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RE: The Art of Losing Money!

in LeoFinance4 years ago (edited)

You know doc, I have traded most of my adult life (no all my adult life and some of my teenage!), and now I don't really think about how I trade, and why I enter a position, when, how I exit. It has sort of become muscle memory. I only think, when I see something interesting happening. A good trade, or a bad trade. I pay attention to the aesthetics of the move :) But, now that I read your trading posts, the passion you put in it, it is honestly very uplifting to me. First, I want to thank you for that. There are millions of trading related articles I have read over the last 28 years. I am not saying yours are towards the best in terms of new material (as there is rarely new material in trading), but yours is cetainly towards the top in terms of passion and grit! I can literally see you grinding your teeth! That means a lot to me!

Ok, that's the background. I will start the reply with a quote: from Paul Tudor Jones

Every day I assume every position I have is wrong.
There is no training, classroom or otherwise, that can prepare for trading the last third of a move, whether it’s the end of a bull market or the end of a bear market.
You adapt, evolve, compete, or die.
Trading is very competitive and you have to be able to handle getting your butt kicked.

If you read these words from one of the most successful hedge fund manager of the world, you will see the analogy with sports, soccer! In trading, first you lose, then you learn how not to lose, and then, and only then, can you get on the road to generating a consistent income.

Let me mention a simple account size management process, this is widely used by many traders all over the world. It is a tried and tested method.

I will use your Hive trading account size.

Start with 1000 hive (or any multiplier). Your initial goal is to run the account up to 2.5 times your starting capital, or 2500 hive. When you reach this goal, Withdraw your starting capital 1000 hive, plus a profit of 250 hive. So you have withdrawn 1250 hive. Leaving you with 1250 hive. This is now your capital (treat it as capital, nobody takes your money!) Now your goal is to run the account up to 2.5 times again, to 3125 hive. Once you get there, do the same process again. Take half out. Reset. Repeat.

The time it takes to do this isn’t critical. You aren’t focused on achieving your target in a week or a month or a quarter. You’re simply following your plan and taking your setups. What this does is something two fold, first, you stop counting money!, second, you can never go belly up, as after the first rinse and repeat (and you are expert at this for your studies), you don't have any systemic risk.

Good luck, Doc.

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I too could see it:3 we know doc a little too well😅

That strategy might actually do me some good! Might work as a reverse catalyst and stop me from making impulse driven trades.

Hehehe :v :v

I am actually going to start implementing this strategy. It would have been much simpler if we only traded Hive, but we also need to divert some of the profits to different trades. But as dada said, the time doesn't matter ;)

but yours is certainly towards the top in terms of passion and grit!

Thank you so much dada! You guys know me all too well! When I enjoy something, I do it with all the passion I can muster. Once the passion is no longer there, I know it's over.

Going to the quote from Paul Tudor Jones

Trading is very competitive and you have to be able to handle getting your butt kicked.

This is gold hehehe! A lot of the times new traders tend to quit after losing on a few trades initially and I would have too if you didn't keep constantly reminding us it's fine! In fact, I have LOL! I started doing a few small trades back in 2017 bull market and obviously they all went horribly wrong an I gave up xD xD But I'm glad I restarted and this time with proper conviction!

The account size management is something I need to start doing right NOW! I had grown my account considerably and then I get cocky and lose a decent chunk of it --__--