#1 rule, keep loses small i have two friends who are "professional" poker players and believe it or not have pulled over +1mm from online cash games. one is actually ranked top 10 in the world in heads up high stakes sng.. i was trading well before i met the two but only became profitable when i really sat down and listened to their methodologies of "bankroll management". to this day i am no good at poker, but i can spot a good entry into any instrument all the time. my entries into trades are world class, but the reason i am not a millionaire trader is because of my exits. point being.. i very much believe it is possible to win this game, and although more difficult and complex than poker, trading is the biggest game on earth. -out of the last 1000 trades, 5 have destroyed my equity curve. something like +200+200+200+200+200+200+200+200+200+200+200+200+200... and then [-2000].. as long as you can limit those big loses. there are so many different ways to beat this game, you can try mean reversion, pair trading, breakouts, fading.. just limit those loses
How can you possibly 'blow an account' on one trade? It's painfully obvious that the most important element of your trading plan is MIA - Money Management. The only reason that I'm responding is that it also took me a number of years to finally understand what all the hoopla was about concerning MM. Have you ever read the simple fact that it takes like 84 losing trades in a row to blow an account when risking 1% of your equity per trade. It's understandable that most traders fail, when they are working with small accounts, and trading the futures mkts - they can't possibly use intelligent stop placements without incurring individual losses that eat up 5%, 10% or more of their account. The above is the one advantage of trading the forex. Most brokers will offer a large degree of granularity relating to position sizing. A small account will force you to trade microlots and will take some time to build a decent sized account, from which each winner will actually mean something, in terms of actual monies. But proceeding in this manner will allow you to slowly develop your trading methodology, while more importantly afford the opportunity for you to gain the psychological strengths required in trading. Trading is a slow and arduous journey. And it requires that you EARN the right to match wits with the big boys. Any fool can step up to the plate and throw money at them. You have invested a lot of time - now it's time to actually learn what is required. It can be accomplished - good luck to you.
Airwaves, I had the same thing happen to me with the GBP/USD except the opposite, every time I kept on having to deal with huge rises. I simply switched the currency pair I was trading to something that was less volatile and now instead of losing money the only thing I lose is time. I'm exiting out of a losing trade at 90 cents now but all I need to do now is make sure that I stop repeating the same stupid mistakes. I recently felt some extreme torture this week where I missed out on almost $80 worth of profit from one of my trades but it was far better than having my account wrecked for the third time due to crazy bumpiness of the GPB/USD. I recommend only trading that one and the EUR/USD when you have a good amount of capital behind you because otherwise the loss would just be too much.
I won 8000 euro in the casino in one night with punto banco, played the martingale system and was just very lucky I guess that one night. I lost it all + another 1000 on commisions.
You're right on.... IMO Micro lots is where anyone with less than 5k should be. $50 or 50 pips is your maximum risk per trade. Trade, not gamble.
Hi Meph. In this occasion, my account was already on its last legs and i decieded risk the last of my account on the trade. I opened up a forex account trading very small stakes using stops. As mentioned, in the past the only time ive made money is from not using stops, but i know that unless you have an unlimited amount of money, the market will bite you at some point. So, i traded small stakes(mini lots), and took stop after stop like a robot. In the past I would have reverted to my 'stops are for girls!' policy much sooner, but i really wanted to progress. So i carried on, stop pit after stop out. After a few months of this my account had drastically shrunk, losing $50 or so per day, which is when i bought GBP/USD at about 1.4940 or so (i think) It then began to tank, and my broker closed my position out within 3 ticks of the low so far, as i could no longer cover teh margin. Based on experience, the GBPUSD should now rally quite hard, making me feel a little sick. (its already put 100 points back on within hours of stopping me!!) It happens every time. I can think of about 5 times off the top of my head. Most memorably the ES low last March or so at around 666. My account blew up at around the low tick from being long. It then rallied like nothing i'd ever seen before, and would have given me my money back with interest in a matter of days had i been able to hang on about 2 more points!! lol I felt sick for weeks, watching it rise.
You don't know how to trade. You don't have an "edge", so you're trading based on your opinion instead of learning how to interpret crowd sentiment through price action. Here's an exercise that takes advantage of crowd psychology. If price is in an uptrend and approaches the last high, go long a few ticks before the high, or a tick or two above the high (or should I be referring to "pips"? Never traded Forex, but sim traded it with my son once, buying breakout through the last high). Your stop should be very tight, because a real breakout means the crowd thinks it's going higher and they want to be on that train; a failure to keep going means the breakout failed and was nothing more than stops getting triggered, and likely indicates a reversal. This is exercise works in an established trend or after an initial strong move; NOT in a range. Are you uncomfortable buying at or above the last high? If so, then you've pinpointed one of the reasons you're having trouble profiting. Something else you can try and likely find success: When you think of putting on a trade, choose where you'd place your disaster stop and wait for price to get there before trading.