Dumb Question from Total Newb

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Old Nov 16, 2009, 9:48am   #1
 
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Dumb Question from Total Newb

Hi there everyone - like most folks here I suspect I've stumbled into this 'game' with the intention of making some 'easy' money (i.e. not having to pick up a shovel and dig dirt/coal/pigsh*t/whatever for a living). Then the first post that catches my eye is the £10K wipeout. Yikes! Now the question:

I've heard that trading is a zero-sum game for everyone except the middlemen making their spreads. So there has to be winners and losers. If so, what are the defining features of winners vs. losers?

Thanks for you input everyone and good luck.

ajdavies
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Old Nov 16, 2009, 9:52am   #2
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Winners know how to cut their losses!!.. most people wipeout with spread betting because when a bet starts to go against them they keep hold of it in the hope that eventually it will turn around and go into profit.. it may work once,twice even 10 times but eventually it wipes them out! always trade with a stop loss!! good luck
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Old Nov 16, 2009, 9:55am   #3
 
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ajdavies started this thread Great advice, thank you. I'm compiling these answers and will use them as a checklist when I start to actually lay some wonga down. Right now I'm in information accumulation mode....call me cautious, but I couldn't have seen a better post than the £10K wipeout (no offence to the guy) as it really makes you think before you leap. Hope he recovers.
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Old Nov 16, 2009, 9:56am   #4
 
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Hey AJ, it's not a dumb question, but it is one which has been asked many times before. Check out these threads http://www.trade2win.com/boards/sear...archid=4794672 Obviously if you know the defining features of a loser you can avoid them and become a winner (or you would think).
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Old Nov 16, 2009, 9:59am   #5
 
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ajdavies started this thread This is a great forum! I can see not much work getting done today!
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Old Nov 16, 2009, 10:04am   #6
 
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Winners dont let the up and downs of trading affect them emotionally try to remain detached. Trading physcology is paramount.

The winner considers what is my potential loss on this trade? whereas a loser would only consider the potential profit.

Winners apply good money management and risk control- The aim of a winner should be to stay in the game long enough to reap the rewards of your trading strategy. The loser enters trading with the aim of getting rich quick. Often tries to make a few big hits but usually ends up striking out.

The loser beleives he knows it all. The winners know the market is always changing and everyone has something new to learn.

Evreyone experiences a loss at some point or another, Winners embrace their losses aswell as their wins and examine each loss carefully to learn what they can from it and raise their game to the next plateau. Consider your loss as a tution fee ! you lost the money but your now going to learn a lesson from it.

Last edited by adamhargreaves; Nov 16, 2009 at 10:07am. Reason: havent had my coffee, spelling mistakes !
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Old Nov 16, 2009, 10:59am   #7
 
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ajdavies started this thread Thank you Adam!
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Old Nov 16, 2009, 11:35am   #8
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i would say that the main mistake that new traders make is thinking that the answer is in the system, and if they only find the right system then they will make it. Generally most successful traders use comparatively simple systems, similar to those found in common books. They succeed mainly by being disciplined and consistent and by mastering their own psychology. The system is almost secondary.
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Thanks! The following members like this post: Black Swan
Old Nov 16, 2009, 11:48am   #9
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Quote:
I've stumbled into this 'game' with the intention of making some 'easy' money
It is not easy to make money consistently on a daily basis so that trading becomes your sole income source and frees you from slavery.

It requires hard work and lots of time....which is probably measured not in hours, but in years.

Discipline is the key and the ability to behave like an emotionless automaton.

Trading can be an exceedingly boring occupation so you need to find a way of trading that maintains your interest.

So much to say...there is just no end to it.
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Old Nov 16, 2009, 12:45pm   #10
 
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Originally Posted by ajdavies View Post
Thank you Adam!
Your welcome,

slightly off topic but some books that helped me when i started (which wasnt very long ago im still learning)

Trade your way to financial freedom - dr van k tharp
Market Wizards Jack Schwager (every trader i spoke to recommends this )
New Market Wizards - Jack Schwager
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Old Nov 16, 2009, 2:03pm   #11
 
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winners find an edge that works for them and use it as a tool to grow their capital, they do not use their capital as an excuse to aimlessly trade.

"1st do no harm" - capital preservation is critical, don't forget that the single largest hedge fund wipeout in history involved "0" stop losses and "2" Nobel prize winners (the book "When Genius Failed" = solid blow by blow).
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Old Nov 16, 2009, 3:01pm   #12
 
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I see that stop losses have been mentioned several times. Really stop losses aren't the issue, I personally don't use stop losses. The issue is with overleverage and undercapitalisation.

LTCM were killed by being overleveraged by the way. If they had been properly leveraged and been able to wait for the basis to narrow on their arbitrage portfolio they would have made a killing. Leverage forced them to unwind massive positions into an illiquid market.
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Old Nov 16, 2009, 3:11pm   #13
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Originally Posted by dealer911 View Post
Winners know how to cut their losses!!.. most people wipeout with spread betting because when a bet starts to go against them they keep hold of it in the hope that eventually it will turn around and go into profit.. it may work once,twice even 10 times but eventually it wipes them out! always trade with a stop loss!! good luck
Totally agree! i Use a very tight 8-11 pip stop loss
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Old Nov 16, 2009, 7:58pm   #14
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Totally agree! i Use a very tight 8-11 pip stop loss
including the cost of spread? What you on, 1-3 min TFs?
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Old Nov 16, 2009, 9:00pm   #15
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Originally Posted by ajdavies View Post
Hi there everyone - like most folks here I suspect I've stumbled into this 'game' with the intention of making some 'easy' money (i.e. not having to pick up a shovel and dig dirt/coal/pigsh*t/whatever for a living). Then the first post that catches my eye is the £10K wipeout. Yikes! Now the question:

I've heard that trading is a zero-sum game for everyone except the middlemen making their spreads. So there has to be winners and losers. If so, what are the defining features of winners vs. losers?

Thanks for you input everyone and good luck.

ajdavies

As has been suggested, keep, your losses small. This will keep you in the game, buying you the time to develop a consistently profitable system and the right psychological attitudes to deal with the unexpected and manage your money. When consistent, steadily increase your trade size, keep monitoring and refining your system, and watch the £s roll in.
Good luck.
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