When can you say that you’re Trading the Financial Markets successfully?

Hi All

Yes, I’m still around and don’t post as frequent as I used to but I think that’s part of the evolutionary process with regards to trading. Initially, you have so many questions, so many thoughts and just want to document everything. I’ve felt that I had nothing new to add with regards to new thoughts and experiences as I feel I’ve gone full circle… my trading is now successful and I’ve at least experienced and adapted to all the various scenarios which Trading can throw at me.

Now that goes back to the title of this blog post… when can you say that you’re Trading the Financial Markets successfully? The thing is that I’ve felt this before in the past..  I’ve had periods of months where my trading is going well and I think I’ve finally made it.. only for something to go wrong and my account ended up below where it was before the successful period.

The thing is that the markets change..  a bit like the seasons in the year and then again, these differ from year to year.. ie sometimes you get more snow, sometimes you get a lot more rain in the summer etc. In trading, there are bull markets, bear markets, periods where the market is ranging, periods of low volatility and high volatility… you need to be able to navigate through these.. even if it means sitting some of these out until conditions are favourable again. A bull market one year is not going to be the same as a bull market another year so you do need to be adaptable or have a trading strategy that can weather all storms.

I’m now almost a year in where my account has seen a rather rapid increase in it’s account value. I still haven’t made back all the losses since I first started trading but so far, the account is growing back a lot quicker so I’m hoping I should get back all the losses in a third of the time it took to lose. I also believe I’ve weathered enough of the seasons to say that I’m now successfully trading the financial markets… of course that’s subjective also as there are always going to be periods of drawdown and you’re never sure if it is drawdown or possibly worse (ie the years good results were just a blip and in fact, you can’t trade).

So, I just want to mention that I’m now experiencing my first extended period of drawdown. Previously, every month in the past year had been positive and I only had 2 weeks where I had losses and these weren’t 2 concurrent weeks. This extended drawdown period has been 3 consecutive weeks which is first in my period of ‘successfully Trading the Financial Markets’ …  the thoughts which had surfaced were ‘Is it still early for me to say that I’m trading the markets successfully?’, ‘Do I actually need more than a year of successfully trading to say that I’m a consistent trader?’ ‘Am I going to be able to get myself out of this?’ etc

I felt that it was important for me to stay focused on my trading strategy during this time. In the past, as a newbie trading, as soon as you get the first signs of losses, you would bail on the strategy you were trading and find something else. Successful trading strategies all experience periods of drawdown and the last thing you should do is to abandon it.

Anyway, the drawdown I experienced was 20% of the account value and I’m not quite there in popping out the other side of it yet… however, this past week, we are just 5% away from it so I’m confident that I’ll pull through. The diagram below shows what I’m talking about.. it’s a picture I found on the Internet so not one of mine but you can see that the person started with 10,000 in his or her account.

They initially suffered a 20% drop in their account to 8,000. They managed to claw back 1000 but then the account drops again to 7,000. The account is now 30% below the starting figure. Luckily, they were able to pull through and make back all the losses (denoted by the orange circle).



Taking my own figures. The initial 20% drawdown I’m talking about on my account is taken from the start of my winning period. If I taken the period from when I first started trading, I’ve still got a long way to go before I make back all the losses I’ve incurred since I ever started trading. In fact, you could say that I’ve been in drawdown since I started trading!

I tell you one thing though, when the time comes and I’ve made back all my losses from the start of my trading career.. I know that for sure I’m definitely Trading the Financial Markets successfully.


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Category: Blogging, Make Me Some Money Ideas, Trading