Trader loses everything, starts begging online

A few weeks ago I was speaking with a new acquaintance who, upon finding out that I’m a Forex trader, started bragging about a friend who turned $20,000 into $2,000,000 by selling the Yen in 2014.

Almost immediately, my bullsh*t meter went off.

In my head, I was thinking, “his friend must either be very very dumb, or very very lucky. Possibly both.”

But I pretended to be impressed.

I widened my eyes, raised my eyebrows and said something to the tune of, “wow… that’s awesome.”

You see, I’ve been in this business long enough to know that for every one person who strikes the Forex lottery, there are a thousand others who blew up multiple accounts trying to be that one special winner. Survivor bias, anyone?

“Yeah,” my acquaintance continued, “he offered to teach me to trade… but I don’t know, I’m thinking about it…”

My eyes glazed over. This guy just told me that his friend made a 9,900% return in 12 months, but he’s not sure if he wants to learn from him. Go figure.

Not wanting to sour the situation, I went along with it.

“So what’s he trading now?” It was the most genuine question I could muster at this point.

“I… I think he stopped trading. He’s doing something else now”.

Hm.

So maybe this friend of his wasn’t as dumb as I thought. He knew he got lucky and walked away while he was ahead. Or perhaps he later went on to blow up his account? I didn’t ask.

“Oh, that’s a pity…” I said, as I got ready for the conversation to end. Small talk isn’t really my thing.

“Yeah, that’s a lot of money.” came the predictable reply of a non-trader.

I simply smiled, nodded, and let the conversation die in awkward silence.

This is why I don’t get invited to parties.

It’s not all about the profits

It’s no secret that people learn to trade because they want more money.

But the irony is that a focus on making profits is counterproductive.

Successful traders don’t win by making big profits. They win by not suffering big losses.

And they do that by betting small.

Check out this trader who bet the farm and lost everything:

trader lost it all

You can read more about him here.

Bottom line: Don’t get bedazzled by large gains. Watch your losses and the profits will take care of itself.

By |2019-03-04T15:57:43+00:00March 4th, 2019|Mindset, Philosophy|7 Comments

7 Comments

  1. Alex McCullie March 7, 2016 at 12:01 pm - Reply

    I hear a lot ‘hey i made high% return in the last 24 hours” but say nothing of the last week, month, year, and so on. Consistency seems to a truer measure of success. I’d be happy with smaller regular gains.

  2. Donovan Scoburgh March 9, 2016 at 8:19 pm - Reply

    Hello I read this article, and I understand about betting too big to get a large profit gain, but if you are trading a demo account, it does not matter, because I bet big to see what I can get away with, just for the thrill of it, because it adds excitement, and then when I get lucky with that big win, I immediately revert back to money-management. At least this gives me a feel that I can beat the market with a demo account and feel really good about it.

    Now if I were trading a real live account, then of course, money-management rules would apply for sure, but the trend is a culprit that plays into a traders greed, and on his emotions, to take more lot sizes, but a demo account provides a safe environment to watch the outcome of betting based on emotions, and you can learn valuable lessons along the way.

    • Chris Lee March 10, 2016 at 4:58 am - Reply

      Yup.. things would have been very different if this guy had traded with a demo account instead!

      • Alex McCullie March 10, 2016 at 5:13 am - Reply

        One FX trainer recommends opening a live $200 account where you can open positions with nano lot sizes (100 units for each nano lot), instead just relying on demo accounts to gain experience.

        With a 50 pip stop loss you are looking at a $0.50 loss per nano lot depending on currencies traded and your own account currency. His argument was that psychologically we take even a small but real $0.50 loss more seriously than of a $1000 virtual money loss of a demo account. There is a greater likelihood that you will actually document and review each trade. This wouldn’t be in MT with its micro lot minimum.

        Any thoughts?

        • Chris Lee March 11, 2016 at 9:06 am - Reply

          I’d agree. For most people, trading with real money is very different from demo trading. If someone can’t afford to lose a few bucks over a few trades, they shouldn’t be looking at trading.

  3. Jose Ayaia March 12, 2016 at 2:09 am - Reply

    Now what strategy do you believe that I employ in my composition, with the understanding that I am aware of the difference?

    • Chris Lee March 14, 2016 at 7:26 pm - Reply

      That’s the key question, isn’t it? Unfortunately, there is no one-size-fits-all answer and it depends on your unique situation and experience. More clues can be found within the pages of this blog.

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