The confessions of a trader.. My Rise and Fall

Trading Discussion
29

Thank you all for your words of support.
To admit my losses, talk about them and write a post like this would’ve been impossible a year or two ago.
Well I did write posts before but they were about profits, my winnings and set ups I used. I ignored the times when I lost and lost big.
Most forums I visited, most posts I read are about countless trading systems and set ups, success stories and profits amongst other forex related stuff.
I am not saying that there are no consistently successful traders, of course there are but not as many as advertised.
I know that people don’t like stories like this, they would rather ignore them and concentrate on the success side of trading. And that’s ok because we need to be positive and inspired, however if you want to trade long term and be consistently successful then you need to learn how to avoid the pitfalls.

Before I write part 4, I’d like to chat about what I wrote so far. In my story so far, I’ve identified, in general terms, why I failed. Now I’d like to go into bit more details. For example under the general terms there are specific mistakes that occurred and most of them, if not all, are psychologically related.
So where do you want to start? Overtrading, greed, fear, confusion, false hopes, no risk management, no discipline, inflexibility, no trading plan etc. etc.
I’m sure that at some point of your trading, you can identify with one of the above.
So for example, lets take ‘overtrading’ for today. Anyone did it or still doing it?

30

yes, raguza,

SOME of traders start trading think that.

I know you must be didn’t like my post. But its my opinion. I would tell you more about your past situation, but its not my business.

even experienced have to think about losses. I guess they do. That’s why the stop loss for.
That is why we are protecting our capital

If you stop thinking about possible failure then you at rick again.

I really wish you from the bottom of my heart luck in trading!

31

Well I guess all of the above are related, lol. You start with one, whichever you want and the others come by themselves. My main problem was overleveraging, but when it comes to overtrading, I was there!.

Overtrading and I were close friends, or should I say enemies?

The most stupid thing to do, or better said, I did, was thinking that by the time I opened my charts, that same and exact time a trade should have been done.

It was like “oscillator is oversold and the ten indicators I have plotted say long, then I go long”. But I fitted it all in my head and it was like I should always had to be in a trade. To me that was trading. To be always in a trade. Then you lose, you think you entered too early, everything is still on your side so you pull the trigger again, over and over.

But I think it’s a matter of beginner’s behaviour. You’re way too excited, you think you have all under control, but the truth is that your poor experience, judgement, lack of knowledge, and mismanagement of yourself and the tools that you have, get your feet back on the ground, if you’re still in the game.

Great thread by the way, I’m enjoying it very much. Hope to read your story and other’s experiences.

32

Hi Raguza,

Thanks for your story.
this kinda information is of great importance to newbies such as me…

I’d really like it if you would expand on psychology versus your trading system(s).
[I]
Was there a real system? Did you make it yourself? How mechanical was the system? did you obey the rules? was it too flexible? did you log your emotions during the trades? did you change the system after a losing a few times in a row? etc. [/I]

This stuff I’m preoccupied with myself at the moment, i’m trying to figure out where/how to start building a system and testing it…

Thanks, can’t wait till part 4

36

Hi everyone, I just wanted to suggest a very simple cure for overtrading that saved my trading ‘career’ (and I use that term loosely, for now at least) about a year ago. I simply have a daily pip goal. I only need to make 25 pips a day. Once I reach my goal, the live account go off, no exceptions. My system also dictates that I only trade during the NY open, this eliminates trading all day and all night. I also only trade one pair, which further eliminates the need to trade different opens (EO or LO for example). I used to keep my demo open to satisfy my trading bug once I reached my goal in the live account, but since my trading style has drastically changed from when I first started, the volume and ADR are not what I need it to be during non-open hours to demo trade profitably and consistently. Now I spend daily non-open trading hours reviewing fundamental analysis, news and figuring out the overall sentiment of investor’s psychology as related to my pair. Let’s face it, trading is really a chess match between you and other investors, figuring out where they think price will go and trading accordingly. Finally, in regards to overtrading, I’ve found that sticking to one TF, preferably 1hr or 4 hr, stopped me from over trading as well. Why? Think about it. If you’re consistently jumping between the 1m tf and the 5mtf, you constantly have candles closing every one and five minutes. This makes you trade more, get whipsawed and not see the over all sentiment because you’re too close too the Vangoh. Not that I’m an expert, but these adjusts allowed me to stop killing my account and I’m still trading successfully today. I hope this has helped in some way. Thanks everyone, Pipbull

37

Thanks for the post pipbull, great tips.

I was thinking about this zero sum game aspect of forex… Being a newbie, my only live experience in forex is: buying cash outside some airport :wink:

Can’t help but thinking that the same, blind buying of cash, is happening at a large scale too…
I mean, big firms (or their banks for that matter) who just need a pile a cash to buy resources or something probably can’t afford to sit around waiting all day for ‘that perfect breakout’… right?

I should probably just find a book about this stuff…
any recommendations?

Regards!

39

I can connect with what raguza is saying, because I’ve been involved in a business venture where a five figure investment was made by a partner and it all went south. Things like that can teach you a lot, if you have the courage to step back and look at what you did wrong, taking it as a lesson - and it is a good thing you are doing this.

Having that experience really helped me because it gave me an understanding of what it means to fail, what it means to lose other people’s hard earned money, and what it means to live off the support of others as they eagerly await for you to succeed. All of these things are what entrepreneurs go through, whether its starting a pizzeria, going into real estate, making an independent film, etc. All these things require a lot of capital, time, and effort - there’s no way around it. Trading is just the same, and the same exact concepts apply.

Entrepreneurship is something that takes a lot of vision and courage, and it also takes maturity. Some people are born entrepreneurs, the rest of us have to readjust our mentality. Change takes time, it takes effort, and most important it requires us to get out of our comfort zones. If we realize and understand that we HAVE TO change in order to succeed, then our main objective is clear before us.

Personally, I think its as important to spend time on developing the right entrepreneurial mentality as it is to spend time looking at charts and reading TA books. I’m not just talking about reading trading psychology books. There is as much to learn about trading through other entrepreneurs, for example take these quotes by Aristotle Onassis, one of the most successful businessmen in our century and try to apply them to trading:

"“We must free ourselves of the hope that the sea will ever rest. We must learn to sail in high winds.”

“The secret of business is to know something nobody else knows”

“I have no friends and no enemies – only competitors.”

“It is during our darkest moments that we must focus to see the light.”

I think that all of these things are very relevant to what we are all trying to do.

40

This story reminds me of Bernie Madoff…

42

HAHAHAHAHA!

I don’t really see the connection my friend xD

43

Neither do I, its one thing when you set out to defraud someome from the get-go, its another when you honestly want to succeed and you bite the learning curve hard. Its tough because in this business you need a lot of $$$ to succeed (or at least you need someone to pay/help pay your living expenses).

45

I agree TonyIommich. I personally know of two very successful forex traders (one is a personal friend that introduced me to forex and the other is an acquaintance) who’s accounts are both in the mid to high six figures (I’ve actually seen the live accounts) and both started with an amount of $25k or more and both had full time jobs when they started and were not taking from the accounts to pay bills. I’m not sure if this is the magic number for success and longevity, but if your MM is proper, then it certainly gives you a lot of room to make bad trades and learn. I’ve only [B][I]read[/I][/B] about people that supposedly started with $1000 and went to $1M and usually they were selling something in the process. By the way, love BS and RIP RJD:cool:

46

Interesting situation. I think it takes a special talent to trade well and hold down a full time job, you must be a very good time manager or have a relatively undemanding gig.

Btw, to add to my earlier post, I found another excellent quote from a business magnate that applies so well to trading. This one is by J Paul Getty (Getty oil, you’ve probably seen the gas stations), in his book “How to Be Rich”:

“A businessman has to be willing to take risks. They may be planned and calculated, but they’re risks all the same. The shrewd businessman weighs all the known and, to his knowledge, possible factors in a given situation. He tries to allow for all the variables, but he is well aware that he cannot think of nor insure against every contingency. He accepts the idea that there is always a possibility that some completely unforeseen element or development will turn up to alter or even wreck his plans. He is, however, secure in the knowledge that he has done everything to tip the odds for success in his own favor.”

Now, if that’s not trading, I don’t know what is…

47

The special talent that it took was discipline and drive. Both of these individuals worked full time demanding jobs during the day, then came home and napped a bit, then woke up to trade the london open starting at midnight PST and they would usually trade to around 3am or 4am. Like anything in life, it all just comes down to how bad you want it.

I completely agree with Getty. Especially after a very recent business venture where something happened that I could have never seen in all of my over-analyzing before opening that office. Oh well, more money left over for trading because that expense is no more.:slight_smile:

48

nevermind the above…, I found a thread about this stuffhere on babypips.

@tony
thanks for the quotes, maybe it would be nice to start a thread dedicated for quotes!

49

You mean like this one…

http://forums.babypips.com/melting-pot/26745-quotes-worth-quoting.html

:D;)

50

whoops, HAHA!

I guess I’m underestimating the wealth of this forum…
I’ll shut up for a week now and commit myself to browsing.

Cheers

51

I wish it was him, he could share his trading tricks. :slight_smile:
do they need him any more :confused: :rolleyes:

52

What tricks? Bernard Madoff is not famous for trading!

He is famous for stealing people’s money!

53

I thought he was a great trader. that how he did his capital long time ago.
sorry David, I am not a judge non investigator.

Any knowledge can be use for any purpose good or bad. And everyone can decide for their self how they going to use anything they own.
Even if he was a trader and could share his knowledge, its for yourself to decide how you going to use it.
Such knowledge can be use for a great things, hmm … some may donate to relive the tragedy in the Gulf of Mexico … such poor birds and turtles I saw
in the news :frowning:

Does it make any sense?

Btw, what is the name of the broker company that he had own? Did he?
I am far away from the center of events … :rolleyes:

54

I don’t think he owned any Broker!

Basically what he did was rob over 50 Billion Dollars, yes, over 50 Billion to investors in the promise of a 10% yearly profit return on their investments.

He never invested the money for real, and ran a ponzi with their money.