Hello to all!
First of all: I have created some headings to bring in structure. That said, it is not a post of analytical significance and should not be treated as such. Take it with a bit of humor and pick out bits and pieces that interest you. Also feel free to write a comment. I will answer it with pleasure.
2 days ago I read a post about losing 5000€ on derivatives.
Of course, I don't intend to start a competition about who lost more or less money. Nevertheless, I think it is interesting to share experiences in dealing with derivatives.
After all, everyone who starts trading thinks they are now making oodles of dough. In hubris, people like to ignore the big warning that 89% of traders lose money.
How it all began
My experience was 3 years ago and it started on 10/03/2020 at the young age of 13.
If you think about the date, you will notice that this was the beginning of the corona crisis. Only until that time the young @TheAnalyst not yet, how he should arrange this virus into the total economic events.
After about 3 months of demo trading and a bunch of Youtube videos about trading strategies, I thought it was time to handle real money. Of course, the amount was limited to money earned by myself. So on 04.06.2020 the time had come, the first 500€ rolled into the account. (Attachment 1)
Full of anticipation, trading began. A few trades went great and I made friends with currencies and oil derivatives. I also created an accurate Excel spreadsheet of profits and losses to keep accurate records.
The beginning of the end
However, my other trades went rather less well and the stress took me fully, so that I could hardly grasp a clear thought.
In addition, I could not imagine that the $GDAXI would fall to 12,900 points and below, but that happened soon.
Apparently, I also lacked the strong nerves at that time to hold the shorts I made against the short counter-movements. This was probably also due to the fact that at this time I still could not imagine a huge recession to witness.
So the whole game took its course and gradually more and more margin call warnings came into my email inbox. In total there were 23 (attachment 2).
It is probably not worth mentioning that I liked to use levers in the range of 10 - 50. After all, I really wanted to make money.
Based on my firm conviction that the market can never fall further and will turn in a few days at the latest, 4 more deposits fluttered into the account after hardest persuasion work with my father (attachment 3). The margin calls had to be covered 😉
I went about my normal everyday life, only with the difference of constantly having to think about the rates and also the margin calls. My table tennis training became an ordeal. Every 5-10 minutes I had to look at my phone and if necessary inject another cash injection to keep the game going. After all, you only make a loss when you realize it🧐
The plan was to cover the margin calls until the prices would rise again.
In addition to training, my working hours were also significantly disturbed by thoughts of and glances at the price data.
Unfortunately, I woke up one morning to find the notification on my phone. One of my positions was closed due to a margin call. The largest one. (Exhibit 4). Well OTC there are just movements when you trade against the broker🙁🤷♂️
New strategy
At some point I realized that the shit was pretty much hitting the fan. After a long talk with my father and I closed all the positions I still had open. I changed tactics and was able to make consistent profits.
Unfortunately, these were by far less than the high losses I was incurring. Nevertheless, my body and especially my fingernails thanked me for giving the margin calls a break.
However, it took me far too long to work the loss back in, so I thought.
The END
In the meantime I had become 14 years old and that gave me an idea. This idea was then also successful and I closed officially on 17.05.2021 my trading account. I know that this is not an execution of the end and the new strategy, but I have to keep it so short, because I do not think it is appropriate to share them here. Anyone who thinks a little will surely come up with it.
Conclusion
I don't want people to read this post and feel encouraged to also recklessly go down this path. But the opposite is equally undesirable. I will probably open an account with a trading broker again in the near future. But this time with better planning and the prior knowledge from this first time.
The lesson covers a variety of areas. At the core, however, are experiences that you make yourself. Namely, the feelings that overflow the body during trades and against which you can hardly do anything. However, you can learn to understand which actions you take based on your feelings and thereby filter out an opinion that is as objective as possible.
Of course, there are also tactical lessons to be learned. In the time after my trading, I focused mainly on analysis. I assume that in some ways it is a defense mechanism to prevent the loss of control I experienced in trading in the future. Nevertheless, it is a development that has already brought me many benefits and a better understanding of certain events.
I hope it's a nice little story to sweeten your holiday a bit.
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Dream big. Be brave. TheAnalyst
