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@lancelottrader, you can tell by the responses how much this has resonated with so many others, who have gone through something like what you have recounted (but maybe not quite so intense ).
I'm very grateful that you are willing to recount your experiences, especially since, as we can see from your current posts, you have broken on through to the other side. (Yeah, I remember when the Doors were new, too.)
I think this is what traders face, every one of us. It is gutsy to tell about it.
Hell @bobwest, you guys are only a few hours apart... you could get together, toss a couple back while listening to some old jams, talk trading and life in general It can be a lonely business for sure.
Your Trading Journey Part 2 is a real stomach churner. I think most people reading it will be able to recall that shell-shocked feeling from some point in their own journey, though I imagine for most it wouldn't have been a fraction of what you probably felt after losing so much that fast.
I had to laugh when I looked at your journal entry picture from Part 3. I have similar hand written journals with lots of sentences in very large letters, or capitals, in the same vein, "You F'ing idiot", "You're so dumb", "Why can't you follow your rules" etc. Electronic journaling doesn't have that same spontaneous passion that you can see in handwritten journals. Scrolling up to increase the font size or change to bold just feels too contrived
Thanks for revealing some details of your trading history. Glad you're on the right track now.
You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
Around 2010, I began to realize that I wasn’t getting anywhere with my trading and that my behavioral issues were a big part of that. Wizetrade had just come out with a new automated trading program called Command Trade. It basically allowed you to pick premade strategies or craft your own. Most of them relied on the same sort of moving average crossovers that their manual trading software used. There were additional conditions that one could add on. I ended up buying the software and committing myself fully into creating the best automated trading strategy that I possibly could. In reality, I was just slipping into a brand new Rabbit hole.
At the time, Wizetrade had these live online training sessions for the Command Trade software. The host showed his success rate with a pound/yen strategy he named, “Pound the Guppy.” Guppy was a nickname for the pound/yen currency pair. The strategy was extremely simple and relied on triggering an entry after some 1 hour ema crossovers had occurred. I spent the next three months modifying this strategy with my own conditions. Then I did months of testing, backtesting, sim trading with it.
The results I was seeing were fantastic ! The backtesting showed an extremely high win rate. My forward sim testing was also getting excellent results. It was probably the most euphoric time in my life. I felt I had truly “cracked the code” and that my I was well on my way to turning my PC into my own ATM machine. I would constantly take out my calculator and estimate my earnings with various win rates. Since my stop loss was roughly less than half my target, I would still earn a substantial sum even with only a 40% win rate. I had a friend that I had known since childhood and we would speak on the phone very often. When he commented on how upbeat and enthusiastic I sounded , I had to tell him about my amazing Auto trade strategy. My conviction and euphoria were so palpable, he wanted to be in on this as well. So, he bought a Command Trade program and opened up a $50,000.00 account with MB trading. He knew me since I was a kid and he knew I wasn’t bullshitting about how great my strategy was.
I started live trading with the program. I would attach the strategy before I went to bed, and sometime during the night (if the conditions were met) the strategy would enter a trade. It would either win 100 pips or lose about 40 . For reasons now that I can barely comprehend, I went from trading 1 lot to 10 lots in less than two months. I was totally convinced that this strategy was the true Holy Grail and couldn’t possibly fail. In other words, I was totally delusional! I deposited a whopping 100k into MB trading and started to attach a 10 lot strategy ($100 a pip). So, if the trade won, it would make $10, 000.00 and if it lost…it would be a $4000 hit. But my statistics were so great, I wasn’t worried at all…initially. Even worse, my friend did the same and attached the strategy to his account.
To make a long story short, the strategy started going through a losing streak. It lost eight nights in a row. That had never happened in any of my testing. My friend and I had just evaporated $32,000 each in eight days. I started to get worried. Yes, I knew there would be some drawdown, but I didn’t know how I would mentally react. All of a sudden , the doubts poured in and my euphoria and hope disappeared. How do I know this will work? Do I really know for sure this might not keep losing and burn through almost all of my $100,000.00 account? I decided to take a break on the live autotrading and do it on SIM for a while. I felt awful my friend also had lost over $30,000.00 because of me. The SIM results show that the strategy would have continued to lose consistently for the next several months.
How could this happen? Why did it work for so long and then go bad when I had bet everything on it? I was beyond devastated. I had lived in a fantasy world for six months and had never been happier. Now I didn’t even want to get out of bed. What I had failed to realize is that the pound/yen was in a strong downward trending mode for over a year. Of course the strategy worked perfectly during that time. The Financial crisis had cause it to selloff almost every night. By the time I got to trading 10 lots with it, the conditions changed. Suddenly the pound/yen got choppy every night and caused my strategy to fail. This was an exceedingly painful lesson.
To be continued
Damn. I've got Journey's Don't Stop Believin in my head as I read this.
Working hard to get my fill
Everybody wants a thrill
Paying anything to roll the dice just one more time
Some will win, some will lose
Some are born to sing the blues
The movie never ends it goes on and on and on
If it weren't for people like who you used to be, markets wouldn't exist.
Here are today's trades. I was a little hungover. Went to see the movie "Bohemian Rhapsody" about Freddie Mercury (Lead singer for the rock band Queen.. for my Millennial friends who never heard of him) and I had some Tequila at the theater lounge to get into the spirit of things.