You guys blowing out your accounts left and right

[wrbtrader]

Blowing a trading account, or taking a very significant hit, is like shooting someone in war...or watching another person get shot in front of your eyes -- it's kind of a rite of passage, and somewhat...of a requirement...to harden you up to the realities of this...game.

But more importantly, it's 2018...Make Trading and Your Life Great Again...High-Five`

I think a "rite of passage" would be big losing trading day or a drawdown but not a blowup trading account (trader can no longer trade until account is refunded).

Regardless, I've seen more traders here at ET talk about their accounts blowup or calling it quits in the past 12 months than any other year I've been here at ET. Yet, are you suggesting that blowups are more common than not ???

If that's what you're saying...I can't disagree with you.

Anyways, I can relate to what the OP of this thread is talking about. Many traders here at ET had talked about such as if its something they needed to go through although those words were not used but they seemed to react to their blowup as if it was just fender bender. The one thread that sticks out for me was the one where the guy maxed out his credit cards along with taking out personal loans to only start bleeding the trading account with consistent losses until the infamous blowup day.

wrbtrader

 

[comagnum]

Those that interview the big time traders have commented on how blowing up a time or two is something that they all seem to have in common.

The average retail account cant possibly be as small as some here claim. A study back in 2000 showed the average full time retail trader account was $114k, are retail traders accounts getting smaller?

Average account sizes of what I could find:

TradeStation (10-Q, 2010 Q4)
Equities $70,700
Futures $21,800

Interactive Brokers (10-Q, 2010 Q4)
Universal Account $125,000

Fidelity (10Q, 2017 Q4)
401(k) $99,900
IRA $103,500

 

[jinxu]

Anyways, I can relate to what the OP of this thread is talking about. Many traders here at ET had talked about such as if its something they needed to go through although those words were not used but they seemed to react to their blowup as if it was just fender bender. The one thread that sticks out for me was the one where the guy maxed out his credit cards along with taking out personal loans to only start bleeding the trading account with consistent losses until the infamous blowup day.

Yes, it would have been best if he had learned his lessons with a smaller account. It really doesn't matter if you blow a 100k account or a 1k account. It's the same lesson learned. Life is about making small mistakes so you don't make the bigger mistakes later on. Now he has a much bigger hole to dig out of on his path to profitability.

 

[maximumpossiblesuffering]

It's actually so easy , 99.9999999% of you can't do it.

I actually made money on a trade once. Admittedly, I hit the sell button in instead of the buy button and then accidently added to my short while attempting to reverse my position. By the time I tried to get out, the market closed. The next day the stock gapped down and I sucessfully closed the position at a profit.

Been trying to repeat that performance ever since!

 

[jinxu]

Not even close to reality. The person that lost $1k has far less pain (99% less) & reasons for changing then the person that lost $100k.

Blowing up a $1k account is at worst a minor obstacle whereas $100k is typically devastating. A $1k acct is hard to take very seriously unless your maybe 6 years old.

Nope.

https://www.elitetrader.com/et/thre...ills-to-crush-the-market.313333/#post-4518412

Note. I've even had a $1000 profit day already.

 

[wrbtrader]

Those that interview the big time traders have commented on how blowing up a time or two is something that they all seem to have in common.

The average retail account cant possibly be as small as some here claim. A study back in 2000 showed the average full time retail trader account was $114k, are retail traders accounts getting smaller?

Average account sizes of what I could find:

TradeStation (10-Q, 2010 Q4)
Equities $70,700
Futures $21,800

Interactive Brokers (10-Q, 2010 Q4)
Universal Account $125,000

Fidelity (10Q, 2017 Q4)
401(k) $99,900
IRA $103,500

I believe it is because I do know TradeStation, IB are notably larger although I'm not aware of any survey involving Fidelity.

Yet, what I was commenting about involved +20 brokers including forex brokers back in 2008.

As for full-time retail or part-time retail...can't remember if that survey was categorized as such. Regardless, there was an article on Bloomberg last year that the account size of the average trader were getting smaller.

wrbtrader

 

[comagnum]

Many traders have blown up, even after having years of success & large accounts , nobody is immune from blowing up. In fact most will blow up a time or 2 before they have a decent risk mgmt strategy, even than you need a fierce resolve to always follow it. Making a lot of $ is the easier part, keeping it is the hard part. The old saying "our worst draw-down is the one that we haven't had yet"

Jack Schwagger has interviewed many of the top traders. This is an excerpt of an interview someone did on JS, the excerpt on blowing up:

It's almost folklore in some circles that becoming a great trader involves getting wiped out or suffering some huge set back at some point – was that generally the case with the great traders you interviewed?
JS: Some did go through that, but others didn't. Some were successful from the beginning and others blew up multiple times on their way to mastering trading.

Do you think those who had a smoother time becoming top traders, i.e. avoiding blowing themselves up, did more preparation and studying before becoming traders?
JS: I think it's just a difference of approach. Some people have an innate need to apply risk controls and that stops them from blowing themselves up. Whereas other people start out not understanding the risks and have to learn about them on the way.

Reading some of your books such as Market Wizards many of the traders you profiled come over as very conservative in their approach to trading. So for instance they'll typically risk less than 5% of their capital on a trade.
JS: Actually most will risk far less than 5% on one trade. Many risk less than 1% on any single trade. That's true because risk management is such an essential part of trading. You'll find that the vast majority of top traders have a robust adherence to their risk management strategies.

 

[sss12]

Those that interview the big time traders have commented on how blowing up a time or two is something that they all seem to have in common.

The average retail account cant possibly be as small as some here claim. A study back in 2000 showed the average full time retail trader account was $114k, are retail traders accounts getting smaller?

Average account sizes of what I could find:

TradeStation (10-Q, 2010 Q4)
Equities $70,700
Futures $21,800

Interactive Brokers (10-Q, 2010 Q4)
Universal Account $125,000

Fidelity (10Q, 2017 Q4)
401(k) $99,900
IRA $103,500

I guess I would ask
Of these accounts how many clients and with what amounts are actually trading vs what they consider investing ? Ie: sitting in an under performing MF that they think is great since it is "no load", etc.
Especially the Fido's ?

 

[jinxu]

Reading some of your books such as Market Wizards many of the traders you profiled come over as very conservative in their approach to trading. So for instance they'll typically risk less than 5% of their capital on a trade.
JS: Actually most will risk far less than 5% on one trade. Many risk less than 1% on any single trade. That's true because risk management is such an essential part of trading. You'll find that the vast majority of top traders have a robust adherence to their risk management strategies.

Yeah, about this...Not my definition of risk control. This is more like a crutch for Trading 101.

 

[syswizard]

I actually made money on a trade once. Admittedly, I hit the sell button in instead of the buy button and then accidently added to my short while attempting to reverse my position. By the time I tried to get out, the market closed. The next day the stock gapped down and I sucessfully closed the position at a profit.

Been trying to repeat that performance ever since!

I love that story !!!