How did trading make you lose your wife?
Asking for research and advice purposes. I am not married yet.
How much did you lose on the journey to becoming profitable?
- Thread starter Risepoint1879
- Start date
Asking for research and advice purposes. I am not married yet.
With this statement it's very clear you are lacking any immediate understanding of probability.
Trading is gambling. There is no difference. The only difference is you look down your nose at gamblers as degenerates while you blow huge money on terrible risk high leverage trades. Traders are also degenerates when they dont possess proper risk management and "trade for the thrill". Many traders who wouldn't call themselves gamblers have lost their houses and livelihoods because of the addiction. You don't "become the bank" with an edge. You can still lose with an edge just the same, especially when your edge is ephemeral (not statistically sound). Your implication you can print money with an edge comes from ignorance. Not from any mathematically sound basis. An edge is worthless without risk management to allow your expected value per trade to dominate.
1. If you stick to the 1% rule you have 100 trades to come out on top. You can back off this to 0.75%, 0.5%, 0.25%, etc as you lose. Call it the "reverse martingale". Assuming the expectancy of your strategy is is positive (+EV in the gambling world) the law of large numbers will nearly guarantee your 1% per trades produce profit eventually.
2. Gambling is not a coin flip. In blackjack your odds can be brought up so the house only has 0.5% edge. Played completely correctly, you can have a positive expectancy on nearly all of your hands. Each game has it's own odds, with poker having the best odds as their is no house to bet against (though the rake eats up some of your expected hourly profits).
You've been kind enough to demonstrate the reason why many successful traders started out as gamblers (in the casino sense). If you don't understand basic probability enough to grasp the concept of risk management you are doomed to fail.
Exactly how someone who doesn't have a edge would think!
And I said there are similarities with trading and gambling.
If you don't have an edge it's gambling. Like in any business, if you don't have an edge it's gambling. What's the success rate of restaurants or most businesses? I don't know but I think it's around 50%.
I personally risk 2.25% per trade. Why wouldn't I? I know what my worst losing streak can be, and I know that at 2.25% per trade, I'm ok with it. And now I can make twice the money.
If you know you are consistently profitable, and comfortable with the drawdowns, why not scale it up.
But then again, I'm the guy who gets new glasses and wears them the whole way home, when the eye doctor said it takes 3 days to acclimate. I have a pet peeve with safety rules that are pointless. Results of having an overprotective father....but I digress.
Lost my mind many times-don't think it came back, was making it in stocks but dropped 105k in futures. They don't trade the same long term/intraday-and yet they have similarities, plus forced to learn to program.
I use to fly to Vegas every weekend in the 80s to gamble, never thought for a second I would lose, I counted cards and was good at it, you have to have an edge in any business you own and it is always the same, Knowledge of what works for you.
I use to fly to Vegas every weekend in the 80s to gamble, never thought for a second I would lose, I counted cards and was good at it, you have to have an edge in any business you own and it is always the same, Knowledge of what works for you.
Even if past performance indicates that you have an edge, trading is not directly comparable to being the house in a casino game. One is a closed system with fixed rules subject to 100% known mathematical probabilities; the other is a dynamic system where the "rules" change over time in ways that are often unpredictable, and on top of that is subject to a variety of risks that go way beyond garden variety drawdowns.
With a system that's 50-50 and a run of 200 trades, going from 2% to 3% risk per trade raises your odds of a 20% drawdown via straight consecutive losers from <10% to above 50%; and the odds are higher if you're talking about peak-to-trough DD including some winners rather than straight losing streaks. This is the basis for the 2% max-risk rule of thumb. Aside from that, there are a number of excellent reasons to risk even less:
1. Many traders desire lower max DDs than 20%, or have systems with lower win-rates making long losing streaks more likely.
2. DDs will often be worse than a straight mathematical analysis suggests, due to being accentuated by factors like trading mistakes or errors, and inferior performance due to the emotions of trading during a DD.
3. A drawdown of any size suggests a non-zero probability that the "edge" underlying the system is deteriorating, or has even eroded completely. This happens even to players with a seemingly unbeatable "house advantage" structural edge due to changing regulations, market structure, technology, etc.
4. Being in a position incurs many risks which may not be captured by a theoretical model or retrospective performance analysis - these include things like overnight or over-weekend gap risk, risk of hardware or internet failure (at your end, the broker, or the exchange), and the risk of illiquidity or "flash crash" type events leading to larger than forecast losses.
5. Decreasing marginal utility of money and the disproportionate psychological impact of losses vs. gains, may lead a mature trader with plenty of money to take fewer and smaller risks than one earlier in their career.
Put it all together, and for most traders and systems it will make sense to risk something between 1% and 2% per trade, with 1% being conservative and 2% being moderately aggressive.
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Lost 85k , I'm a licensed broker , and honestly I never saw any traders making any money , only people who made money long term and I;m a witness , folks who never sold any good stocks but kept adding for years.
trading is not for most people that's a fact ... I know someone at ET who had at a certain point over 700 FESX daytrading for his own private account since he was in a trading group.
It took me over 14 years to know the ins and outs of options, it took me another 14 years to get futures. Most people don't have that timespan in mind. I have about an iq of over 130. So it's not that I am stupid ... it cost me a lot of sweat and tears and a lot of blowups of small accounts.
It took me over 14 years to know the ins and outs of options, it took me another 14 years to get futures. Most people don't have that timespan in mind. I have about an iq of over 130. So it's not that I am stupid ... it cost me a lot of sweat and tears and a lot of blowups of small accounts.
daytrading is not for ALL people according to tickmagnet.