When should a trader be advised to stop

Babypips is a great forum full of advice and encouragement. But where do you draw the line? We all know there’s a circa 90% fail rate. If someone posted consistent losses, blown accounts and mental anguish would anyone here ever go further than advising them to take a break and actually advise them to give up trading altogether? Given the large amount of money you can lose, isn’t this sometimes the best advice?

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I would only advise, if you’re losing money, stop trading with money - i.e. go into demo and stay there until you’re making money. But never give up.

Churchill - “If you’re going through Hell, keep going.”

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A good question. I get a lot of people asking me for advice in one field or another. My first question. is:
What do you wish to do and why?

A lot of people just say “I want to make money without having to think too much about it - just use my money to make money” My reply is “then to to a financial advisor and let him make the decisions. If you go to one that acts within the law, at least it is unlikely he will run away with your money”

If the requestor has not already run away, I ask why they chose Forex as a pursuit instead of hundreds of other pursuits they could have chosen.

I then tell them that the reason I am interested in Forex (and have been for over 30 years) is that it is the only topic I have tried over and over again and have not managed to understand how to make consistent profit in, and that both intrigues me and frustrates me.

If they are still talking to me, I ask them to decide how much of their life this pursuit is going to cost them in terms of time allocated. Long term this is the only thing that matters to me. How much time I allocate, and whether I consider that to be a pastime (hobby?) or part of my income-earning work.

If it is a pastime, then I value the time spent refining my skills at zero cost. Eventually though, I do have a “value per hour” target for my own pursuits, borne out by past experience.

With specific regard to trading, I ask the requestor to define how much total money he wishes to invest, and that includes cost of hardware, software, education and training time. Whatever that sum is, if you have managed to spend half of it, take a break - right now, of at least a month, and figure out why you lost half your investment fund. Anyone who does this twice over and still can’t decide needs to look at alternatives - even driving for Amazon should make more money than pretending you will beat more than 98% of the participants in this market.

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You lost money, you feel lost direction, you feel upset, you feel stressful,… all those things usually happens for most of newbie. I used to have the same that feeling but in my mind always has something that push me to study and practice more and more. I back to demo account (I do very good job with demo account but with real account it seems opposite so I just trade with 0.01 size in real account). I did a post about ‘Challenge for newbie: $300 to $3,000’ in this forum and I’m doing hard work everyday for this challenge. During this challenge, I did back-test my strategy and find out many reasons why I lost money before (main reason is lost more than gain, overtrading, revenging trading). I’m fixing all of them day by day, little by little.

Hope this help for you. And you only the person that know what you really want, go on or give up.

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I don’t believe in a negative approach towards FX trading as it is quite possible to become consistently profitable.

Why traders lose their capital is mostly because they are excited about making a sh*t load of money early doors. Which is a fast track to oblivion.

The positive approach is boring as watching paint dry, so it’s understandable that new traders can’t get high and do not follow simple rule steps. Which is a kill joy process.

For those who are more serious in managing a new business venture, they need to approach this zero profit and loss enterprise, and knuckle down to using expenditure to learn the correct way to become profitable consistently.

That means, apart from completing the free courses on this great education site, spending money on a few trading books, attending a pro trader’s seminar, or follow a broker’s free video session, as well as buying the basic tools of the trade other than using a phone app full of young smiling traders.

When the basics have sunk in, and practising and experimenting on a demo account for several months has evolved to developing a method, system and process that is profitable. First step completed.

Now open a live account with a regulated broker who seperates client monies from their own. Invest capital and it’s your job to protect it at all costs, as without capital you cannot trade.

Second step is facing a live account emotional challenge. This is the largest obstacle to success, as when a losing trade occurs, the method, system, and process is NOT followed and when a winning trade occurs there’s a rush to take a quick profit .

This is known as FOMO. Fear of missing out, and FOLM, fear of losing money. As emotions never go away, ACCEPT that they WILL occur. This is the third step. If need be, place your trades and then turn off your computer for at least one hour at a time.

The fourth major step is to learn how to detach from what’s happening with open trades. Think in percentages helps.

I read that the reason Tiger Woods was so successful is that his mindset detached from his mistakes, and he was able to play the next hole as being a new fresh challenge, instead of worrying where he went wrong. This approach is ideal for FX trading.

Thanks for staying with me. One day, I’ll write a book.

.

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Hi @steve369,

I learn a lot from many your comments on this forum, thank you for your help with newbie around here.
I’m looking forward to reading your book soon.

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Ditto. There’s no reason to stop trading demo. If someone focuses so much on trading that he’s neglecting other responsibilities, then that’s a problem with balancing responsibilities–not trading.

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I’m just gonna add that trading will definitely hold a mirror to you; it will expose your faults in character.

I suppose the same can be said for attempting to accomplish any endeavor. With other endeavors, the resistance comes from within. Whereas with trading, the resistance mistakenly comes from the market.

Meaning, if you want to run a 3km race, you would never think that the 3km is against you. It wouldn’t make sense. But you could say the market is against you. When we have trouble with trading, we like to blame the market. After a while, we have to realise that the market just does what it does, and we have to learn to go WITH it. None of us on this forum are capable of PUSHING the market. So, we have to learn to go with the flow. This is when we realize the difficulties we experience in trading come from within us–not the market.

A surfer would never say the ocean is against him. He doesn’t start paddling when there’s no wave. He just waits and waits. Then, when the wave comes, he starts paddling to get some momentum, then when the wave comes, he goes WITH it! And he just rides it. He never blames the wave if he falls off.

Trading will expose so many of our faults. It’s not a reason to quit–it’s a reason to resolve whatever problems we have inside. Then, as we improve, we’re better equipped to improve in trading.

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I like the comparison between trading and running.

Its a fact that trading is a test of character, not intelligence or knowledge. Reminds me of the 4-minute mile. The 4-minute mile “barrier” was first broken in the 50’s by Roger Bannister. But after he did it, lots of people have run sub-4-minute miles.

After Roger Bannister, runners still have 2 legs and a mile is still a mile, but now their mind-sets have been changed, so they can do it too.

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Good analogy, makes sense.

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Yes, you’re right in a way, traders should understand that execution, capital, and emotions can be different when trading real money. When we face losses, that’s the time one should go for more practice and using demo accounts will just help you to get your skills chiselled.

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I believe that success has never been for the majority. It’s only a few people who are mainly at the top. Life should not be that way but the majority concede defeat, they accept failure. This produces a 95% and 5% difference.

The question is why did the individual join the business in the first place? If your reason for joining cannot drive you to success then it’s better for the person to quit. Consistent losses and blowing up accounts I believe should not be the reason for leaving.

The story of Thomas Edison gives a man who is resilient no matter the failures against him. Edison once said, “I have not failed 10,000 times—I’ve successfully found 10,000 ways that will not work.” And I believe in his exploration we are enjoying some comforts. So it is with the 5% that no matter their failures they usually never quit until they enter the successful statistics.

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Ok, first of all. This is great way to put it. I hope to remember to give you credit when I repeat it elsewhere in the forum!

Second, it takes quite a while to understand this, I think. When you first start and you’re excited, you think a winning strategy is the only thing you need. But after reviewing your losses and seeing patterns in your behaviour, you realize that it’s not about intelligence. In fact, it has more to do with self-control than anything else.

Think of it like this. You could place 25 trades per week, for a year and lose 75% of your money. Or, with patience, you could trade 3 times for the whole year and increase your account by 15%.

Matter of fact, if you were patient and waited for the most favorable setup, and traded just ONCE per year and increased your account by 1%, techinically you’re financially further ahead than if you lost 75% of your money trading everyday.

This is a great example. Your mindset is key. It’s funny how there are high schoolers who can run that now.

I 100% agree. It all comes down to who’s willing to pay the price until the end. Perhaps I have more resources than you and a specific activity comes easier to me than you. Does that mean you can’t do it? Even if you have more challenges than I do, that doesn’t mean you can’t do it. It just means that you have certain circumstances and you have to overcome them. Matter of fact, if you overcome more obstacles than I did, your mindset will probably be stronger than mine and you’ll have more determination.

And here’s the kicker…when you want to quit, and you’re crying by yourself…all you have to do is not quit. That’s it. When you’re at your worst, all you gotta do it sit and wait for those feelings to subside and when your mind clears, you just keep going one step at a time. And all the while, people around you are quitting.

So, when you feel like quitting, and you’ve blown your demo account for the 6th time, all you gotta do it just not quit. Look at what’s going wrong and try to improve. It’s difficult, but simple. ¨Don’t quit¨ sounds cliché, but actually not quitting isn’t.

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This is what happened to me. I was trading live and lost over 30% of my money. I decided to switch back to demo.

I’m glad I did because in demo, my account is down 50%! Imagine if it was my precious capital!

Making the switch was humbling, for sure. But I’m glad I did it. The good thing is that when I lose in demo, it feels real. There’s no change in psychology for the moment.

Good read Mondeoman

Now open a live account with a regulated broker who seperates client monies from their own. Invest capital and it’s your job to protect it at all costs, as without capital you cannot trade.

That sounds great that you are actually taking full usage of the demo account for learning. How much loss have you faced in a live account?

Approximately 30%, so quite a lot, but still enough for live trading when I’m ready. Going back to demo was a big step for me. It was difficult to admit that I wasn’t profitable. You keep thinking you’re gonna catch some big wins that will turn your situation around, and then the big wins never come.

Eventually, you gotta submit to the truth.

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And where most give up and move on.

This kind of attitude is what separates a successful business from a fly by night operation.

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I hope you might have recovered from your losses by now, and you’re back with stronger motivation to perform the best you can, also I believe acceptance is all we have in the end, but getting back to the demo isn’t a bad option. Lifelong learning has no bars, be it in trading or real life so we should take the chances of grasping knowledge and coming back on foot when the right time comes.

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