The reason why some people blow up their trading accounts.

Discussion in 'Psychology' started by Golden Retriever Trading, Dec 19, 2016.

  1. This is just trading 101, but it is something that I constantly battle, and I figured a lot of other people may battle the same thing.

    I am of course exaggerating, but doing it just to illustrate the point.

    kmiklas likes this.

  2. the op is clueless trader imho

    He missed the point or pint of guiness irish jokes
  3. haha, really? Please explain.

  4. Firstly you may have to read all my psychology threads , secondly it is all about the belief system , implanted in the minds of the blowhards .

    To even have a thought that you can make more than 0.2 % per day on average is going to lead to disaster .Your subconcious brain will use your thoughts , your thoughts will become action under pressure ,If you are thinking of risking 30% of your account to make 5% a day , your thinking of risking 30 % will soon lead to disaster after 3 losses .

  5. Umm yea, I think I would agree with you there. Did you watch the video all the way, or watch the same video that I posted?
    Zzzz1 likes this.

  6. I watched the video you posted but here is a great article and video from brain specialists

    Dr. Brett Steenbarger

    Self Sabotage for traders

  7. Not sure I'm going to spend over an hour watching that.. I'm not sure what that video has to do with my topic either.

  8. It will explain to you the brain's thought process and how thoughts become reality.
  9. Turveyd


    I do that in Excel all the time, if it wasn't for that going to be happening REAL soon, instant zillionaire then I doubt I'd ever bother to get out of bed ever, let alone before 2pm!!

    Getting off my ass and trading for more than 20mins occasionally and maybe, just maybe I'd have a shot!!
  10. JackRab


    Haha.. I thought you were talking to yourself @Golden Retriever Trading since I've got TEB ignored...

    I haven't watched the entire video, but did watch a fair bit... the main reason people blow up there accounts is because they are ignorant and just gamble without risk management.

    Also, you are right with the fact that a lot of 'traders' are over-confident, mainly because they do a backtest and think they hit the jackpot while the only thing they hit is a past data fit.
    That 5% you mention in the vid, it's certainly doable but mainly because of leverage. You have 10k, leverage it so trade with 200k in futures and make 0.25% = 5% on your account balance.
    The problem with that is eventually you run into issues with the strategy not being scalable to infinity. IE, when you hit 1mln, you will find it hard to run the same strategy because you would need to trade 100x initial size... and you hit bigger liquidity issues further up.

    That's also one of the reasons multi-billion dollar hedgefund "only" aim for what... 20-30% yearly?
    #10     Dec 19, 2016
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