Best Thread £10k wipeout

[Lightning McQueen]

The SB v DMA debate has been split off and can be found on the following link

Spread Betting v Direct Access - The Annual Revisit

 

[grimweasel]

I would read 'Fooled by Randomness' and 'The Black Swan' both by Nassim Nicholas Taleb. The gist is that you should limit you exposure to the 'Black Swans' (random spectacular events that were outside of the Gassium Bell Curve predictions and totally unexpected; Sept 11 is a good example as was Oct '87). I would always use a stop for protection as you simlpy can't predict the future. All you 'edge' (entry/exit rules) give you is a greater chance of an event that you have noticed before happening again! Don't be mad when trades go against you, it happens. Embrace randomness, after all it's why we are all in the trading game; without randomness there would be no trading one could argue?

Also you should read 'Trading in the Zone' by Mark Douglas. Essential reading for every trader.

Then, get back into the markets and learn with small amounts. Paper trading is fine but you need wins and losses to learn how to deal with yourself!
Happy trading;
Grim

 

[sunlion61]

Sorry to hear such a sad story. Perhaps I have lost more in a short time but over my life time I am definitely up. Dont be too hard on your self we all make mistakes but we make mistakes for a reason. Just try to keep things very small and things should be alright. I try not to bet more than 50p now which is the minimum stake I can find at the moment and I would go right down to 1p if I could find the platform. Things could be worse which is the way I look at it during losing streaks and I try to draw back to stop increasing damage.
Good luck with it all and keep talking to the wife as I am sure she will understand your problem eventually

 

[Sledgehead]

I'm down, rock bottom.
my wife found out about my losses and has threatened to leave me. I hate myself

...

well not sure what I would do if she had gambled it away, which is actually what I've done. ...

... most women don't want the fast life, they just want security. trading is inherently risky.

the main issue she has is she keeps thinking of the missing money - "think what we could have bought with that" etc. the resentment may be there for years.

Men seem to like securities/derivatives for the short term.

Women seem to prefer property for the long term.

Men are seen as more prone to gambling. Women are paragons of virtue .... or so they would like us to think.

I invite you to check out a thread at SingingPig, a favourite haunt of property developers and buy-to-letters. There, over the past 8 years, you could find hoardes of enthusiastic "investors", peppered by the odd naysayer. Invariably the naysayers were brave disciples from singingpig's arch enemy HousePriceCrash.co.uk.

Curiously, singingpig's membership was almost exclusively femaile (check out the pink theme). Housepricecrash was and is still dominated by males.

Back to that thread I refered to. You should be able to find it here:

http://www.singingpig.co.uk/forums/post/520499.aspx

But since it may have been censored away (they simply MUST stay chipper at "the pig"), I also offer a link to HousePriceCrash where the good folk there have preserved the thread's opening post for posterity - and as a source of eternal amusement ( ): Dear Oh Dear... Annecdotal Over At The Stinky Pig... - House Price Crash forum

Here are some extracts:

"I now find myself waking up each morning sick with fear and with a sinking feeling in my stomach that is difficult to keep at bay. ...

... I am actually sick with fear also that I may soon have to tell my children that I have lost our own house too, that despite all of the hard work and effort that I’ve put into our business that I have now hit a dead-end. ...The thought of telling them I failed when I actively encourage them to dream big dreams for themselves is killing me inside.

The reason for my sickening fear is that when my portfolio starts to come off its fixed rates that I will be facing much higher and possibly unmanageable mortgage costs than I face at the moment. My tenants will be unable to absorb that cost and even if they could many of them are mid-contract."

Yep ADVFNTRADER, this silly person has not lost a measly £10k, they have lost EVERYTHING AND MORE.

Your crime is that you wanted to get rich quick. Hers is that she wanted to spend like the rich, even before she got rich quick. To my mind that his a good few levels lower in the faustian pit of financial profligacy.

Furthermore, you gambled with money you had to lose. She not only gambled with money she could NOT afford to lose, but gambled with other people's money ("investing" 'OPM' as the singingpig crowd loved to call it was once seen as the holy grail of financial logic).

So whilst I have no real practical advice for you on the financial side, I can offer you plenty to help you:

1 ) convince your missus things could be far worse even if she had shacked up with a property investor;
2 ) realise that your sex does not make you a wanton fool;
3 ) put your loss in perspective.

And I personally reckon that's the best anyone on this thread has done. So there.

 

[trigger]

I'm down, rock bottom.

started trading Crude Oil futures, though it was easy money at first. made a bit. then I got greedy and didn't use stops. went short and I wasn't willing to take any loss so let the trade run for 7 days, the loss got bigger and bigger so then I entered another short hoping to raise my breakeven. then the biggest rise since the gulf war took me out of the game.

I own double what was in my account and my losses are shocking bad probably £10,000 in total. don't think I can come back to trading, I feel emotionally scarred.

my wife found out about my losses and has threatened to leave me. I hate myself

I know exactly how you feel my friend, i started back trading in march with 10k, lost 3k, made 1k, lost another 3k then made 2k again in small increments, didnt take a modest profit just before it freefalled recently and paid dearly emotionally and financially, lost 4k now my pot is down to 3000, changing tack and will move to position trading still with same instrument, with similar domestic issues as yourself..... dont give in friend, if you alotted that money to risk with trading then keep breathing, re evaluate, paper trade, re evaluate, and paper trade some more before trying again with what is left in the pot, tenacity is the key, and if you really feel trading is not for you, then i wish you all the luck in your future endeavours, be well
steve

 

[littlemog]

Wow, I can't believe I didn't read this until now... I personally blew up 3k on my first live FX account before having a 'wakeup' and investing in education while taking a time out. While I didn't have to face with additional pressure (my girlfriend was understanding and constantly encouraged me), I did place a lot of pressure on myself. It's been nearly 6 months now, and I'm slowly learning still (making a monthly 7-9% return trading shares & 1-2 currency pairs).

I'm only 25, so often time is my advantage (I shudder to think of those pensioners blowing up their pension)... still, if I've learnt anything from the books I've read, it's about you as the trader... nothing else. Psychology, even philosophy, is the main thing to overcome (vs. some get rich today ideas or scams)

I found the following books useful to me over the last 6 months as I attempt to learn what trading is all about:

1. Trade your way to financial freedom - Dr. Van Tharp
2. Come into my Trading Room - Dr. Alexander Elder
3. Trading for a Living - Dr. Elder
4. Market Wizards - Jack Schawager

And reading Brett Steenbarger's blog has also given me some insights (gotta get his book!)... and not to mention lurking in this forum and the one over at Babypips.com.

Think of it in relation to your job... I often look back as a creative designer and the years spent as a youth in schooling and experimenting before I was able to execute my craft to a level of excellence. Trading won't come in a seminar over a weekend or 2-3 books. It'll take years, at least that's my perspective. It also probably won't get you crazy returns of 50, 70, or 120%. But it'll be definitely a way for those who try and are committed to utilize as an additional source of growing your wealth and income.

I'm not surprised at your wife's reaction... at the end of the day, you're accountable to her in the marriage as she is to you. Most of us here are trading, she's not... despite some insensitive comments towards her, I'll say - What if your wife was into collecting teapots and liquidated all your positions without telling you to buy more teapots? Would you be furious?

Anyway, my humble newbie 2 cents. Thanks for your honest sharing... this is a great thread indeed.

 

[niraj shah]

i find this very hard to believe, why trade when you have not learnt the basics such as stop losses and cutting your losses short. if you are a beginner play with no money first and then trade a very small account and put in small trades to learn how the markets work and move. learn the foundamentals of the instrument you are trading.
Have a percentage of loss in your system e.g if i loss 5% i am out of the trade.
I am not a trader or nothing.

Remember to cut yout losses short and let your profits run.

Good luck next time.

 

[hyzelinho]

Small room of error

Greetings,fellow trader, I would like to ask:

Having 5% as your stop loss, doesn't it get you out of a trade prematurely if a retracement happen?

I'm a novice trader, from your experience, is it a good thing to place 5% as a stop loss.

Thanks!

 

[SirFrancis]

Greetings,fellow trader, I would like to ask:

Having 5% as your stop loss, doesn't it get you out of a trade prematurely if a retracement happen?

I'm a novice trader, from your experience, is it a good thing to place 5% as a stop loss.

Thanks!

I believe most traders will agree that protecting your capital is vital to long term success. For that reason a stop loss is of first importance, and 5% is a reasonable, though perhaps high, number.

 

[benleeph]

I believe most traders will agree that protecting your capital is vital to long term success. For that reason a stop loss is of first importance, and 5% is a reasonable, though perhaps high, number.

yeap...agreed. if we can take care of our losses, the profits will follow. capital preservation is #1 aim. We will often have losses and that is normal. What we need to do is to keep our losses small and manageable while let our profits run.

 

[benleeph]

As for the 5% stop loss...yeap, you might get stop out quickly and prematurely. another approach which I believe that is superior will be to limit your position size.

control your loss limit via position sizing rather than trying to optimize your entry and exit level. you might want to include both.

 

[qarliv]

This is how we learn

I'm down, rock bottom.

started trading Crude Oil futures, though it was easy money at first. made a bit. then I got greedy and didn't use stops. went short and I wasn't willing to take any loss so let the trade run for 7 days, the loss got bigger and bigger so then I entered another short hoping to raise my breakeven. then the biggest rise since the gulf war took me out of the game.

I own double what was in my account and my losses are shocking bad probably £10,000 in total. don't think I can come back to trading, I feel emotionally scarred.

my wife found out about my losses and has threatened to leave me. I hate myself

It probably happened to everyone one way or another. Systems are great to follow theoretically but one can learn just from his mistakes. You'll have to wait for a while before being able to trade again, and then stick to a system, don't be greedy and start slowly.

 

[Aurora1234]

A possible solution

I am genuinely sorry to hear of your losses and especially the problem it caused with your personal life.
What everone here says is quite true: Losses are part of the tuition (if you will) of learning to trade.
However, there are some ways to play it smart and keep in the game without risking your savings:
1) When you want to take a trade, make sure that three reliable indicators are all in agreement with what you are doing.
2) Use "expert" advice. I use two expert signals and only take something when they are in agreement with my own assessment and each other.
3) Make sure your have a plan that you have written down and that what you are about to do violates NONE of the rules of your plan. No fair having the plan in your head where you can change it at will.
4) Suppose you do have a "sure fire" gut instinct and just have to get in? I would get in on a demo and let it run for an hour or two. If it isn't moving the way I want, then it isn't worth the risk.
5) Always (and persistently) examine your personal discipline model. It's brutal to hack your way through every trade and critique your own performance, but it is a lot more brutal to be down a bunch and not be able to face the wife with the news.
6) I have been trading my demo for over 5 months, and using it to determine the validity of my trading ideas. I still make errors and I have done the exact same thing you have done, but I pulled out early (200$ loss) because I forced myself to really set up and honor these iron clad guidelines.
7) We are ALL avoidant; we don't like feeling bad and we all want to do what we want to do. The discipline of trading demands that we push through those bad habits on a personal and professonal (or trading) level; otherwise, we will be among that unhappily large percentile that wind up losing everything and abandoning Forex as a bad game.
8) I highly recommend the demo usage, both for testing and for actual trading.It has saved my life over and over.
9) Last thoughts on this: the market is actually very slow to respond in most cases. Even if you use something as simple as two moving averages, (I like 5/13) you can have a rule that you will exit when a trade goes against you and the MA's cross against your trade. Those rules you make are there for your protection and will save you when you get invested emotionally and don't want to pull out. The market moves slowly, so always wait for the 4 hour chart to give you a signal that price has moved in your direction before you jump in. (No, that doesn't mean all the action has bypassed you). You want the filet of the steak. The middle bit. Wait until you are out of congestion, get in late and get out early. Work on keeping your losses small and your gains reliable.
That is the best help I can offer right now. I sure hope you avoid aversion (so to speak) and have a very good Forex trading future.
Your friend, Aurora

 

[Mr.J-Arthur]

Work on good entries and keep that stop loss at 1% of total account.
example:100 k account =stops @ $1,000/pts

trade mini dow with a huge (1%) stop which is equaled to 200pts for 100k account.
If it goes against you before 1% is hit, just reasses and flip it!
1/2% gives you 100pts stop, still huge IMHO.

my account is much smaller so I put stops at 20-30pts max, much harder to trade this way if entry isn't nearly exact.

If it's a winner you can let it run with a stop over break even...Remember this too: scale in slowly. add on after a first pullback. That's when you beef up your position, make sure to have extra cash on hand. as always, stop loss to protect profit.

 

[rudeoilbarron]

Hi ADV,

I started out in March 2004 with a £10k account, by April it was down to £3900. I took on too much risk too soon, with too little experience. I've paid my entry entry fee like everyone else, and now I'm nearly back in profit and looking to be trading for a living sometime soon. I was 16 at the time so to lose over six grand was pretty heart wrenching, but it has been the best lesson in risk management I could ever have wished for.

I now only look for good probability trades with a risk/reward ratio of 1:5, risking a maximum of 2% of my account on any one trade (1% when I feel less confident, you can always add to you position later). I also move my stop loss to break even as soon as the price has moved far enough away for breathing room.

The best thing I can advise is to read, read, read and watch the markets every day in order to learn how they move and when. If you are a trader at heart then you have to keep going and battle on, but don't risk another penny until you are profitable on a demo account, and the wife supports you. The last thing you need as a trader is external pressures on your emotions.

I know that this won't cure your account, but I hope it helps get you back on your way!

 

[donone]

Hi ADV,

I started out in March 2004 with a £10k account, by April it was down to £3900. I took on too much risk too soon, with too little experience. I've paid my entry entry fee like everyone else, and now I'm nearly back in profit and looking to be trading for a living sometime soon. I was 16 at the time so to lose over six grand was pretty heart wrenching, but it has been the best lesson in risk management I could ever have wished for.

I now only look for good probability trades with a risk/reward ratio of 1:5, risking a maximum of 2% of my account on any one trade (1% when I feel less confident, you can always add to you position later). I also move my stop loss to break even as soon as the price has moved far enough away for breathing room.

The best thing I can advise is to read, read, read and watch the markets every day in order to learn how they move and when. If you are a trader at heart then you have to keep going and battle on, but don't risk another penny until you are profitable on a demo account, and the wife supports you. The last thing you need as a trader is external pressures on your emotions.

I know that this won't cure your account, but I hope it helps get you back on your way!

That's interesting r-o-b. I have a friend who's just starting & we've developed a system for him which provides about 3-4 trades a month (on the DOW) - but his account will be quite small - about £5k & we are finding it difficult to find a way for him to bet small enough to gain the experience - at 1%-2% his stake would be £50 - £100 & allowing for a decent stop he'd be wanting to play for a few pence a point (Up to 50p = -$1 - say)

Can you suggest a way of him betting that small ? - spread betting is where we are looking at the moment - because he'd want to hold maybe 2-3 days.

Any info gratefully received.

 

[TomTom]

from personal expieance I would not not go through any spread betting company as financing costs for over night postions are high pluss the large spreads. 4 points on the dow when you do direct market spreads are 1 point. Need i say more ?

 

[donone]

from personal expieance I would not not go through any spread betting company as financing costs for over night postions are high pluss the large spreads. 4 points on the dow when you do direct market spreads are 1 point. Need i say more ?

Well yes please - where & how do we go about setting him up an account for "direct market spreads" for 25p - 50p per point ? (& what does that cost for an overnight hold ? )

I have no personal experience of this (as I generally pay the 14 points for a 3 month bet)

 

[rudeoilbarron]

Hi donone and tomtom,

So 1-2% of £5k is £50-100 as you say. At £1/point this would allow for a 50-100 point stop loss (minus the spread). Whether this would be enough for your strategy obviously depends on how you are entering the market and on what time frame charts you are basing your setups. A 50-100 point stop loss is plenty for an intraday strategy on the 1H chart for example, but perhaps too small to trade setups on the D1 chart.

I agree with TomTom on his point, but I think that direct access might be a little bit overwhelming for a beginner. You could try Interactive Brokers, however be aware of comission, income tax implications and the $25k minimum required for day trading stocks.

Personally I'd advise sticking with spread betting, it's tax free (UK) and the spread is all you pay. You can also daytrade any market available with no restrictions or uptick rules etc. I use CMC Markets, (If you trade with them remember to restart your software EVERY session and you should avoid any problems). Finspreads offer 50p/point trades and just 10p/point for an introductory period. You can always move to a direct access broker later.

I wouldn't worry about rolling charges, if you're not in good profit within the first day do you really want to still be in the trade the next? Most of the time you'll already have been stopped out.

I use support and resistance for my oil trades, looking for hourly setups with 10m and 1m entries I can keep stops as low as 20 points sat behind a strong barrier of S/R. I trade only for at least 100 point rewards. I'll move my stop to break even ASAP to create a 'free' trade situation, and move it to lock in profits according to momentum, time and volatility. Sometimes I also add to my position when I've made enough profit to cover the new position's stop loss. Admittedly I get stopped out often, but I make large profits when I don't.

Hope this helps

 

[RichMowbray]

ANyone want to try playing the volatile crude oil markets should do it via one touch options ... IG index do them.. and with the market moving 300 500 points a day you can give your self a chance with a minimal risk.... new to this board ..