How much tuition have I paid for this road of trading?
A couple of days ago, a friend told me that he had a massive loss of hundreds of thousands of dollars in one go before the New Year, and he didn't even have a good holiday. I had to comfort him, suggesting that he take a break from trading for a while and consider this money as a tuition fee paid to the market.
While comforting him, I couldn't help but feel a deep sense of empathy, as looking back, I realized that the tuition I've paid to the market far exceeds hundreds of thousands, and it's still very painful to think about.
If the self-media had been as developed back then, and if I could have seen the experiences and lessons learned from others' losses, I might have been more cautious before paying my own tuition.
So today, I've decided to share my own painful experiences with you all, including how much I lost and how I lost it, in the hope that my lessons can help you avoid detours, and that this money won't have been lost in vain.
1. I once lost over a million dollars through reckless trading.
When I first got into trading, I heard stories of people making tens of thousands, even hundreds of thousands of dollars in a single night.
The speed of information flow at that time was not as advanced as it is now, and the circles I could access were deliberately created for me by others, so I had this notion in my mind that trading was a get-rich-quick scheme with no real challenges.
At that time, I simply read about reversal candlestick patterns in books and thought that as long as a reversal pattern appeared, the market would reverse. After trying it a few times, I was lucky; the market did reverse after I placed my orders, and I would take profits at the slightest opportunity, but I would hold on stubbornly when it didn't reverse.
I followed my instincts, going long after a continuous decline and short after a continuous rise. This approach led to more losses than gains. After a few losses, I started to fight the market; as it kept falling, I kept going long.
It just so happened that during that time, there was a speech by Ben Bernanke in 2011. I didn't understand the impact of the words of the Federal Reserve Chairman on the market, and I was even less knowledgeable about fundamentals and interest rate hikes.That night, the price of gold plummeted by over 100 US dollars. I spent the entire night trading, starting with a 3000 USD account that got wiped out. I continued to deposit another 3000, which also got wiped out, and I kept depositing several times. By the end of the night, I had lost over 20,000 USD.
I remember the last time I deposited 5000 USD and made two long positions without setting a stop loss. I directly closed the trading software and stopped looking, feeling afraid of losing more but also harboring a glimmer of hope. The next day, when I opened the software, the account was still wiped out.
Following my instincts, I traded like this for over half a year, losing over a million USD. I never calculated the exact amount, and I was too afraid to do so.
Later on, when I learned about the existence of trading systems, I realized that even a rudimentary system, as long as I followed its framework, would not lead to a devastating loss.
In certain moments, I suddenly understood the significance of a trading system—it provides you with rules and standards, preventing you from spiraling out of control.
2. I've lost hundreds of thousands following a master trader.
There was a period when I found that no matter how I traded, I always ended up losing, which was very frustrating. At that time, I had no direction and just wanted to recover my losses as soon as possible.
That's when I started searching for magical trading methods and paying attention to those who were very good at trading. I hoped to find a trading expert who could guide me and help me turn my losses into profits quickly.
I had seen some "trading masters" on forums before, who would often talk at length about market trends and occasionally show off their high-profit settlement statements, with profits that were several or even tens of times their initial investment, making one feel envious.
After observing a master for a few months, I privately contacted him and asked if I could learn to trade by following him. He reluctantly agreed and, after symbolically charging me 5000 USD, had me deposit into a trading platform and start following his trades.At the beginning, the success rate of following the orders was exceptionally high. Within a week, my principal had tripled. Initially, I was just testing the waters and didn't invest much, just a few thousand dollars.
At this point, the master began to encourage me to withdraw a portion of the funds. After I successfully withdrew, I sent a red envelope to the master, thanking him for guiding me to make money.
After the smooth withdrawal, it was as if I was bewitched, developing an unwavering trust in this master and the trading platform, and I started depositing funds one after another.
Gradually, the profits accumulated more and more, reaching several times the original amount. When I wanted to withdraw a part, the master held me back, telling me that the market conditions were favorable and that withdrawing funds would be a pity, as I would miss out on significant profits.
Under this bewitching influence, I left hundreds of thousands of dollars in this platform for more than half a year without touching it. When I really wanted to withdraw, I started encountering all sorts of errors.
For example, incorrect bank card entry, freezing for several days; system errors, withdrawal failed; exchange rate issues, withdrawal failed, and so on. No matter what, I couldn't get my money out, and that's when I began to suspect that I might have fallen into the trap of a black platform.
When I went back to the master, at first, he comforted me, saying that he had encountered the same situation. But when he noticed that I was getting angry and embarrassed and stopped depositing funds, he blocked me.
At that time, my head was really buzzing. I wanted to complain to others, but I was afraid they would call me foolish, so I had to swallow my bitterness alone. The pain in my heart was truly indescribable.
3. I lost hundreds of thousands by participating in training.
I have participated in trading training, at least eight or nine times in total, spending at least hundreds of thousands, with some costing tens of thousands and others just a few thousand dollars.Just as I was tricked by a master, I suddenly realized that transactions still have to rely on oneself, so I started to enter the learning phase. However, my mentality was not good, and I still wanted to take shortcuts, which led me to seek help from any available training programs.
I remember there was an expensive combined online and offline training program that cost 39,800 yuan. It was advertised as a 1-minute ultra-short-term trading strategy, claiming that it could double the investment within a week. However, after I participated, I found it to be utterly useless. My impatient nature was exacerbated by this training, which directly sent my loss rate soaring.
There were also some training programs that were very impractical, with no substantial content. They just gave you a vague concept, making it feel like they covered everything and yet nothing at the same time. Sometimes when I asked the teachers some questions, their answers were ambiguous. They would say that I needed to understand it on my own, which further confused my understanding of trading.
Only one or two training programs were somewhat useful, covering theoretical knowledge as well as trading techniques, including the existence of a trading system. It was during that time that I began to recognize the importance of a trading system.
Including the "absolute classification" of trading systems they mentioned, it has been very beneficial to me to this day, and I consider it the most worthwhile expense.
In fact, training can indeed improve the efficiency of self-study, but in the era of information explosion, one needs to have the ability to discern and filter information, otherwise, the tuition fee is inevitable.
This is also why I don't include any nonsense in my own courses, focusing only on the essentials, and I won't stretch the duration to create hundreds of hours of content. The truth is, there's only so much to learn, and I won't price my courses at thousands or tens of thousands, because I've been there and understand the value.
I also never emphasize that one can soar after completing the course, because there are no free lunches. I require each student to thoroughly understand a concept, to review it themselves, to practice it, and to apply it in real combat, so that they can transform it into their own ability, something that will accompany them for life. This is the true meaning of learning.
4. Lost money by imitating a friend's trading.
Previously, I had a friend who had been trading longer than me. I had access to his demo account and noticed that he had been consistently profitable over three months.His approach is as follows: The distribution of right and wrong in the trading system is probabilistic; it won't be wrong all the time, there will always be times when it's right. By using a strategy with a 2:1 win-to-loss ratio and fixed stop-loss amount for position management, after a stop-loss, double the position size regardless of how many times it was wrong before. As long as one trade is correct later, it can make up for all previous losses.
For example: The first trade has a stop-loss of 1000, and it's wrong. The second trade is still 1000, and if it's right, continue with a stop-loss of 1000. If it's wrong, because of the 2:1 win-to-loss ratio, the third trade is still 1000. At this point, if it's right, you earn 2000, which compensates for the previous losses and returns to the starting point of 1000.
However, if the third trade is wrong, the overall loss is 3000, and the fourth trade should use 1500. If it's right at this point, you profit 3000, and all previous losses are recovered, returning to the starting point of 1000.
If a stop-loss occurs, the overall loss becomes 4500, and the next position size must be doubled to a stop-loss of 2250 to recover all previous losses in one go.
And so on.
Many friends understand at this point that this strategy is the Martingale strategy from gambling. Due to the 2:1 win-to-loss ratio, the position size does not increase rapidly at the beginning. In theory, as long as there is enough money, it is definitely possible to make a profit.
However, in practice, I encountered a serious problem: mentality. Because he had been profitable for three consecutive months, I was optimistic after learning his plan and tried it for a while, making a profit. Then, I started to get carried away, and the position became more and more aggressive, with the first trade being quite heavy.
Later, when encountering consecutive stop-losses, the position size doubled and doubled again, becoming extremely heavy. A single stop-loss reached 15% of the principal. At this point, when opening a new position, I was very worried. It was very painful to lose so much at once, and I was even more afraid that if I made a mistake again, the position size would have to continue to increase.The more mistakes you make, the heavier your position becomes, and the more fearful you feel. Eventually, you become afraid to take positions, and you start thinking about stopping now to preserve some of your capital. What if you continue and end up with a margin call? In the end, you accept the loss and give up halfway.
It was only then that I realized that to execute a strategy effectively, it's not just about seeing how much money the strategy can make, but also considering its drawbacks and understanding your own psychological limits. It's not about blindly applying any off-the-shelf strategy.
If you simply copy others' strategies, the likelihood of failure remains high.
5. Discussing market trends with others and losing money.
I used to enjoy joining discussion groups because there was always a sense of belonging. Everyone was involved in trading, understanding each other, and supporting one another. Especially when I lacked confidence in trading, joking around with everyone in the group provided some psychological comfort.
However, in these groups, it's inevitable to discuss market trends with others. When you make a profit, you want to show off your achievements and talk about your operations. At that time, I often engaged in mutual flattery with a few friends in the group, feeling extremely satisfied.
But one bad aspect is that since everyone likes to share their views on the market, I found that each person has a completely different understanding of the same market trend, with some being bullish and others bearish.
Especially when some group members who are usually very accurate in their market predictions have views that are completely opposite to yours, it's really hard not to waver.
I remember in the spring of 2013, there was a significant downward break in the gold market, with prices falling from 1603 to a low of 1180 over three months.
After the market broke below 1200, I recalled an article I had read before, stating that the cost of gold mining was between 1100 and 1200 at that time. If gold continued to fall, it would break below the cost, making it difficult for the bearish trend to continue.So I started to position myself to bottom-fish gold above 1200. When it broke through 1200, I added more positions near 1190, with an average cost around 1210. The market closed with a big bullish candle that day, with a closing price of 1234, and my orders had already started to show profits.
As I was congratulating myself on a successful bottom-fish and discussing this gold long position with others in the group, I heard several senior group members with completely different views on gold.
There was an older fellow with whom I had a good relationship and who was also quite experienced in trading. He believed that the target for gold's decline was $800 per ounce. He said that 1180 was not the bottom, and the bullish candle that day was just a temporary retracement. After consolidation, it would definitely continue to fall, and the short positions would not stop until it reached 800. He advised me to close my long positions and go short.
His confident assertions really shook me and began to make me doubt my own judgment. The next day, the market continued to rise, but the space was clearly reduced. In the following days, the market fluctuated, and this older fellow came to ask me if I had closed my long positions, urging me to go short on gold with him. My conviction in my long position was becoming less and less firm.
Subsequently, on July 5th, gold experienced a bearish move of more than 20 dollars, which completely shattered my confidence in going long. I closed the remaining long positions with minimal profits and started to go short on gold.
But the market seemed to be playing a trick on me. July 5th turned out to be the lowest point of the bullish retracement. I closed my long positions at the lowest point of the retracement, and then gold rose to 1433. The following image is the daily K-line chart of the trend that year.
In the chart, I marked the bullish candle that signaled the reversal and the daily line where the market fell back.
After switching to a short position, the market continued to rise, and I kept going short on gold, resulting in significant losses. I vaguely remember that during that period of over a month, I lost at least 30,000 US dollars.
I could have held onto the long position in gold, and my profits could have been at least 30,000 US dollars, but now I'm in the red by more than 30,000. It was really infuriating to the point where I felt like smoke was coming out of my head. But you can't blame anyone else for this; you can only blame yourself for not having a firm will.
From then on, I left all the discussion groups and never discussed the direction of the market with anyone again. I no longer care about how others evaluate my trades, only doing what I believe is right.In fact, throughout the transactions, I have paid various scattered tuition fees, but as time has passed, I don't remember some of them. I only recall these more memorable experiences.
The most frightening thing is not paying tuition fees to the market, but doing so without limits. Sometimes, if you feel something is amiss, it's crucial to cut your losses in time, take a break, and wait until your mind is clear and you have the ability to think before making decisions again.
I hope my experiences can be of help to you.