The way NOT to trade

[adrianallen99]

Firstly, this has Nothing to do with the book the way to trade. It is mearly an example of what you shouldnt do.

Don't try this at home, it was just a bit of fun.

I credited money to a new account today and at 2pm made a trade.

By 2:50pm I closed the trade for a 40% profit (30 pts) on my total capital.
I immediately opened a new trade, but to my horror within 10 mins I was down nearly 70 points. 65% of my capital and over 50% of my original capital.

This is a true example of bad money management.

With only half my original capital remaining I risked the lot in a desperate attempt, In 1 and a half hours I made back nearly 200%.

I closed the day 33% up on my starting capital with a maximum draw down of 65% Ive summarized the account value in points.

2:00 75 points
2:50 105 points
3:00 36 points
4:30 100.5 points

After the initial win. riding high on my success I looked for another big gain and lost out badly, leaving myself a massive amount to make just to get back my capital. All that in less than 3 hours.

I was very lucky not to get completely wiped out, and even luckier to end the day in profit and of course I have probably lost a few years of my life due to my heart racing as I watched my money dissappear

 

[bracke]

adrianallen99

I presume that you are not a novice to trading and that you know many of the pitfalls associated with speculating.

Why did you do what you did? You say that it was a bit of fun but you knew that it flew in the face of what you know.

Are you saying that it was pure gambling and nothing to do with speculating or was there some other motive

Regards

bracke

 

[wellshot]

thank f**k you made it

to fight another day [sorry...trade another day!]
no better experience, in my opinion!
the clever ones are the ones who learn from their experiences


what were you trading??

 

[boy]

adrian,

Wht were you trading, currencies?

 

[peedee]

It all seems ok AA, if your on valium.

 

[adrianallen99]

bracke: Im not a novice, but then I don't know what im doing either I would say it was gambling

I was spreadbetting.

 

[donaldduke]

adrianallen99,

Ed Seykota and Van Tharp call risking between 2-3% on a trade
'Gun Slinging', however you are engaging in the equivalent of
Global Thermonuclear War with your account..

As you say, defintely not the way to trade..

 

[peedee]

AA, no need to be so humble, good on you if you made it, but it was a bit erratic. Anyway, at least you come out on top( this time ).

 

[Selbats]

adrianallen99

I would be interested to know if you had a stop in place, and if not did you leave your screen unattended or did you watch your position move away from you?

 

[bonsai]

AA
only the future will tell what emotional baggage you have now collected and will have to deal with next time you trade.

Bad move.

You may have thought you won today but tomorrow it will still be with you.

Anybody know an exorcist ?

 

[oatman]

Reckon you will go bust.

 

[BBB]

DD - Van Tharp IS NOT a trader. He is a 'theoritian'. He can stuff 'Trade your way to Financial Freedom' where the sun doesn't shine - sideways!

Personally, I'd say risking 1% is a waste of time. Like 1 contract futures traders. If risking 2-3% will cause intolerable drawdown, then the 'trader' either nas nerves of snot or a very poor system, or both.

You can take all these books, throw them out. Look at your past trading record and do your homework. What would have been a more profitable figure to risk? Have confidence in yourself and your TRUTHFUL findings. Dont take as gospel something that someone has never traded says.

 

[donaldduke]

BBB,

Dont take as gospel something that someone has never traded says.

You are talking rubbish.

Van Tharp is a trader, he started trading 30 odd years ago and
like almost every other starting trader he lost money,
thats what got him studying top traders, he still
trades today: his companies retirement fund.. Which i would
imagine is a mutli million dollar account.

And if you read my post, i also said it was Ed Seykota
opinion as well, now do you question his experience too?

This game isn't about nerves or how big your balls are, its a
serious business, and most serious businesses would prefer steady consistent growth rather than erratic and volatile results.

 

[boy]

Time for a beer.

 

[qaza]

adrian........................its high time you started a hedge fund !

 

[BBB]

DD- MAy be I was a bit too 'off the handle'

Sure, we all know there is no one size fits all here. If Van Tharp is such a great trader/manager of pension funds and does so well, why does he have to make a living selling books, courses, training material, home study etc. If you think about it, you begin to ask yourself where he finds the time to trade!

As for Ed whats his name, wasn't he one of the turtles? Is this the same bloke who now makes a living selling his name on various products, interviews etc? Yes I do question their experience. I don't believe everything I read.

You make an important point:
'Which i would
imagine is a mutli million dollar account.'

YOU IMAGINE! You said it all. You've been drawn in to the hype, glamour and lies that are so prevalent in US marketing.

I agree with the last point you make.

At the end of the day though, if these theories and ideas that are put forward 'sit' with your view of the market and aid you in making money - good for you. Ignore everything I say.

I just happen to think they are both fakes, along with Elder, Toni Turner and the rest.

PS as a side point - a lot of the turtles are now broke. The method worked, but the system doesnt adapt to changing markets. Thats why they are all now flogging black box systems, books etc.

 

[sidinuk]

I agree with you BBB. 1% risk is fine if you have a large trading account, ie £200k plus. If you only have £2k then your not going to get anywhere only risking 1%. If you want to grow that £2k into £200k then you are going to have to risk more than 1% initially. As your capital grows reduce the %age risk. If you lose £2k it's not the end of the world and shouldn't take too long to replace (you are, of course, trading with money you can afford to lose). If you lose £200k then it'll be a lot more difficult to replace so it stands to reason that you should take much less risk with it.

10% of £2,000 is £200, 1% of £200,000 is £2,000. So you would still be risking 10x as much on each trade but 10x less as a percentage of capital.

If your serious about building a decent size trading account from an acorn then you've got to take a few risks when it's small.

 

[donaldduke]

BBB,

No Ed Seykota is the definitive Market Wizard, managed money
in the 70s and 80s made 250,000% percent over a 16 year
period (and therewere withdrawals during that period too).

The guy is a Genius, and he taught some of the other Market
Wizards as well. Have you read Market Wizards? You really
should..

As for Van Tharp not trading full time, he has said he gets more
pleasure out of helping other people. And the reason he only
trades his retirement fund is because like
you say he doesnt have the time to trade full time.

For anyone who doesnt know who Van Tharp is:

http://www.iitm.com/consulting/vkt_interview.htm

My mission in life is to teach people how they think and how they can change their lives and this planet by changing their thinking. Traditional occupations do not do that. If I can influence just one more person by creating great models, I'm eager to do so. People need to realize that they can wish upon a star and get their wish. What they really want is happiness. Happiness does not come from wealth or money or achievement. People get happiness from deep down inside of themselves. And they realize they have it by giving it away. I guess that's what I'm about-giving away happiness. I sell financial success, but what I'm attempting to do is give away happiness in the process.

 

[darrenf]

Personally, I'd say risking 1% is a waste of time. Like 1 contract futures traders. If risking 2-3% will cause intolerable drawdown, then the 'trader' either nas nerves of snot or a very poor system, or both.

You can take all these books, throw them out. Look at your past trading record and do your homework. What would have been a more profitable figure to risk? Have confidence in yourself and your TRUTHFUL findings

I'd say this holds true for me. I started out using 2% risk per trade, but through looking back over samples of trades and basically looking whats worked and what hasn't, I've been able to refine entries, stops, profit taking etc and am now confident to risk 3% per trade. I was starting to think I was out on a limb with this but maybe not.

My rationale for increasing risk has come as a result of confidence in my trading set up's etc and by refining the above, I have decreased average losses/ drawdowns even after increasing risk per trade.

I don't agree that risking 1% per trade is a waste of time though. If I were to switch to day trading (from position trading), I would only risk 1% per trade, at least initially,

I've also heard a lot of people say if you find something that works, stick to it. Personally, I don't fully agree with this either. If something works, great- reap the rewards but I always look for potential ways to tweak my basic methods. ie over a sample of x trades, how could I have squeezed out a little more profit or reduced average losses? To me, this is not looking to fix something which aint broke, but ensuring I adapt to changing market conditions. I have never done this by backtesting, just basically looking back and trying to figure it out. After all, as they say, any system with a given set of rules will stop working eventually!

 

[peedee]

Why not risk what you know, instead of what somebody tells you to risk. After all, if your gonna lose money why let somebody else lose it for you?