£10k wipeout

This is a discussion on £10k wipeout within the First Steps forums, part of the Reception category; Message to moderators: Could you kindly consider whether there are any merits to pin this thread as required reading for ...

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Old May 27, 2008, 5:29pm   #33
 
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Message to moderators: Could you kindly consider whether there are any merits to pin this thread as required reading for all newbie traders.

The reason being is that if a newbie reads this pinned thread, then it is likely that it can help newbies from making the same trading (ie risk management) mistakes as advfntrader did.

advfntrader: thank you sharing your experiences with us.
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Old May 27, 2008, 5:30pm   #34
 
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Hi ADVFN

I'm sorry to hear about your loss and hope you don't beat yourself up too much over this. You would be surprised how common his type of behaviour is when learning to trade. It's a harsh lesson, but a lesson nonetheless and it may have saved you from losing more in the future.

I can't offer any better advice than that which has already been posted but, what I will say is that I don't think you should give up trading. Why? Because then that 10K was lost for nothing and you've learnt the most important points of strategy, money management and emotional control all in one.

You can trade on Finspreads for 50p per point, commodities, indices, whatever. Choose something where its volatility suits you. Set your account up with a small amount, let's say £1000 (if possible, this bit is up to you) and make sure you don't risk more than 1% of it in any single trade that you do. Just so you know, risking more than 3.5% of your account equity per trade can result in 100% drawdown in the event of a long run of bad trades. Keep this in mind.

Take some time off trading, have a period of reflection, go over that trade (frame it on your wall if necessary) again and again, learn from it, size down, start trading again with a plan and never give up...

Best

JD
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Old May 28, 2008, 2:57am   #35
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Sorry Advfntrader to hear about your sharp turn in trading. However feeling sorry will not accomplish much. Trading in many ways is a journey of discovery, one discovers markets just as much as one discovers him/herself, what I mean is the discovery of things like badly based hope, pain and pleasure, pain barrier, learning to to without emotion what naturally is emotional and so on.
If you find markets and trading interesting, you will find the way to integrade trading into your busy day. If your main reason to trade is to get the 1st million by September, or to take revange on the market for the lost amount, you most likekely will end up with bigger injury, which I hope is not the case. There has been a lot of very good advise posted already. Stopping after paying the first instalment on the way to become a trader is probably not the best idea, that is if you know deep down that trading is something that interest you and trading is something you really want to do. There are a lot of people that would not risk any resourses, just in case things would not workout for them. They are perfectly fine and happy individuals and very valuable members of society. There also are those like you, the other traders and me who are preparred to take some risks, knowing well that there also are some rewards. We would not take all and every possible risks, or manufacture one, just to get more excitement. I would not choose to jump from an aeroplene without a parachute, hoping to land on a large heystuck, however exciting it might sound, would you? Yet when one comes to the market and places trades without careful preparation and some serious research, one is exposed to do a real damage to him/herself and to the account. Yet, the very fact that so many traders have experienced these "puryfying" losses is a testimony in itself that there are many haystucks around. I know for sure that if my risk avertion was extremly high I would not have done many profitable things in my life. When I look back I am pleased I have taken many risks, I still do not like the loosers, but without the loosers I most probably would not have the gainers, for that is the kind of person I am. I can assure you that I have not enjoyed any of these loosers, especially at the time of their happening, and some of them have been very substantial. One has to put it behind and go farward, treasuring the learned lesson/s without bitterness, assuring the next step will be done in a disciplined and a wise way. Taking some time to study the market and your own reactions, demo or small lot trading will not be a lost of time and apportunities, indeed it most likekly will make you consider things, which otherwise would have been undedected and undiscoverred, including all the positive sides of becoming a profitable trader. Preferably your wife also needs to be involved or at the very least be aware of your intentions to explore trading as otherwise what would have been enjoyable might become devisive, and that is no good at all.
I wish both of you the very best,
2be
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Old May 28, 2008, 6:23pm   #36
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my take and no offence intended

I always wonder about gamblers and what actually makes them stay in the game so much. I mean, to the outside (the general public) and people posting on bulletin boards, it just seems that these people don't know what it is that they are doing and yet, for the love of GOD, STILL do it.

My only real conclusion is this: in their minds, and their ways of thinking, they are right, it is possible and and losses and losing runs are just temporary or just part of the game.

I know of a gambler who has tried 4 times now (last time with a 25K loan he got from the bank - don't anyone do this please). He made about 60% of that loan in his first 3 weeks (he plays the horses on betfair backing or laying, he does not trade on betfair). It took him 6 weeks to get wiped out!! When I looked at how he played and what it is that he did he got really defensive about it, but end analysis was that he played probabilistically (which by the way is the only thing you can do with the horses), and he used martingale staking to try and turn a bad day into a good day. This worked 95% of the time, it was only the 5% that had devastating effects.

The problem with playing with probabilistic systems (or seeing something as probabilistic), is that there is no such thing as "certainty". Hence something you see as certain to happen because of this and this and that, might just happen because it was "likely" to happen, not because it was certain to happen. Because that's how you view it.

Your reply, 2be, is typical of all gamblers who still stay in the "hobby" stage and who continually lose money all the time they try, because to their mind they could do it. It never occurred to them that they couldn't do it because that means accepting defeat.

Notice I said gamblers because I am specifically talking about horse racing (where you cannot take out probabilistic effects). I really don't know of any successful tipsters or gamblers making a lot (apart from a handful and even they have losing runs). It seems that the entire horse racing industry is filled literally with people who think they could do it, and when they do it does not amount to much.

Trading is different and can be played differently. But alas, very few can do that, and knowing how it can be done so does not guaranteed success in doing it like that.
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Old May 28, 2008, 11:56pm   #37
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Quote:
Originally Posted by temptrader View Post
I always wonder about gamblers and what actually makes them stay in the game so much. I mean, to the outside (the general public) and people posting on bulletin boards, it just seems that these people don't know what it is that they are doing and yet, for the love of GOD, STILL do it.

My only real conclusion is this: in their minds, and their ways of thinking, they are right, it is possible and and losses and losing runs are just temporary or just part of the game.

I know of a gambler who has tried 4 times now (last time with a 25K loan he got from the bank - don't anyone do this please). He made about 60% of that loan in his first 3 weeks (he plays the horses on betfair backing or laying, he does not trade on betfair). It took him 6 weeks to get wiped out!! When I looked at how he played and what it is that he did he got really defensive about it, but end analysis was that he played probabilistically (which by the way is the only thing you can do with the horses), and he used martingale staking to try and turn a bad day into a good day. This worked 95% of the time, it was only the 5% that had devastating effects.

The problem with playing with probabilistic systems (or seeing something as probabilistic), is that there is no such thing as "certainty". Hence something you see as certain to happen because of this and this and that, might just happen because it was "likely" to happen, not because it was certain to happen. Because that's how you view it.

Your reply, 2be, is typical of all gamblers who still stay in the "hobby" stage and who continually lose money all the time they try, because to their mind they could do it. It never occurred to them that they couldn't do it because that means accepting defeat.

Notice I said gamblers because I am specifically talking about horse racing (where you cannot take out probabilistic effects). I really don't know of any successful tipsters or gamblers making a lot (apart from a handful and even they have losing runs). It seems that the entire horse racing industry is filled literally with people who think they could do it, and when they do it does not amount to much.

Trading is different and can be played differently. But alas, very few can do that, and knowing how it can be done so does not guaranteed success in doing it like that.
Hi Temptrader,
I am sorry if I have offended you and I am very surprised that you think I am a typical gumbler. For very serious reasons I can assure you I am not a gumbler, do not know that much about gumbling, so I cannot elaborate on it in any way, not even on horses. Please do not confuse taking risk with gumbling, and if one is not ready to take any risks one probably would not be able to trade.
This thread is not about gumblig, it is about advfntrader loosing what is to him a substantial amount of money, because of not being experienced enough in trading and risk control. Many tradres have started in a similar way, some of whom I know personaly. To be a profitable trader one has to start somewhere, one has to learn. Lost trades have tought many traders, myself included, very valuable lessons. It is with discipline and experience that one is able to keep the looses small, and allows profits to grow.
Advfntrader, sorry for that little diversion into gumbling territory, I hope that you will be able to discern the difference between gumbling and trading, allowing you to become a disciplinned and profitable trader. It is so easy to blame other things in order to place on them the responsibility for our mistakes. Markets are so quick to square us on this, yes we do make mistakes, but experience and discipline makes us to act quickly in correcting them, so that we can keep the looses small. Stopped trade very rarely is a mistake, mistake is when one trades against the selfestablished plan, strategy and rules. Mistake is a luck of selfcontroll, luck of discipline and an attitude which prevents one to treat trading in a professional way.
My best wishes to all,
2be
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Old May 29, 2008, 1:45am   #38
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Quote:
Originally Posted by 2be View Post
Hi Temptrader,
I am sorry if I have offended you and I am very surprised that you think I am a typical gumbler. For very serious reasons I can assure you I am not a gumbler, do not know that much about gumbling, so I cannot elaborate on it in any way, not even on horses. Please do not confuse taking risk with gumbling, and if one is not ready to take any risks one probably would not be able to trade.
This thread is not about gumblig, it is about advfntrader loosing what is to him a substantial amount of money, because of not being experienced enough in trading and risk control. Many tradres have started in a similar way, some of whom I know personaly. To be a profitable trader one has to start somewhere, one has to learn. Lost trades have tought many traders, myself included, very valuable lessons. It is with discipline and experience that one is able to keep the looses small, and allows profits to grow.
Advfntrader, sorry for that little diversion into gumbling territory, I hope that you will be able to discern the difference between gumbling and trading, allowing you to become a disciplinned and profitable trader. It is so easy to blame other things in order to place on them the responsibility for our mistakes. Markets are so quick to square us on this, yes we do make mistakes, but experience and discipline makes us to act quickly in correcting them, so that we can keep the looses small. Stopped trade very rarely is a mistake, mistake is when one trades against the selfestablished plan, strategy and rules. Mistake is a luck of selfcontroll, luck of discipline and an attitude which prevents one to treat trading in a professional way.
My best wishes to all,
2be
Hello 2be,

I'm merely drawing attention to the fact that allowing for losing runs and having the odd account getting wiped out is not enough.

I am sure you mean well and have good words of encouragement, but I was merely giving an example of gamblers (those that mainly play with horses) as an illustration of persistence for a futile goal - a goal attained by an absolute few, and even then the rewards are not worth it. And yet a lot of people poison themselves trying to attain something that very few can attain. In gambling (horse racing) it worse since losing runs are part and parcel of the game you have to get through . . .

From what I know of people blowing their accounts, it's usually because they played "brainlessly". When they are earning good money on a nice winning streak, they relax and think it's easy, and that's when things start to go wrong. They become mechanical in the way they do things and think the game is easy, and thus let their guard down.

Sometimes, it's simple because what they are doing is mechanical and they just happened to have a winning streak and it was only a question of time when their accounts would get wiped out.

And because the two above scenarios are viewed from a probabilistic perspective, it's is incredibly hard to separate what happened because it just by chance happened, and what happened because they knew it was going to happen due to thinking right.
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Old May 29, 2008, 10:09am   #39
 
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advfntrader started this thread I'm been thinking about the difference between gambling and trading a lot. My wife thinks I have gambled the money away as I didn't buy anything for it. In a way she is right, spreadBETTING kind of gives a clue, trading is actually gambling IMHO, BUT if you are disciplied and control the RISK then its different.

I had no real mechanical system, no rules and didn't control risk. hence I feel I was gambling. if I return to trading this will NEVER happen again and I will stick to a system 100%
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Old May 29, 2008, 10:25am   #40
 
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Originally Posted by advfntrader View Post
I had no real mechanical system, no rules and didn't control risk. hence I feel I was gambling. if I return to trading this will NEVER happen again and I will stick to a system 100%
and.... Here endeth the lesson !!!!!!!!

Advfn,

I think your maturity towards trading has improved 100% since your first post.... Keep it up !!

Regards,

Chorlton
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