During my first go at trading, I've blew away several small accounts. I mean it never got to ZERO like @Xela said but it was effectively zero since it was not enough margin to trade anything meaningful. This time around I've gotten better. I'm also a little bit older and wiser and with other obligations. So, I'm balancing my trading with other stable income sources. Right now, I'm leaning toward system buildings and other efforts. If you read the story of the great traders, then you'll find out that almost every single one of them have blown out their accounts(perhaps multiple times) during their trading career. This is usually early on. Go read the Market Wizards books and it's filled with stories of legendary traders(even Paul Tudor Jones and many others) blown their accounts away in the beginning. Now, here comes the crucial part. They LEARNED from their mistakes and fixed it. Through persistence they eventually made it. That's the real secret of success to trading and in life. I came across this old interview of the Dan Zanger, the trader who made like 28,000% or whatever during the internet bubble. He gave back a lot of it during the bear market but then determined to win back. Now he's doing fine again. But his journey was not easy or short. He started in 1976(way before most of the people here on ET were around) and gave all of his profits up to that point back in 1991! So 15 years of profits gone. Then he finally learned his craft and when the internet bubble came in 1999 he turned $11K to $18M in 18 months. Yes, those were crazy times. The point I'm trying to make is not the money made. But once you got your technique down and fully integrated your thinking then money in the market will come fast and furious. Now, for some people that day might never come. For others it will come eventually. But you gotta stop doing what's not working and focus on what is and improve on that.. Can the typical retail trader survive that long of a learning curve? The answer is NO! So go get a job. Full-time or Side job. Start a biz. Or whatever while you learn. The market game is not easy. It takes a long time. http://chartpattern.com/articles/stocks-comm-2003.pdf
"3 Tips from 20 years of building trading strategies [Part 1] Time sure flies doesn't it? 20 years ago -- almost to the day -- I built my first mechanical trading strategy. I designed it from scratch using an old programming language called PERL. It was two strategies in one. Mean reversion and trend following on the S&P 500. With the hindsight of 20 years of experience, it was no where near the power of the 'DB Transaction' I discovered 16 years later -- but it was a start... Tip #1 Let the tools do the work Before that, I was committing the cardinal sin of not doing a computerized back test with my ideas. That's like driving a car without oil in the engine. Sure you might get closer to your destination, but eventually, the car will catch on fire and burn to the ground. I would do the 'ol "back test" by hand trap, which ended up making me cherry pick trades, deluding myself like a damn fool. A fool and his money were quickly parted in my case. Good thing I didn't have much back then or it would have been flushed down the memory hole. You ever do that? Almost everyone does it in the beginning, so don't feel bad...but don't feel good about it either. Tip # 2 Simplicity When it comes to designing strategies, simple wins. Take Project 88 for instance (the quest to forecast stocks with a specially designed 2000-core supercomputer). It's pretty simple on the surface. You look at a stock's current price patterns, and then crawl through every stock's price patterns until you have a bunch of matches...like combing through a massive FBI fingerprint database. Then you see what happens next on average after the pattern forms. Then you buy the stocks predicted to go up the most. There you go -- only three sentences to describe what we're doing. But of course you need to process trillions of computations to do those things... ...and you need to back test every single day for 30 years (7560 days multiplied by trillions of computations is not a small number of calculations right)? Digging for gold is simple in theory -- just get yourself a pick and shovel and a good plot of land -- but it's back breaking work in execution right? Tip #3 Be thorough Years ago, I read an ad about a one-legged golfer who could stripe the ball down the fairway 300+ yards like clockwork. I wanted to know who wrote the ad, and after some digging, I found an interview of the author talking about how he came up with the concept of the one-legged golfer. Turns out the author spent hours asking question after question from the guy who he wrote the ad for. He kept digging and digging and digging. About three hours into the conversation, the golf instructor casually mentioned that he learned how to consistently hit fairways from a one-legged golfer back in his early days. Bingo! That's the kinda of information that makes you stop in your tracks, and get your ad read. The result was a wildly successful golf educational business. By being thorough, and poking and prodding down every possible avenue, he found the hook that would get massive attention. When you design a trading strategy, you need to be thorough, no matter how ridiculous it seems. And let's face it...trading is a business and should be taken very seriously when you're doing your research. After all, you worked hard for that money you saved in a professional way, often investing several years of your life in higher education...it doesn't make sense to treat that same money as a hobby. Often times, the way the markets actually work, and how you think they work will be 180 degrees out of phase. Case in the point, the Smart Money Indicator for bonds. We used the same rules as the SMI for stocks, and the results were worse than the benchmark. Then we flipped the rules upside down, and a winning bond trading model was born. BTW, both SMI's for stocks and bonds, and short-term bonds remain on a sell signal, putting the strategy in cash. This post will be continued in Part 2 next week. Stay tuned... Trade Smart, Dan"
"I am leery of traders who have never lost it all. I think that intense feeling of desperation that accompanies such a horrifically deflating experience indelibly cauterizes great risk management reflexes into a trader’s very being." -- Paul Tudor Jones He also wrote: "The best lessons I learned from Jesse Livermore were his repeated failures and how he dealt with them. He lost his entire fortune four or five times, and I did the same thing although I was fortunate enough to do it all in my twenties on very small stakes of capital. I lost $10,000 when I was 22 and $50,000 when I was 25. At the time, it was all I had to my name and it felt like a fortune."
Let's also mention the 32% loss in one day, just to balance things out. If you bet big, you gain/lose big.
Blowing up an account teaches you you only need to make one mistake to blow your account. It also teaches you about complacency, something most people don't understand instinctively.
Boy, did I learn that lesson the hard way. Back when I was an engineer out of college, I had taken a commodities trading course at my alma mater. It was one of the first classes of it's kind at the time. I took $5k which was a lot at the time and gave it to this broker Saul & Company. I was unknowledgeable about the mechanics of trading at the time (as well as technical analysis), so I deferred to their trading decisions. The first trade was in pork bellies and they kept calling me to go short. I delayed my decision and that was a huge mistake. The market was dropping like a rock. By the time I gave them the go-ahead, it was too late....the market rebounded from a deeply oversold condition and my short positions lost big-time. After 8 more trades in cattle, potatoes, etc. my account was down to $600. This all happened within 6 weeks. I had just lost my down payment for a BMW 2002i.
Typing in All Caps...is just trolling. -- and you're most likely an easily emotional and failed trader. Just, primarily, living off of your doctor wife's income. Having a doctor wife must make any man feel belittled, I must imagine. -- She automatically is the one wearing the pants.