Which brings me to this important point that I'm sure is on everyone's mind: If you lost everything, despite all the time and effort you invested in learning the trade, would you go back to trading again when you put together enough seed money? Or would you leave this field for good, never to look back? I know that I could never leave trading for another "job". Unsurprisingly, many traders that I've talked to share the same view.
OP By your definition I have never blown up, by mine I have blown up twice â both times my account dropped below the $25k minimum The first time I lost ~40% of my account â and replaced it The second time I lost ~24 % - right then and there I decided I was either going to trade my way out of the flippin hole I created â or quit I nutted up â now I can trade anything â and I know it (confident not cocky) If ever I lost everything â I would not give up trading â but the chances of me losing everything is slim and none â I love my losers and will not hesitant to say so â or take them RN
You brought up a good point. Certainly not everyone will wait until their trading account goes up in flame. While one trader walks away only after his or her account goes to the ground, the other might call it quits when it's down 50%. But the reason why one decides to give up trading is not all that different from those who literally wiped their trading account. The main reason in my mind is that he or she has no hope of turning things around and believes it's better to leave when there's still some money left. Either way, both traders crossed the point of no return, at which point their trading account is closed or they are no longer trading.
Okay, when I started trading lost 25% of my money(though I still had enough for margin requirements) and quit trading for about 8 months. Got back, lost about 10% and quit again for a year. Managing a living since entering the markets for third time.
Don't really fit into any of the categories. Made a profit trading regularly, never had a really big loss, but eventually I came to realize I had just been lucky, so I quit.
I lost about 30% of my account when I started on two swing trading strategies that appeared to work during testing, and then failed when I flipped the switch. What I came to appreciate was that one was designed during normal conditions and implemented during very high volatility, and the other was designed in crazy times and implemented during a period when the market was boring. I feel very guilty that I worked with a co-worker on both of them (they really did look good if you squinted right) and it cost him a lot more than it cost me. I also had a few stupid impulsive trades thrown in. At that point, I stopped, took stock, and decided to trade on a longer week+ horizon using some strategies cribbed from known winning traders. After that I had a long period where my trade ideas were starting to be more good than bad, but my execution in terms of entrance and exit points sucked and I made little if anything on my good ideas and lost too much on my bad ones. During this period I broke even. Then I did some work with computerized short term trading that lost me a tiny bit of money, but taught me a ton about a ton of things. Making everything an algorithm really gets you to think about what distinguishes one type of market behavior from another. I developed a library of charts that illustrated these distinctions. At this point I was probably down 33%. Then I took what I learned from the computer work and spent some time learning to read short term (minute chart) price action in several futures markets, and developed what might be called a real edge - a setup with a very positive expectation, that occurred frequently enough, had nice risk properties, and an algorithmic method for exiting the trades that has proven very good. That system is pretty much all I trade now, and it makes me money and I believe will continue to do so as long as the tax/regulatory environment remains relatively unchanged. The thing that saved me from blowing up my account was previous experience as a sem-pro gambler (poker, sports, blackjack etc.). From that I got an understanding of the Kelly Criterion and the 1/2 to 1/4 Kelly variant (THE most important mathematical concept most traders have never heard of, google it). I knew the importance of being able to distinguish positive expectation wagers from negative ones. I got most of the emotional crap out of my system - I knew the high of cashing out won money, and I knew the sick feeling you get when you do something really dumb that costs you a used car worth of cash. I think every prospective trader should start at the tables and books of Vegas (or your local equivilent). Nearly every skill you need to beat the market can be learned there at a discount.
I too think you can learn a lot from gambling, especially poker and blackjack. The concept of card counting is invaluable and I believe it can be readily applied to trading. Thanks for sharing your fair share of trader's woe, Big Daddy.
Yeah, it's too bad that card counting in blackjack is not really feasible right now. It was the perfect first class in gambling/trading school because it's simple, algorithmic, and has bet sizing that's totally at the player's control. Plus the number of trials you could get in was extremely high. Sports betting is actually better in many ways, since it has the oppositional nature of the market, very similar pricing, bid/ask spreads etc and has an analysis component, but the pace is glacial (a few betable games a week), so it takes a long time to build experience and prove yourself a winner.