How not to lose money

[p0box4]

Realistic expectations, which I would say matter a lot.

Yes!

If you start with unrealistic expectations you will be disappointed with the results, which can end up in frustration, which can end up in bad trading, not following the system, taking extra risk, ...

Like expecting to make a million in a year while just wanting to risk $3.500 isn't realistic and is likely never going to happen.

 

[p0box4]

It goes like this. Good traders don’t have egos (at least not during trading). Therefore, taking losses is not a problem for them. They trade to make money, and not to be “right”. It’s a numbers game to them. Each trade is just a probe with limited risk.

In contrast, those who cannot take losses, cannot trade! They usually have the need to be “right” (ego, conditioning, greed, etc).

This sums it up.

If you know your system and the statistics behind it then you should know that taking a loss wouldn't be an issue as long as you stick to the rules.

However that's not how most losing traders operate. I bet most of them have no idea what their performance stats are and never analyse what went wrong over a longer period of time so they know what parts they could improve.

For example i know that for my system not trailing my stop is more profitable than trailing my stop and i know that because i kept a record for almost a thousand trades now and i am still keeping track in case something starts to change.

 

[hilmy83]

As a high-performance coach and trader, I'm intrigued by the psychological aspects of trading. I'm looking to gather ideas and feedback on the psychology of avoiding financial losses.

What do you think are the most important psychological factors to consider? I'm interested in your insights, personal stories, and experiences.

Your input could spark some great discussions and be valuable to many in our community.

I'll add more myself along the way.

Thanks in advance for sharing!

Here's how not to lose money, make this true for your trading strategy:

(Avg win * win %) - (avg loss * loss %) > 0

 

[beginner66]

I reckon key thing for trading (other than having a real edge) if :
1. Manually trade.. trader must have stable internals. eg consistent object constantcy. If too much uncontained feelings then many fears and blind spots come to the fore and will drain your account in no time (even with an edge) when this happens one begins to trade against oneself without even realising it.
2. Automatically: Like some very experienced guys have said here, Stats, skills sets to extract stats and underlying nonvisible patterns, coding skills, stats skills,math skills, analytical skills, big data skills, computer skills and thus here is the crunch , having abilities in these areas well above the average person at uni/trading org/institution or a person just gifted
cheers

 

[SimpleMeLike]

Here's how not to lose money, make this true for your trading strategy:

(Avg win * win %) - (avg loss * loss %) > 0

Good Evening hilmy83,

I agree with you 100%.

The challenge or problem is for the 4 variables in your expectancy equation the following are unknown before the trader start clicking buy or sell button.

Avg win - Unknown
win % - Unknown
avg loss - Unknown
loss % - Unknown

So then the problem becomes how to determine these 4 variables and then the never ending search begins because there only so much time in a day to manual back test every trading idea or program every trading idea a trader thinks of.

But that is the beauty of trading right, seek what others can not find. lol

 

[p0box4]

Good Evening hilmy83,

I agree with you 100%.

The challenge or problem is for the 4 variables in your expectancy equation the following are unknown before the trader start clicking buy or sell button.

Avg win - Unknown
win % - Unknown
avg loss - Unknown
loss % - Unknown

So then the problem becomes how to determine these 4 variables and then the never ending search begins because there only so much time in a day to manual back test every trading idea or program every trading idea a trader thinks of.

But that is the beauty of trading right, seek what others can not find. lol

This comment isn't serious, right?

The challenge or problem is for the 4 variables in your expectancy equation the following are unknown before the trader start clicking buy or sell button.

Avg win - Unknown
win % - Unknown
avg loss - Unknown
loss % - Unknown

And that's why you need to keep track of trade performance, so you have access to these numbers and can calculate expectancy ... These numbers don't refer to future trades but past trades.

 

[SimpleMeLike]

This comment isn't serious, right?



And that's why you need to keep track of trade performance, so you have access to these numbers and can calculate expectancy ... These numbers don't refer to future trades but past trades.

Good Evening p0box4,

Please tell me how to obtain the variables to the equation below so that the equation is greater than zero year to year for the next 20 years of my life or once I have $1,000,000.

Thank you sir.

(Avg win * win %) - (avg loss * loss %) > 0

 

[p0box4]

Good Evening p0box4,

Please tell me how to obtain the variables to the equation below so that the equation is greater than zero year to year for the next 20 years of my life or once I have $1,000,000.

Thank you sir.

(Avg win * win %) - (avg loss * loss %) > 0

OMFG

You sound like someone who's on his first day of trading.

 

[SimpleMeLike]

OMFG

You sound like someone who's on his first day of trading.

Hello p0box4,

Lol, my point is. The only way to obtain those variables is to guess over and over and over and over again rather that guess be manual back testing, forward testing or programming.

it is all Guessing initially until the equation exceeds 0.

Go help the OP of the thread. I do not need no help on this topic.

 

[p0box4]

Hello p0box4,

Lol, my point is. The only way to obtain those variables is to guess over and over and over and over again rather that guess be manual back testing, forward testing or programming.

it is all Guessing initially until the equation exceeds 0.

NO! You clearly don't get it ...

You shouldn't be trading, you should be protected from yourself.

This is unbelievable, even my 7 year old son would understand this.