When I first got into forex trading, it was my first taste of trading fullstop. I hadn’t traded in stocks/shares/commodities or anything else. All this nonsense about forex making you a millionaire in a short period – I didn’t believe it, but I realised there was potential to make a lot of money.
What happened during the next 6 months was pretty much a disaster. Me and my mate opened live accounts and then started trading whatever system claimed to make the highest number of pips. Had I come from a trading background in general, I would have known this was a stupid mistake, but since I was totally new to trading, this idea of making X amount of pips in Y days for some reason seemed a possibility, albeit an indistinct one at that.
I didn’t really fall for the whole EA crap, I knew it’s impossible for a PC to print money 24/7, otherwise the whole world would be doing it, so I kept on trying different manual systems. But each system I tried made me a loss. I can name these systems here and now, some of them are scams, others I can’t really testify for, but that doesn’t meant it wasn’t my fault. $1k loss became $2k loss. So then I was playing catch up, with each new system I thought I’d recover my losses in addition to making substantial profits. $2k loss became $4k loss. Not good, not good at all.
Did I lose my shirt? In short, yes. My mates trousers also went missing. It was only until I lost a lot of money did I stop live trading. What the heck was happening? I was a graduate from a top university in the UK, my family expected great things from me, I was supposed to have a fully fledged career, and be focussed upon that, not spend half the night in front of a monitor staring at squiggly lines. It was at this point I knew I had to stop.
I’m a very stubborn person, but nothing’s more stubborn than the market, as I learnt and paid dearly for. However, I was stubborn enough to make sure I can get to a stage where I’m making small, consistent profits.
So I stopped live trading altogether, and soaked up as much info I could over the next year or so, whilst working a full-time job. Only until I made a consistent amount of pips in demo for a few months (whilst devising my own system), did I step out into the real world for the second time.
When I look back however, losing my shirt probably was a good thing for me. I don’t think I would have been so determined to become profitable otherwise.
That doesn’t mean that new traders can’t become professional traders unless they’ve lost their shirt. Nor does it mean every new trader who loses their shirt will go on to become a professional trader. Yes, a few will learn their lesson and become more determined, but others will just give up, whilst others will never learn their lesson, resulting in the loss of multiple shirts.
Good article. Training in a demo account is extremely important for learning to trade. This personal story emphasizes the point.
I cover this topic over and over again at Forex Crunch.