My 5000th post: a video on dealing with margin call and blowing up an account

Am very impressed with your honesty and candour in this post and video. I suspect there are lots of blown accounts over the years, but I’ve not come across very many admissions, certainly ones so detailed and honest, such as yours. Big kudos.

Also, from a psychological perspective, this act of vulnerability is an important step in moving on (especially hard as a male in this seemingly bravado trading culture). And, ultimately, as a sign of character and for personal development, it is (IMO) far more important than some mistakes and a blown account.

My only suggestion would be to take some time completely away from forex to recover. We (generally) experience losses particularly hard, and with a complete wipe out like this, you probably experienced it as a big loss, emotionally. The risk in not taking some time away is that you’ll continue to be implicitly affected by it, without really knowing that it is impairing your judgement.

From a risk perspective, with the style of investing you were following, I would absolutely suggest regular adverse scenario testing. Take the top 5 adverse events from the last 20 years to hit forex and throw them against your portfolio. How does it respond? What would happen? Could you stomach it? Then double the impact of those and do the same.

Although you referred to this event as a black swan, it’s not really. These events are predictable in that we know they’ll happen, we just don’t know when. I’ve spent most of my career focusing on 1 in 100 year events, these are nothing like that. These are are maybe 1 in 5? 1 in 3? With the swiss franc last year and this one recently, evidence that these types of risk are realistic and should be expected. Particularly if you’re holding positions for long periods of time you’re inherently exposed to these risks and need to be aware of them, how they’ll impact you and be deliberate in how you accept or mitigate them.

Good luck with whichever way you go!

I will try my best to move forward…

I have lots more going on in my life, so I want to minimise the amount of time I spend

on here or worrying about my trading…

Any new system would self-regulate (e.g. entry orders with stops and profit targets),

so I would be more a manager than a human entry/exit executor - machines can do that

faster.

Of course, low-level programming may be insufficient, as Manxx said (because I do not have

the money, talent, and expertise of programmers in a hedge fund, for example), but if not

for programming, then certainly it will improve my data gathering/analysis ability.

Whatever I then do with the data and whether I will be able to find the necessary support/skills

to code/programme a trading robot, is a question that will take me a while to answer.

In the meantime, I will have little new to offer on here, so I will just stay away from BabyPips,

or not post as much…

Thanks for your comments.

UPDATE!

Traded for ten trading days with FXCM new demo account (thanks to Jason Rogers here)…

RESULTS:

P/L (GBP): -30.28
P/L (pips): -441

Gains (GBP): 36.42
Gains (pips): 397

Losses (GBP): -66.70
Losses (pips): -838

Winning trades: 8
Losing trades: 26

Market orders: 17
Entry orders: 17

Winning to Losing trades ratio: 30(.6)%

Trades by instrument (highest number at the top):

USD/CNH: 10
NZD/USD: 8
EUR/GBP: 4
Crude Oil: 4
EUR/USD: 3
NZD/JPY: 3
FTSE100: 1
USD/JPY: 1

Average Gain (pips): 49
Average Loss (pips): -32

Position size: 1k for all but three trades (these were 10k).

Highest win (pips): 80
Highest loss (pips): -61

Highest win (GBP): 8.54
Highest loss (GBP): -5.22

Ratio between highest loss and highest win: 61(.12)%

Total starting account (GBP): 5,000;
Highest win as a percentage of initial account: 0.17%
Highest loss as a percentage of initial account: 0.10%

Good to see you’ve got your average loss value lower than your average win, a positive move. Do you know why your ratio of losing trades is so much higher than your wins? Flipping a coin would get you 50/50 but your only getting 30/70.

Hi Carlos,

I have usually a 2:1 or 3:1 reward-to-risk ratio, and risk

nowhere near 1% per trade, much less in fact…

Perhaps it is the choice of trades, and the mix

between breakout-based entry orders and

range-based market orders within the same

instruments.

I have now a fixed maximum risk on each trade, which is an improvement, but I also need:

  1. total risk per day;
  2. total risk per trading week;
  3. total risk per trading month.

The above are very important, so that I know how much
I can put on the table each day as a percentage of the
monthly risk allowance.

That was well said Manxx , so well that i don’t have anything to add. PipMeHappy is well liked and respected on this thread. Keep doing your great work and thankyou.





Great posts Truth. I hope a lot of members take the time to read them, there’s a message there for many of us

Same response from me, too!

Hello Truth,

great post, you are right…

I particularly value your comment here:

“For an individual to think that they are going to create a computer program to trade successfully reminds me of a child thinking that they will build a space ship in their bedroom over the weekend. Pure fantasy.”

Sadly I have come to realise that with time being short I have less time for trading as I thought, and as much as I tried
to stay up late to fit it all in, it is a huge ask of me at this time. Given new demands on my time, also to do with being a dad to a young baby, I really think that my project of learning to code etc. has to be left alone…

Thanks for your thoughts…

Happy Trading

Ps: I am still dabbling… Currently only trading one pair in a strong uptrend, and ignoring everything else. Fear Of Missing Out can be a huge distraction, so I am just focusing on trading one instrument, getting some consistency.