Advice from a LOSER

Hi to all you Newbie’s

I just want to pass on some of my experiences to you from the last 2 tears.
First of all. I have failed. I have lost thousands of pounds making ALL of the mistakes and broken all of the rules for successful trading. I had read all of the rules so many times before, all most in every trading book and article I have ever read. But I WAS a very stubborn person with a huge ego so ignored them all. IT COST ME BIG TIME.

Keys to my failure:

1) EGO
Until now I have always been very successful in everything I do. The possibility of failure never even occurred to me. Therefore I gave the markets no respect. I always new best.

2) FOOLS RUSH IN
After only a period of 1 year day trading as and when I had time, maybe a few trades a week. I was the man. I new it all. So I gave up a highly paid job in the city to day trade full time. Did I really no what I was doing? NO.

3) SIZE
Why should I start small when I can trade 20 contracts each time and risk thousands on each trade? Maybe it would have been better with just 1 contract to begin with. Sure, I would not make my millions. But I would not lose so much. Now I am down to trading 1 contract because that all I can afford.

4) TRADING PLAN
Plan? What plan? I have had lots. I was maybe inventing 2 a month. Are they any good? Yes I think that 70% of them are not bad. But how would I know? I never used any of them except in hindsight.

5) DISCIPLINE
HAHAHAHA that’s a joke. Everyone knows the key to being a successful trader apart from having a good trading plan is discipline. Run your profits and Stop your losses. Stick to the rules 100%. Could I stop a loss? Never. Could I stop a profit? Always.

6) LEARN FROM YOUR MISTAKES
I always learnt from my mistakes. Until the next time I made the same mistake, time and time again.

Well, that’s me. Now I am out of the game for the moment and I feel like a complete ****!!! I have zero confidence, little money left and I am quite depressed. I start my new 9-5 job on Monday for less money than I gave up 2 years ago. SAD??? NO, STUPPID. It’s all my own fault.

I don’t want to put anyone off but know the realities of what you are getting into. It’s a great life but its not easy money. The market can be very unforgiving and does not suffer fools. Make sure you know what you are doing before you commit your cash and start small. Build on sucsess over time and gain experinence. In my view the most effective way to follow a trading plan and apply strict discipline is 100% automation.

I will be back. But more humble, more disciplined and 100% automated.

GOOD LUCK.

Respect for your honesty.

I am just like that. The market isn't the problem, I am!

All the best.

Good honest post, makes a change from the talking-your-own-book spam rubbish that finds its way onto these boards too often. All newbies should be referred to this as a salutory tale! My only question would be that given you have a very objective view on where it's gone wrong for you, why have you found it so difficult to correct the 'faults'? My guess would be most 'losers' don't have half the awareness of their problems that you do, and identifying the issues is more than half the battle. I can't quite understand why having understood your problems you've not been able to resolve at least some of them. Anyway - good luck in the future and with the new job.

7.) Poste Your Trades

control of chaos by selfcontrolling feedback is a key issue to successfull trading

ducados said:

Hi to all you Newbie’s

I just want to pass on some of my experiences to you from the last 2 tears.
First of all. I have failed. I have lost thousands of pounds making ALL of the mistakes and broken all of the rules for successful trading. I had read all of the rules so many times before, all most in every trading book and article I have ever read. But I WAS a very stubborn person with a huge ego so ignored them all. IT COST ME BIG TIME.

Keys to my failure:

1) EGO
Until now I have always been very successful in everything I do. The possibility of failure never even occurred to me. Therefore I gave the markets no respect. I always new best.

2) FOOLS RUSH IN
After only a period of 1 year day trading as and when I had time, maybe a few trades a week. I was the man. I new it all. So I gave up a highly paid job in the city to day trade full time. Did I really no what I was doing? NO.

3) SIZE
Why should I start small when I can trade 20 contracts each time and risk thousands on each trade? Maybe it would have been better with just 1 contract to begin with. Sure, I would not make my millions. But I would not lose so much. Now I am down to trading 1 contract because that all I can afford.

4) TRADING PLAN
Plan? What plan? I have had lots. I was maybe inventing 2 a month. Are they any good? Yes I think that 70% of them are not bad. But how would I know? I never used any of them except in hindsight.

5) DISCIPLINE
HAHAHAHA that’s a joke. Everyone knows the key to being a successful trader apart from having a good trading plan is discipline. Run your profits and Stop your losses. Stick to the rules 100%. Could I stop a loss? Never. Could I stop a profit? Always.

6) LEARN FROM YOUR MISTAKES
I always learnt from my mistakes. Until the next time I made the same mistake, time and time again.

Well, that’s me. Now I am out of the game for the moment and I feel like a complete ****!!! I have zero confidence, little money left and I am quite depressed. I start my new 9-5 job on Monday for less money than I gave up 2 years ago. SAD??? NO, STUPPID. It’s all my own fault.

I don’t want to put anyone off but know the realities of what you are getting into. It’s a great life but its not easy money. The market can be very unforgiving and does not suffer fools. Make sure you know what you are doing before you commit your cash and start small. Build on sucsess over time and gain experinence. In my view the most effective way to follow a trading plan and apply strict discipline is 100% automation.

I will be back. But more humble, more disciplined and 100% automated.

GOOD LUCK.

Click to expand...

A courageous post, not many would admit to so much. Good luck to you, too.

Split

Thanks for the posts all.
To Jack o'Clubs: That is a very good question. Its one that I will be asking myself in the months to come. I have known my problems for sometime now, always when the market is closed. I think the answer maybe quite a simple one. For 2 years I have been a gambler not a trader. The worst thing for a gambler is to sometimes get big wins and that’s what happened to me. When the position goes against you, you know in your heart you need to exit. But you remember the one or two times when it has gone against you and then bounced back into profit. So you start sweating and take the risk 10, 20, 30, 40 then 50 points. If my some miracle the market bounces and you exit for breakeven you think you have had a good day. CRAZY but that’s gambling #

My favourite phrases: "Buy Low, Sell Hi", "Balls of steal, my son", "It can’t go any lower than this"

On a more positive note as I am feeling more positive about things today. I left one rule out.

7) DONT GET INTO DEBT CHASING LOSSES
For this one I am quite proud of myself. For a while I sat there and tried to work out how I could get enough money to continue trading at the same levels and win back my losses. I thought about loans and even remortgaging my house. But NO, I pulled the plug. Yes I lost a lot of money. But I am still in the black. I have no debts and I still have my house. I think in a short time I will come to realise that that was the BEST decision I have ever made in my life. For that one decision I think maybe I am not going to be such a losser after all. Maybe I will turn out to be a winner in the long run.

My plan is to take a break and destress. The new job is actually quite exciting and a challenging role. I know I am going to enjoy it. I still have enough money to trade 1 contact and incur a few more losses. The plan is to design a 100$% automated trading system and make back all my losses only using the 1 contract, however long it takes. Then and only then look again at increasing my levels of risk. Even though I am going to be out of it for a while. I think I have turned the corner and when I do return I will return not only a better trader. But also a better person with a healthy respect for money. Its all good in the end and I am NOT in debt so have no worrys. LIFE IS GOOD NOW

There's nothing in trading worth learning unless it costs you money, sure you can pick so called pearls of wisdom from others, but everything you need to know can only be learnt through experience, which inevitably costs.

The mistakes you've made were essential, for you. When you get to the point of realisation that trading is 99% psychology, then you're ready.

If you're still in love with this business then that's a basis for great optimism.

Helpful post D.

But if you've got confidence in your ability (in general) then why not give up trading and go and do something FAR EASIER, which is basically any job but trading

Go create some company, build it up from scratch and you'll most probably make far more money than if you'd got on ok in the trading world, and far less mental hassle as well.

anley said:

Helpful post D.

But if you've got confidence in your ability (in general) then why not give up trading and go and do something FAR EASIER, which is basically any job but trading

Go create some company, build it up from scratch and you'll most probably make far more money than if you'd got on ok in the trading world, and far less mental hassle as well.

Click to expand...

Its a good point. But you could say the same about a lot of things. Like kids
You do it because you love it.

Very instructive post, but it confirms all of us make the same mistakes.

Thank you for sharing your experience with us newbies.

I'm really sorry you've lost your confidence. I hope your job goes well.

ducados said:

Hi to all you Newbie’s

I just want to pass on some of my experiences to you from the last 2 tears.
First of all. I have failed. I have lost thousands of pounds making ALL of the mistakes and broken all of the rules for successful trading. I had read all of the rules so many times before, all most in every trading book and article I have ever read. But I WAS a very stubborn person with a huge ego so ignored them all. IT COST ME BIG TIME.

Keys to my failure:

1) EGO
Until now I have always been very successful in everything I do. The possibility of failure never even occurred to me. Therefore I gave the markets no respect. I always new best.

2) FOOLS RUSH IN
After only a period of 1 year day trading as and when I had time, maybe a few trades a week. I was the man. I new it all. So I gave up a highly paid job in the city to day trade full time. Did I really no what I was doing? NO.

3) SIZE
Why should I start small when I can trade 20 contracts each time and risk thousands on each trade? Maybe it would have been better with just 1 contract to begin with. Sure, I would not make my millions. But I would not lose so much. Now I am down to trading 1 contract because that all I can afford.

4) TRADING PLAN
Plan? What plan? I have had lots. I was maybe inventing 2 a month. Are they any good? Yes I think that 70% of them are not bad. But how would I know? I never used any of them except in hindsight.

5) DISCIPLINE
HAHAHAHA that’s a joke. Everyone knows the key to being a successful trader apart from having a good trading plan is discipline. Run your profits and Stop your losses. Stick to the rules 100%. Could I stop a loss? Never. Could I stop a profit? Always.

6) LEARN FROM YOUR MISTAKES
I always learnt from my mistakes. Until the next time I made the same mistake, time and time again.

Well, that’s me. Now I am out of the game for the moment and I feel like a complete ****!!! I have zero confidence, little money left and I am quite depressed. I start my new 9-5 job on Monday for less money than I gave up 2 years ago. SAD??? NO, STUPPID. It’s all my own fault.

I don’t want to put anyone off but know the realities of what you are getting into. It’s a great life but its not easy money. The market can be very unforgiving and does not suffer fools. Make sure you know what you are doing before you commit your cash and start small. Build on sucsess over time and gain experinence. In my view the most effective way to follow a trading plan and apply strict discipline is 100% automation.

I will be back. But more humble, more disciplined and 100% automated.

GOOD LUCK.

Click to expand...

Ducados

Thank you for sharing that with us and good luck for the future. I don't know if you have been introduced to the book Trading in the Zone by Mark Douglas. If not I hope it might be an interesting read for you, which covers a number of points you have raised.

The chapters other than the final one take a lot of reading through, especially if this type of analysis is not in your nature, but it is necessary to understand and appreciate fully the final chapter which is much more practical.

The only worry I have in your first post and a later post is this idea of 100% automation. It depends upon what you mean by this. If you mean that you will create a strategy and a plan and follow it properly then fine. If you mean that you intend to create a "black box" and not take account of risk and money management then I would be concerned.

Charlton

Charlton said:

Ducados

Thank you for sharing that with us and good luck for the future. I don't know if you have been introduced to the book Trading in the Zone by Mark Douglas. If not I hope it might be an interesting read for you, which covers a number of points you have raised.

The chapters other than the final one take a lot of reading through, especially if this type of analysis is not in your nature, but it is necessary to understand and appreciate fully the final chapter which is much more practical.


Charlton

Click to expand...

Yes, good point. Trading In The Zone should be the very next thing you read. Don't watch any of the crap that will be repeated this Xmas, read that book, as it deals with the psychology needed to apply a system successfully. Whether you've developed a system, a catalogue of systems, bought a system or flip a coin, the application is everything.

Thanks chaps. I will buy a copy tommorow. Good advise.
On the point about automation. Yes I do want a black box style solution. It will handle precise entry and exits and control stop losses to insure maximum constancy and discipline. However, I a will retain risk and money management outside of the system.

ducados said:

Thanks chaps. I will buy a copy tommorow. Good advise.
On the point about automation. Yes I do want a black box style solution. It will handle precise entry and exits and control stop losses to insure maximum constancy and discipline. However, I a will retain risk and money management outside of the system.

Click to expand...

Hi,
I read your post with interest.
I am a fairly new trader, and am also looking in to the idea of an automated system. I've set up an account with an American broker named Tradestation, which provides for fully automated trading and back-testing using a programming language called EasyLanguage.
I've tried a number of strategies to find one that provides a reliable income, but have not found one yet. I wonder whether it would be beneficial for us to try running some strategies/tests together? Send me an email if this appeals.
Thanks

Hi Neil

I agree with you. I have used Tradestation and it is a very good system for designing automated strategies. I have an IT background that includes programming so I found it very easy to get to grips with. I particulay like the continues contract concept. This makes it very easy to back test 2 years worth of data on a single instrument. I have never used it as a broker so I do not know if it is any good.

The downside to Tradestation (for me). Apart from the strategy itself, one of the most important things to consider when designing an automated trading system that is risking a lot of money is Disaster Recovery or Business Continuity. The first thing I think about is WHAT CAN GO WRONG? and design my system around these areas of risk. Here is just a short list but there maybe many more. Most of these would be fine if your at your desk watching. But the reality is who can sit there and watch an automated system for 12 hours a day for more than about 2 weeks? As you begin to relax with the system these risks will inadvertently increase as you spend more time away from the system.

1) PC Crashes
2) Tradestation application crashes
3) Your internal network (router) crashes
4) The Internet goes down
5) The price feed for the instrument freezes
6) The whole exchange goes down (ECBOT twice in one month no long ago)
7) Power cut
8) Your office is destroyed and you are killed.
(Sounds crazy, but if your system was Long and you get caught in a terrorist attack. Not only
are you dead and your systems destroyed. But the markets will crash and your family could be left with Huge debts before you get taken out by a margin call)

The problem with Tradestation for me is that the whole system is contained within the same application and your exit and stop orders are held within the application until triggered. Not only is this a high risk to failure but also makes it very difficult to design independent applications for monitoring and alerting. I like to design my systems as modular applications spread over a few PC's with a fully charged laptop providing real-time monitoring and reporting and a separate application monitoring the laptop and the internet from my home pc. All aspects of the process are monitored in real time and alerts include Audio, SMS text to my mobile, Radio pager alert and a PC voice call to my mobile. In each case of failure all of these alerts are used so they provide backup for each other. I use Serria charts to provide market data to my main strategy application with data feeds from Track Data. This application then passes any trade requests to my interface application on a different PC receiving its data feeds from the Interactive Brokers application API. Each trade is a complete package containing both the entry and the stop. Most importantly the stop is held at the broker (IB) so the second the trade is entered I am safe. The position is then managed by the application by modifying the existing stop, even the exit is a modification to the stop. The reason for this is to exit the trade using the same order not enter a new one and cancel the stop. That’s 2 orders and carries further risk of failure. Anyway tradestation is an excellent tool for research.

Forget all of this for the moment. The most important thing above all else is the strategy, the rules. Until you have this clear and on paper dont even think of automation. Automation can be achieved within a week. It could take many years to come up with the right strategy. I am still looking for the perfect one.

Let me give you a gift. This is a good candidate that I am working on for a strategy. It’s not complete and still needs work to define the rules and back test. But it may point you in the right direction. The key to any good strategy is keeping it very simple then test and add filters. Anyway, see how you get on.

Chart setup:
FTSE or DOW JONES futures on a 30min or 5min time frame bar chart
MACD. Fast time 21, Slow Time 81, MA Lengh 9, Type: Exp
(if DOW set the chart times to be 13:30 - 21:00 GMT, not 24 Hour)

Rules:
Use the crossovers for your entrys. At very least it will get you on the right side of the market for a while. On a 30min chart you need to hold position over night. But results look better.

Sounds simple? GREAT!! That’s what you want. If it works. You will need to define your own rules and filters and do your own testing but it should get you started and it’s quite a powerful signal.

Let me know how you get on. Either post your results here or send me a private message (not email as that’s not working for me here)

Also, read my post completely. Dont just get excited about the automation. You need to be a trader before you can automate. Thats where I have failed so far.

Good luck.

PS: Here is a tip for you. Why do I only trade the DOW and not the FTSE or Russel at the moment? Well, again it’s about risk. If you have a futures position on the other two and the exchange goes down (ECBOT twice in one month a while ago) YOU ARE STUFFED! You are stuck with the position until the exchange is fixed. That can take up to 2 hours and the markets are still moving. You may get a 50 point difference when it reopens and there is nothing you can do except watch. However, the benefit of the DOW is that it is also PIT traded. That means if you are LONG on ECBOT you can SHORT in the PIT as an almost perfect hedge. Its only a small risk but it can happen. It depends on the size you are trading and the damage such an event could do to you as to wether its worth considering. In my case I was overtrading and had hugh positions. Maybe that was the real mistake I think the S&P 500 is traded across two exchanges so that may also be a good one. But you must make sure you have the margin in your account to affectively double the size of your position electronically.

ducados said:

Hi Neil


Forget all of this for the moment. The most important thing above all else is the strategy, the rules. Until you have this clear and on paper dont even think of automation. Automation can be achieved within a week. It could take many years to come up with the right strategy. I am still looking for the perfect one.

Click to expand...

It looks like you are searching for the Holy Grail when there isn't one. The holy grail is within yourself.

You will find 100% automation difficult, may work in some markets for a short period of time, but you'll end up tweaking it and tweaking it when it's not pulling in the $$$ and you will end up chasing your tail. Been there done it!

I take it you have a trade plan with rules about entry, and exits?? I take it you got some education? Was it just discipline in sticking to your plan? A lot of people think oh yeah, rules are rules, I don't need to follow them this time I'll just move my stop a little as I know it's gonna turn later! Little do they realise the importance of rules until they have blown their account out of the water. Having rules instills good discipline and these must form habit. Good discipline is the hallmark of a successful trader. If you can't follow your rules then you will NEVER be a trader. PERIOD!

The best thing you can do is pick a strategy and stick to it. All newbies jump from strategy to strategy when they find it doesn't work. I think its called "looking for the easy money strategy", LOL. What they don't want to do is really put in some hard graft, looking at 1000's of charts until your eyes are bleary, what worked and what didn't. Most people jump from indicator to indicator, timeframe to timeframe, method to method. They will use something for a few days, hit a bump, and move on to something different all together. One day the holy grail is a XX period moving average, the next day it is MACD or an oscillator. One day it is a 30-minute chart, the next day it is a 5-minute chart. One day it is buying the break of the first inside bar, the next day it is a pullback from the high.

I call this "chasing success". The bottom line is the person does not spend enough time on any one method to really understand and execute it properly. They bounce around, and before they know it a lot of time has passed and they are still struggling.

If you pick something and stick to it, you get good at it. Once you get good at it - once you perfect it, THEN you can add something else to your arsenal.

Analyse the details - does it work better when the tail of the hammer also touches the opening range high or the Fibonacci extension? What produces better results - a slow, 3-5 bar pullback or a violent 1-2 bar correction? Does it matter if the bar preceding your hammer is narrow-range or wide-range? What about the hammer being green (closing positive) vs. being red (closing negative)? Learn your set-up inside and out!

You also have to work on yourself. By this I mean, studying your performance, observing yourself, what are your strengths and weaknesses, truthfully asked yourself what kind of trader you are, are you an impatient person?, therefore scalping for ticks might suit you better. Do you have daily, weekly, monthly, yearly goals? Having no goals to work towards just makes us drift and we end up in a horrible spiral chasing our losses, doubling up our positions in order to try and get lucky and get even. Have a daily monetary stop, a weekly % of equity stop, a monthly % of equity stop and a NEVER TRADE AGAIN STOP (50% drawdown fo equity) until you find out what's going wrong.

If this fails, then consider trading is not right for you. Harsh but true.
Best wishes to you in your new job and hope you come back fighting stronger.

Pitbull

PitBull said:

It looks like you are searching for the Holy Grail when there isn't one. The holy grail is within yourself.

You will find 100% automation difficult, may work in some markets for a short period of time, but you'll end up tweaking it and tweaking it when it's not pulling in the $$$ and you will end up chasing your tail. Been there done it!

I take it you have a trade plan with rules about entry, and exits?? I take it you got some education? Was it just discipline in sticking to your plan? A lot of people think oh yeah, rules are rules, I don't need to follow them this time I'll just move my stop a little as I know it's gonna turn later! Little do they realise the importance of rules until they have blown their account out of the water. Having rules instills good discipline and these must form habit. Good discipline is the hallmark of a successful trader. If you can't follow your rules then you will NEVER be a trader. PERIOD!

The best thing you can do is pick a strategy and stick to it. All newbies jump from strategy to strategy when they find it doesn't work. I think its called "looking for the easy money strategy", LOL. What they don't want to do is really put in some hard graft, looking at 1000's of charts until your eyes are bleary, what worked and what didn't. Most people jump from indicator to indicator, timeframe to timeframe, method to method. They will use something for a few days, hit a bump, and move on to something different all together. One day the holy grail is a XX period moving average, the next day it is MACD or an oscillator. One day it is a 30-minute chart, the next day it is a 5-minute chart. One day it is buying the break of the first inside bar, the next day it is a pullback from the high.

I call this "chasing success". The bottom line is the person does not spend enough time on any one method to really understand and execute it properly. They bounce around, and before they know it a lot of time has passed and they are still struggling.

If you pick something and stick to it, you get good at it. Once you get good at it - once you perfect it, THEN you can add something else to your arsenal.

Analyse the details - does it work better when the tail of the hammer also touches the opening range high or the Fibonacci extension? What produces better results - a slow, 3-5 bar pullback or a violent 1-2 bar correction? Does it matter if the bar preceding your hammer is narrow-range or wide-range? What about the hammer being green (closing positive) vs. being red (closing negative)? Learn your set-up inside and out!

You also have to work on yourself. By this I mean, studying your performance, observing yourself, what are your strengths and weaknesses, truthfully asked yourself what kind of trader you are, are you an impatient person?, therefore scalping for ticks might suit you better. Do you have daily, weekly, monthly, yearly goals? Having no goals to work towards just makes us drift and we end up in a horrible spiral chasing our losses, doubling up our positions in order to try and get lucky and get even. Have a daily monetary stop, a weekly % of equity stop, a monthly % of equity stop and a NEVER TRADE AGAIN STOP (50% drawdown fo equity) until you find out what's going wrong.

If this fails, then consider trading is not right for you. Harsh but true.
Best wishes to you in your new job and hope you come back fighting stronger.

Pitbull

Click to expand...

Excellent post. My advice would be to stay away from "Black box" trading systems and automated back testing. They teach you nothing! There isn't a computer or software package on earth that comes close to being as sophisticated as the human brain. Trust me, there are none. One well respected scientist said that if you added up all the computing power on earth today it would barely equal the intelligence of a lobotomised cockroach.

Dr Robert Zubrin, who is eager to get a manned mission to Mars favours human explorers over robotic explorers. He issued a simple challenge to NASA. It is an Easter Egg hunt where NASA could have 1000 planetary rovers versus a 10 year old child to see who ends up with the most eggs.

Finally, take a look at this page to see what it takes to make a computer “out smart” a person

http://en.wikipedia.org/wiki/Deep_Blue

http://www.newscientist.com/article.ns?id=dn2934

I know that this has nothing to do with trading, but at the very least it should make you realise that you are capable of achieving much more with time, practise and experience.

A very honest post, my days of trading are done also, i had a bit of a windfall and thought id try the futures market, big mistake 1st day i was up £450 then then i got burnt, i was with easy2spreadbet, the platform they use is hopeless very flaky indeed, one of my biggest WINS was when the system went down.

I was good using paper money but its so different using your own.

I think stopping now will be wise

ikea1111 said:

I was good using paper money but its so different using your own.

I think stopping now will be wise

Click to expand...

If you believe things are different, or you act differently when real money is on the table then you haven't paper traded properly.