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[TheShanghai]

Hello everyone,

I'm in the process of setting up a live account after a couple months of successful paper trading, and I really want to perform just as well on a live account.
From comments in this forum, it seems that 90-95% of traders lose money in their 1st year trading a live account. There's a lot of posts regarding how you should get ready to lose money and etc. and they're really discouraging, and at the same time makes me want to get this first year over with if it is indeed a process that we all have to go through to win in the long run.
So what did the 5-10% of the traders do differently in their first year of live trading that made them successful? Did they do anything special to condition their psychological states? Did they all start with huge capitals? Any feedback would be much, much appreciated.

thank you all in advance

[Wallace]

Until you begin risking your real money, you won't know how you will experience trading, what your reactions may be.

There's some interesting and practical info in threads in the Psychology forum at Elitetrader: http://www.elitetrader.com/

The most important information to know is when a trade is a losing trade; exit the trade as soon as possible —
'let your profits run and cut your losses'.

[TheShanghai]

Thank you Wallace, I'll go check out Elite Trader. If anyone has anything specific I should watch for on a live account, that'd be great too.


thanks again

[elmagd2000]

The 5-10% who make money in forex in general :
- have a clear trading plan with sound money management rules.
- have psychological balance ( same feelings and reactions in profit and loss )
- have an edge in TA or FA which comes from experience and practice.

Good luck,
Hani

[4X4X]

Originally Posted by TheShanghai

Hello everyone,
So what did the 5-10% of the traders do differently in their first year of live trading that made them successful? Did they do anything special to condition their psychological states? Did they all start with huge capitals? Any feedback would be much, much appreciated.
thank you all in advance

Everybody loose money in trading, even very experienced traders experience loosing streaks, you too certainly will, take it as a compliment and put in the account of the cost of learning. This is where emotions come into play and most of the time hinder decision making faculties. I am not discouraging you, but trying to tell you in advance that this is a part of the game.

What distingushes winners from loosers is their money management/risk management. The size of their winning trades is 2-4 times bigger than the loosing ones, this is to be understood very clearly.

Winners have a very clear parameters of when to enter and when to exit, how much to risk on each trade, they have discipline and patience.

Jesse a great trader once said "Men who are right and can sit tight are uncommon", he further said that it is his sitting which made him filthy rich, means that the right time to sit back is when you position is running in profit(which require patience), it is when the market is against you where you should hastily close your loosing position. This judgement comes with experience.

[TheShanghai]

Than you for the great feedback, elmagd2000 and 4x4x.
I've had the same problem in demo accounts where I took profit way too early. I've tried distracting myself by watching a movie or something and leaving money on the table, but that sometimes has an adverse affect where the market goes against the profit I could've made during the movies, haha. Guess the real key here is learning to watch your profit run and retrain yourself from clicking "square position", *pulls on hair*, haha

[JR97]

Originally Posted by TheShanghai

So what did the 5-10% of the traders do differently in their first year of live trading that made them successful?

If you read any of the Market Wizard books, most of the 5-10% blew out their first few tries. Some multiple times. The difference is that they stuck it out while the other 90-95% didn't.

[TheShanghai]

Originally Posted by JR97

If you read any of the Market Wizard books, most of the 5-10% blew out their first few tries. Some multiple times. The difference is that they stuck it out while the other 90-95% didn't.

Noted with thanks, I feel a lot more prepared knowing that the chances of blow-outs are there, and therefore will not panic if and when they occur.

[JR97]

Originally Posted by TheShanghai

Noted with thanks, I feel a lot more prepared knowing that the chances of blow-outs are there, and therefore will not panic if and when they occur.

There's 2 trains of thought on this. Start small, so if you do blow out, it's not for all of your saved up money. However, undercapitalization is one of the reasons people do blow out.... so it's a tough call. The other train of thought is make sure you're not undercapitalized and therefore can absorb some drawdown up front while you get your feetwet and are able to stay in the game.

If you feel you are undercapitalized, O A N D A unit based trading is the perfect solution. Or any other platform that uses mini mini or unit based trading.

About your post where you said patience and letting profits run has been difficult sometimes. To me that says that you don't have a solid exit strategy... which is much more important than an entry one. Letting profits turn to losses or cutting winners short is something you had better get a grasp on before ever going live. If the problem is you, it's a matter of practice. If the problem is your system not giving exit targets, then you better get back to the drawing board.

Hopefully you can be one of the few that doesn't have to blow out. I thought I was going to be one of those. I had a solid system, MM system and schedule, was kicking serious butt in demo, etc. But going live is so much different. The game is the same... but you are not.

However, blowing out was the tempered by fire experience I think I needed. I took about 8 months off to re-evaluate and subsequently, came up with a system that suits me better than the previous one and it has made all of the difference.

[TheShanghai]

Wow, thank you so much for the advice JR. I'll definitely go look up unit based trading and not start with my entire life savings. Is a broker you've had good experience with in the past?
As for exit strategies, my problems in the past had more been caused by violations of my own trading rules due to impatience and fear. I have much better control of my own emotions as of this moment, in the demo accounts, but of course they're only demo accounts.
By the way, from the end of your post, you sounded as if your own revised system made the difference at the end instead of your psychological state. May I ask if there was any readings or programs you'd suggest I could do to even better prepare my own emotions?

thanks for all the great feedback so far,

[JR97]

Originally Posted by TheShanghai

By the way, from the end of your post, you sounded as if your own revised system made the difference at the end instead of your psychological state. May I ask if there was any readings or programs you'd suggest I could do to even better prepare my own emotions?

Quite the opposite. My pychological state was my undoing and changing that as well as my perspective of the markets was the difference. I then designed my trading system around my paradigm shift.

As far as readings or programs that deal with emotions, the only experience I have is with stuff that has nothing to do with trading. I used to be an audio/video mastering engineer and was exposed to a lot of Stephen Covey, Tony Robbins.. all that self help personal growth stuff. You can't go wrong with Covey. The 7 Habits of Highly Successful People is a must read.

The only other program is life itself. You can read about emotional mastery all you want, but until you actually experience the emotion and all of the pychological and physical aspects of that emotion, everything you "think" you know about that emotion is just speculative. On the bright side,when you survive emotional, physical, or financial trauma.. you know what your lowest limits are and therefore know how close to the cliff you can go. In essence you can get a handle on your fear of "heights". The fear may never go away but getting a handle on it is what it's about.

[TheShanghai]

Oh my god, I have went through Tony Robbins and 7 habbits of Effective Speaking in the past, too!
I just wanted to say thanks again for your helpful words, JR, they've made me feel a lot more in control now.

have a good one

[ampris2000]

you can do it.

be like a robot and if your system works fine for you on the demo,
it will work fine on the live account.

as everyone else has said, it's the emotions that have to be dealt with.

Sticking to your system no matter what. if it says to enter, then enter, if exit then exit.
i have lost some money earlier in my learning process because i didn't follow my system, i followed what I thought.

I also lost a potential gain this week because of emotions. I should have closed the trade because it was at a previous support point but instead i was thinking "i want more so I can get this or that." That's fine. Because that was my first experience with greed. If I had followed my rule i would have closed the trade.

my rule of : Forget about the money. Focus on being a good trader and the money will follow.

[mybuddy]

OK,
Rule #1 Don`t Do It Take Ur Money And Buy Ur Self A New Barabacue
Rule #2 Go BAck 2 The Demo ! lol
Seriously Best Of Luck,
Ciao
$

[TheShanghai]

Originally Posted by ampris2000

you can do it.

be like a robot and if your system works fine for you on the demo,
it will work fine on the live account.

as everyone else has said, it's the emotions that have to be dealt with.

my rule of : Forget about the money. Focus on being a good trader and the money will follow.

Your comment shows more logic and gives much more value than those who just go "don't even think about making money in the first year... etc."
I totally agree with the "forget about the money" thing. When I stopped stressing on losing money from bad trades, and realized that it's impossible to predict what individual trades will go as long as we know our edge will make it profitable consistently in the long run like the way casinos work, my performance in the demo account improved dramatically and had not faltered since. With each trade, I only remind myself of the edge from my trading system, and not the money on the table.
Anyways, I'll let you guys know how live trading goes, funding the mini account this week.