Dumb Question from Total Newb

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ajdavies

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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
 
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
 
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.
 
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.
 
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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.
 
I've stumbled into this 'game' with the intention of making some 'easy' money
Click to expand...

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.
 
ajdavies said:
Thank you Adam!
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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
 
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).
 
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.
 
dealer911 said:
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
Click to expand...

Totally agree! i Use a very tight 8-11 pip stop loss
 
ajdavies said:
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
Click to expand...


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.
 
ajdavies said:
I'm afraid some of the terminology here is going over my head gents. Could you enlighten me? TFs?? PIPs??
Click to expand...

:-0 Blimey mate you really are at the beginnings aren't you? There is a good 'pedia' on the site somewhere which will explain all the jargon to you. TFs - timeframes; traders generally trade off certain TFs, typically 3 mins to 4 hours. For you perhaps start with longer term TFs, 1-4 hours. Pips is the single measurement of what you trade; the profit, loss, risk... you take. "I made 40 pips, trading off a one hour TF, on a currency pair with a 25 pip stop loss..." Repeat that ten times a day and then teach us how to do it....;) Try the lingo on women, they love it...:whistling
 
There is no holy grail to trading like everyone thinks. Get that put your head from day 1 and your on the right road. (y)
 
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