Real Traders’ Stories: The 5 Most Important Failure Lessons From 3 Years of Trading


Get $5 Bonus & Start Trading Today!

The 5 Most Important
Failure Lessons From 3 Years of Trading

Real Traders’ Stories

I am a trader (Julia) from St. Petersburg, Russia. In this article I would like to talk about my 3 years of trading from two opposing perspectives: failure, and success.

Three years ago, I decided to quit a good paying job and start doing what I really like – investing and trading. I had a foundation in economics, I was tired of working full time, I had free money on hand, I was willing to take risks, and most importantly, I wanted to achieve financial freedom.

I chose to trade on the exchange. In Russia, you have to have a certificate of qualification to freely buy any instrument in Moscow and the United States. So it took me six months to take the exam, a process so painful that I still find it difficult to think about it. The good thing is that everything paid off, I got the qualification and finally started my trading career. Then …… came the failure.

Failure 1. Failure in executing the brokerage contract

Choosing a broker took a lot of time. I compared trading platforms, fees, withdrawal methods, but forgot that there are quite a few additional fees for executing trades. This is a problem that newbies tend to have, due to inexperience, opening an account at the beginning with insufficient preparation, trying everything and not making a good research and decision before starting.

I spent a lot of money just entering markets like NYSE and LSE, and also doing Forex, and the account threshold and per-trade fees added up and made my account look bad in the first year.

How can I avoid this failure?

– Having to read the terms of the contract carefully, even if they are long and boring.

– Executing contracts online, which makes the psychological pressure a little less.

– Comparing the terms and fee breakdowns of different brokerage platforms.

– Before you start trading, make sure to do your research and clarify your trading market and direction.

Failure 2. Lack of knowledge and systems

Trading with a real account at the beginning.

 

I also made a lot of ridiculous mistakes at the beginning, I had no idea how orders were executed or what buy and sell prices were. In the first year and a half of trading, I was watching prices go down I followed them and sold them and bought them when they went up, and I bought everything, gold, crude oil, index futures, forex futures, etc. Soon the account finished losing 20%.

 

Of course there were times when I got lucky and made a small profit a few times, for example, in 2018 I made a profit of 15,000 rubles, and almost so once in 2019.

 

But do not think that I do any technical or fundamental analysis, everything is based on “feelings” and “possibilities”. Trading without a system made me make a lot of mistakes, such as trading when I was too bored, trading with too many positions, trading different markets and instruments at the same time, not having any plan, etc. Now of course it’s different. Instead of focusing on why the price is changing this way and that, I pay attention to how it’s changing.

How to avoid this failure?

 

– To read the charts in depth and understand the tug of war between the buyers and sellers of the market.

– If trading intraday, be sure to pay attention to market momentum.

Failure 3. Switching frequently between trading systems

In my short trading career, I have tried at least 40 techniques and indicators, none of which I have used for more than a month. I was always disappointed and constantly looking for something new. Top traders agree that this behavior is the biggest mistake a novice makes.

How to avoid this failure?

 

– Trading systems should be concise and you should try all the features of a system for at least 4-8 weeks to collect some data before making a decision. Losses are a part of every trading system, but not a reason to change systems.

Failure 4. Neglecting money management

Not establishing your own trading principles

 

I started to learn some trader’s principles, such as not losing more than 2% of your capital on any one trade and not losing more than 6% in total for a month. However, I didn’t set the number of losing trades in a day, and it was still harder for me to stop even if I was almost running out of losses for a month.

How can I avoid this failure?

 

– Set the number of losing trades allowed in a day.

– Set an acceptable amount of daily/weekly/monthly losses.

– Don’t violate your own money management principles.

Failure 5. Holding a losing position

The losses have caused me severe psychological discomfort and trauma, I have become very negative, I am always away from my family, and I have terrible insomnia at night. Every time I needed to increase my capital investment, I felt that I could no longer accept the stress of the losses.

For 90% of the losing trades, I always tend to wait for the break-even point to appear, sometimes for days or even weeks on end. I spent the waiting time by imagining scenarios to look forward to. I later learned that this is one of the biggest problems in trading and it took a long time before I slowly changed this mentality.

My biggest losing trade was held for almost a week and finally closed automatically because of a contract change. Perhaps, at that time, I was in a broken state and maybe one of the biggest losses would have made a slight change.

How can I avoid this failure?

 

– Stick with the stop loss. It’s not that you have a bottom in your mind, but you must set a stop loss. The stop loss is triggered, and that’s when you have the least amount to lose.

5 lessons of failure to move on!

I lost 30% of my money in the first year and fell into self-doubt. After deep introspection I felt the need to make changes, so I went along these 5 directions.

Success 1. Change the trading platform that suits you

I decided to find a more suitable platform that would allow me to trade the futures market of the Moscow Exchange, which should also charge reasonable fees, offer many unique indicators, and allow a longer period of free testing.

Success 2. learn about cluster analysis and order flow

I think it is necessary to learn how prices change. I found a trading platform that provides better order flow data. In addition, cluster analysis charts are more useful for me than candlesticks. Take the example of the Russian Trading System Index (RTS index), which has no time factor and forms new bars as soon as the number of contracts reaches +1000 or -1000.

In this chart, I can see the changes in the volume data. With a regular candlestick chart, I don’t have access to this information.

Success 3. Keep a trading journal to test trading strategies and have principled trades

I started keeping a trading journal, analyzing every detail in detail, reflecting on it and then carefully going to test it. I can’t say that my trading method is perfect now, but I can feel that my trading strategy is improving step by step. I pay more attention to the market information, which is hidden in the order flow, in the charts and in each candlestick. Perfecting the trading strategy is an ongoing process.

Success 4. Improve English and expand my horizons

I read information in English. The financial trading market is international and most traders communicate in English. Therefore, this language skill has become necessary for me to search for important knowledge and information. I have read more than 45 books on trading skills and mindset in English alone in these 3 years.

Success 5. Build your trading style gradually

Trading inevitably brings us all kinds of emotional ups and downs, and creating your own trading style helps to make it more stable. By learning order flow analysis and trading on my favorite platform, I was able to slowly reverse the powerlessness I used to feel in the face of trading, gradually understanding the market, keeping track and reflecting on it.

My index futures contracts traded on the Moscow Exchange
I only trade for a few hours a day, leaving the rest of my time for my family, sports and life, instead of staring at the screen like I used to. My English is improving, so it is easier for me to go for trading explanations and training.