Honestly for many years I did’nt get this rule. Why is that
that 90% of traders - as the rule says
- losing their whole money on the forex
market. I need to make two distictions first. Pro primo, the percentage is
worser than 90% I do believe that now, it might be over 95%. I have a friend who works for a german
brokerage company where is the winner trader is rare as a tasty school lunch.
Pro secundo, when I started the trading I had thought it only sounds good, only
an urban legend which could’nt be true.
I am already spent 10 years in this business, and in the
first four years I was in the 90% and after a while I wanted to change my
method, because it showed me which I had learned from many books and from
different trading coursed did’nt work. I figured that out I am also a member of
great losing crowd. So I placed the question. What the 90% of the traders are
doing wrong? If I could answer to this question I might be in the 10%. So for
one or two years I just had read blogs, comments, trading ideas to figure the
answer out. And finally I did that. When I had the answers it was like coming
out from the darkness to the light. All the time it was at right in my face the
answer but I could’nt see that.
So here are my anwers for tha question:
- They are
overpositioned often times. They take too big postions because they are greedy,
they can not imagine that any position can turn into loss. Shortly they are too
greedy. I am still greedy but not supergreedy.
- They use too big
leverages - 1:50 or 1:100, Normally I use no more than 1:2 or max 1:3
- They do’nt cut the
shit. They are sitting in a losing position and hoping that the markets turns around,
maybe it turns and they are lucky, but it is enough only one time when the
market does’nt recover, and they blow up the account. I use each day my
priority rule: Cut the loss and let the win ride”
- They do’nt let the
winning postion going far. In this situation they are scared. Only with few
points gain take the profit. But on the losing side they leave it for tens or
hundred points. What I try to do is following the market if get started any
trend.
- If they lose they
increase the size of the position. I guess
so if you are in cold streak you have to reduce the size of the position
because you are mentally beaten. Why they increase? Beacuse they want to get
back the loss asap. This is more personal by that time making revenge, vendetta
on the market. They want to show the market they are smarter. Personally I do
believe the market is much smarter tha me, beacuse he never do mistakes.
- They are
overtrading. They want to be all the time in the market, because they beleive
if they are flat they are losing money.
- They are listening
on some gurus or tv analysis, or their broker tips. My rule is that “Never
lissen to anybody” Because it is your money not their money, giving advice is
very cheap, trading it cost so much.
So guys, these are
biggest mistakes. But left one another issue why is the 6 months? I have to tell that I have never met any guy
who was lost his money within a year or 2 years, because it is impossible. ou
will lose it within 6month or you lose never. If you have a wrong money
management system you will lose within 6 months, you wont live more than
6months. My personal recorder at one company I worked for was a guy who lost
all his 150k euro within 4hours. He is my guiness recorder.
Finally what is the lesson from the whole article. That we
have to watch only the losers and do the opposite what they do. That’s simple.
I made mistakes a lot, I did it too this errors, I am a
human being too. But I learned how not to do stupid things anymore. My trading
god tells me each day right into my ears - follow your money management system
- which means “cut the loss and let the win ride”.
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