I’ve been trading for about 2 years now and biggest losses that I had were due to my emotions and greed, so I believe it will help me with that.

I am a computer engineer based in Berlin working on algorithmic trading on the side and want to learn as much as possible. I trade cryptocurrencies and stocks at the moment so any tips are highly appreciated.

Thanks for sharing the blog, I will keep an eye for his posts, I also got the Daily Trading Coach now :slight_smile:

Good luck to you as well John, have a great one!

@aak94

I actually traded Bitcoin today for the first time via my CFD broker, of course it’s not really Bitcoin - just a play on the price

But I love the way Bitcoin moves, for the strategy I use it could actually be my best market

Problem is I have to stump up alot of margin for that.

Johnscott31

What a great post.!
One of the very best I have read on Babypips. Well done and thank you very much.

P.S

Anyone who lives in Thailand and is into Mark Douglas is cool with me.

Great movie, and thanks for the book recommendation.

@Johnny1974

Thanks for the kind words.

I spent many sad years as an unprofitable trader, in fact I excelled at it.

Without trying to sound overly altruistic I really want to help beginners avoid that same suffering.

It wasn’t always the case, for a long time I was of the opinion - why help when I myself struggled for so long ?

But it was a very selfish attitude, and as is true in life, the more you help someone else the more your own situation improves.

I let you into a little secret, I was that dumb guy who fell hook line and sinker for the false advertising about trading.

I said in my post I started trading after selling a property, what I didn’t mention is that I also quit my job and moved to Thailand at the same time.

Talk about a baptism of fire.

Totally dumb move, or was it I don’t know. I pretty much landed on my feet when I got here, started working for a financial news media company based here.

However the trading took another seven years before I could make consistent money - also while I am profitable I am no way in the big league - I’m living in Thailand not central Manhattan!

I have started my own blog, you’ll find the link on my profile. But out of fear upsetting the moderators I am not shamelessly plugging it.

If your a short term trader you may find some of the stuff I put up useful. But I’m heavily against day trading - especially for the beginner.

The blog is still very much a work in progress but in time I’m going to explain all my strategies - totally free. Newbies have got enough to worry about with unscrupulous system vendors taking advantage.

Thanks again for the positive comments.

1 Like

Thank you for sharing your story of bouncing back after losses after losses…after losses
I too have a story, a ‘prophetic warning’ - not totally dissimilar to your your own, involving far away lands.
I’ve had a bit of deja vu

My story involves Cambodia, my spiritual home. I am also from UK.
I did not go from losses and losses, however.
Just one almighty crashing loss !

I had a friend, a business partner, who was a very good trader technically. Technically better than I was.
We used to work together, though all the funds were mine. He was not too well off at the time, but I was relatively well off.
We worked together as a great team, doing very well scalping. I think whether you are a scalper or a longer term trader doesn’t really matter, it’s just what suits.
However, my forte was centred on risk management. Having been a successful professional bettor (not gambler) of horseracing in the 1970s when it was possible to have an edge. And I understood probability
However, I enjoyed the life of a playboy and took regular breaks to Cambodia; when our trading stopped.
My friend found these breaks very frustrating and begged me to leave him to trade solo.
In fact, he said that I was over cautious and that I was only holding him back.
Anyway,in my stupidity I left him in charge of my account. I’m not blaming him for my stupidity.

I did not accept, at the time, that he did not like losing trades and that he was also greedy.
Well, he had a ‘Nick Leeson moment’ with my money and blew a £50k account.
Not only that, he borrowed a further £10k from my then UK girlfriend and blew that, trying to re-coup losses !

Please do not think that this is a ‘poor me’ story. It is a
sulutary warning on risk management and understanding probability
If only he had read, and I kept telling him to read **Trading in the Zone **Mark Douglas.

Something else that I would like to share, that is not forex, though directly related to this story.

I was, I thought, a ‘functioning’ alcoholic at the time - I have been in remission now for two years and have learnt a life lesson. Never again.
I took my eye off the ball.
Believe me, alcohol is the worst drug on this planet and I speak from vast experience on this subject.
If anyone would like my advice on reading matter for this one - ‘When Bobby met Christie’-Bobby Beasley.

As you can probably ascertain, I am very patriotic to the turf, my only hobby.

Well, Bobby was my childhood hero and later personal friend.
His story is very inspirational in more ways than one and is often referred to in racing circles as 'the raising of Lazarus’
Bobby was great NH jockey of the 60s-70s era.
And I mean great - the Ruby Walsh of that time, he destroyed his career with alcohol, but recovered and made a come back to win the Chetenham Gold Cup.

Talking of horseracing, the greatest jockey that the world has ever seen, Lester Piggott, was once asked by an interviewer

“What makes a great jockey ? Is it - tactics, judgement of pace, strength in a finish ?”

He replied "No - it’s nothing technical. It’s all about ‘getting into the horses head’ "
Riding in the Zone ?

Johnscott31 ( my handle Johnny1974 does not betray my date of birth, but the year Bobby Beasley won the Cheltenham Gold Cup on Captain Christie - that raising of Lazarus moment ! ) you have inspired me with your story.

I look forward to your blog.

Thanks again

Johnny1974

Man that is a great story and one I totally did NOT expect.

It’s funny because when I first bought the course that set me off on the path of trading, the writer used the analogy of a sports bettor or particularly a pro horse bettor.

That analogy always stuck, at the end of the day we are just playing odds. There isn’t much need for thinking about fundamentals and endless scenarios that are derived from our need to try to be cleverer than we really are - just play the odds

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Absolutely:wink:

Quite right. So a loss isn’t a disaster, as long as that loss took place within a considered approach, as long as the reasoning behind the trade was sound. People tend, in my experience, to get overly hung up on losses or wins, when actually that side of it is not as important as the underlying approach. Every trader will have losing trades. The ones who understand why and don’t necessarily let it change their approach will go further.

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I must visit one day.

@Johnny1974

What intrigues me is why you gave up the turf or did you?

I have heard it said you make money in your own business and lose it in someone else’s.

Not sure how your doing with trading, but it isn’t for everyone.

For me it is, but for many I suspect their talents would be better served elsewhere.

Yes and losing runs, also winning runs.
But the future does not mirror the past. There is no such thing as the law of averages this is a gamblers fallacy.

The law of probability is a different matter entirely.

The next trade is totally independent of any previous trades, it does not know whether the previous trade has won or lost.

The casino has an edge- in roulette it’s ‘0’ or ‘00’ in USA. The casino doesn’t care if its come up black or red 15 times the wheel does’t know, they have their small percentage in ‘0’ their edge.
Having said that, the casino makes its big profit from ‘brave losers and timid winners’, reckless gamblers full of crazy emotions and no money management.
If you sat at the wheel all night you would probably come away losing a small percentage if you just bet level stakes. Your losses would be their small edge.

As traders we must be unemotional. The only time I got emotional in horseracing, and my longest losing run was 43, was when I was cheering Captain Christie on to win the Gold Cup and I had had a rather large bet on The Dickler the horse he beat !

Risk management, risk management, risk management with the emotions of a machine and a cunning, edge an edge so cunning you could put a tail on it and call it a fox :wink:

I have just read your question Johnscott31 - Why did I give up the turf ?

Well, it is very difficult to have an edgethese days. You see in the 60s and 70s there was not so much knowledge available, no internet, even bookies did not have TV monitors in their shops. Nowadays bookmakers and punters are much better informed and the market is very accurate. So it has become a situation where it is very difficult to find a horse that is over priced in the market. And winning at horseracing is, as you say ‘playing the odds’. In fact some of my friends found it rather bizarre that I preferred a good value loser to a bad value winner ! And that sometimes I would suggest that a horse in the race was much more likely to win than the one I was backing. You see every horse in the race has a chance of winning some have better chances than others of course. But you have to look at the long term picture. The odds reflect the percentage chance of each horse and to be successful in the long term you must must find ‘value’ ie horses that better odds than their true chance.
If we tossed a coin all day and some fool gave you 6/4 heads you would back heads ( or you should do’ of course). You wouldn’t mind and get emotional if it comes up tails 50% of the time. Its the same thing - the mathematics of betting.
As I say, the market is so accurate these days and it’s become difficult.
Also bookmakers are not like bookmakers of old who would take a bet and back their judgement against yours, nowadays you can’t get bets on if you show any pretension of winning long term.
Why Forex ? Liquidity in the market and no bookmakers to knock you back. I suppose spreadbetting companies are bookmakers by another name or to some extent market makers, but 3 or 4 trillion $s is liquidity.
I’ve rambled on a bit, but that is why I don’t back horses.
Not even in the National ? I hear someone ask. NO but I hope Tiger Roll win again :wink:

@Johnny1974

Very interesting. Indeed you come from.a professional ‘gambler’ background and I’ve a lot of respect for that.

I think the odds in trading are better than gambling if you find an edge but at the end of the day sports gambler, trader we are all speculators.

I don’t make any apologies for what I do, I love the game - even though we are not actually providing any useful service to society.

Thats the reason why I want to help newbies, because if it wasn’t for that how am I benefitting mankind?

Anyway this conversation has got a bit deep and it’s past my bedtime here in Thailand

I just had the most stella trading month, my best ever, shame I’m doing it on the back of other people’s problems.

Chat again soon I hope.

The Chang beer has gone to my head.

We must not use the word ‘gambling’

And watch that beer

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thank you for sharing your path, your words are valuable! I am Brazilian and graduate in computer science and I am excited about the forex market!