Blown out

Discussion in 'Journals' started by hybridmachine, Oct 21, 2002.

  1. I have, for your viewing pleasure/amusement, my trade log from the past 3 months. I have gone from 2000 to about $383.00. Aside from the humor/sadness aspect of this, I wanted to share this with you as a learning experience. Please note that charting is up to you. I did not save my charts, just my trade log.

    The number one thing I have learned from this ride has been my failure to control my profit/loss ratio. We all talk about using technical indicators and other sorts of things to gain an edge, and drive our win/loss ratio. In my experience though (granted it is limited), it has been my profit/loss ratio that made all the difference. Not that win/loss is not important. Certainly, a good win loss ratio, coupled with a good profit loss ratio will lead to improved profits. If your profit/loss ratio is out of wack though, you will find certain failure, irregardless of your win/loss success rate. That lesson has cost me about $1662.00

    The other lesson is that too little capital will prevent you from being able to sustain the inevitable group of losses that you will incur.

    So, my take away is this:

    1) A win/loss of 60% to 40% is about what a good intermediate trader can hope to achieve, 70/30 is a master trader.

    2) Profit/Loss control is where the biggest impact is had. Don't take your profits early, and don't let your losses run. Set a goal of about 2:1 Profit/loss. The specific ratio will vary on your time horizon and volatility of the underlying security

    3) You need a fair amount of capital to survive the early stages. I'm going to say about 25K or so. Anything less will drive you to take wins too early, and hold onto losses in hope they turn. Both moves are fatal.

    Well, there you have it. For now, I'm out of the game. I'll be back, but for now I'm going to focus on building a trading system on the ES/NQ, and focus on finding the optimal intraday (3/5 minute time horizon) profit/loss ratio. I will also seek to find what the best starting capital base is. Then, in time, once I've tested my system, and built up more trading capital, I'll jump back into the game.

    -Good luck and happy trading
  2. good luck,,,
    believe it or not, blowing out,,,no matter what your capital is a good thing in the big picture as you will come back smarter and stronger
  3. mdmbud


    overtheline........... Your comments are so true!

    Hindsight, the first time I lost all my money really ironed home some trading principles that allow me to succeed now. I was happy my first blown account was not large.....
  4. forget win/loss ratio; it is meaningless. It is the positive expectancy of your system that counts. Simply, and just as a beginning on your road back, consider setting your profit/ loss ratio first; say $100 loss versus $500 gain or 5-1. Then decide what trading instrument and position size makes sense to basically achieve those objectives without forcing your system into rapid losses or never getting a gain. That done trade your system and you will realize that a win loss ratio of 10-20% will keep you in the game while gaining needed experience. Good luck trading the noise while undercapitalized, I don't envy your situation, so be sure you get the money management correct before beginning again.
  5. Blowing out your account at least once is almost inevitable. When you blow out your account, you are faced with two options. 1.) Hang it up, and realize that you were never meant to trade in the first place. 2.) Get so inspired that you spent every waking minute, perhaps for months, researching and studying and honing your skills so that the next time you get back in the game, you'll be well prepared and not so inclined to take the trades and perform that actions that led you to that prior painful blow-out in the first place. Good Luck!

  6. I was curious if any of the traders on this board have done an analysis of their win/loss ratios, and their profit/loss ratios, and would be willing to post that information here.
  7. % Winners: 41% % Losers: 59

    Gain/Loss Ratio: 2.55:1

    The gain/loss ratio is far more important. For every dollar I lose I make back 2.55
  8. EricP


    ~80% winners, ~20% losers
    Avg gain / Avg loss = 1.0:2.0

    It takes all kinds, I guess. My average loss is always greater than my average gain, but my winning percentage more than makes up the difference.

    The bottom line is that you need a system that will have a consistently positive equity curve over time.

    Best of luck,
  9. 65% winners 20% breakeven 15% losers

    ave win .22 - .28 ave loss .12 -.16 some months are better then others.
  10. smokey_mcPaat

    smokey_mcPaat Guest

    That lesson has cost me about $1662.00

    lol- just wait- one day that will be what you lose in just one bad trade with a little size on!! i bet you can't wait !!!:D :D i'll tell you though, much more fun (and rewarding :D ) to trade with size!!

    SIZE up, HoeZ doWN!!!!
    #10     Oct 21, 2002