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Why did so many people go wrong yesterday?

Yesterday was a decent day for us. It was not our best, but we did manage to increase the value of our portfolio by over 3.5%. Which is respectable for the day. Incidentally in the 1st week of the month, we have a total gain of  over 41%, which is double our monthly target, so I am happy for that as I always say results should be the first line of talking. However unfortunately for the community, many let them down yesterday and let them down hard.

I wanted to address why so many so traders did poorly yesterday. It is very simple. They failed to plan. I have had several debates with people on boards this weeks, in which I told them their 90% contribution to buys against the USD is foolish given the fact that several voting FED members have said a rate hike is still a possibility and that putting their eggs in one basket was a disaster waiting to happen to their copiers. These people all told me that I was wrong and it definitely would not happen and “we would see”. Well we did see!. This brings up a few scenarios. Either:

1.) They arrogantly thought they know better about US monetary policy than the Federal Reserve Bank of America and the Federal Open Market Committee. Very foolish if they do.

2.) These guys don’t care about their copiers and didn’t think they should risk diversify.

3.) Maybe they just have zero money management, Eggs… Baskets…..

4.) They had no idea what they are doing.

5.) Maybe they just had bad luck.

I am sure to each person a different above reason applied but in the end for whatever reason, many lost and lost hard. They can call it draw down, but until recovered, that counts as a loss in my book.If you want your money tomorrow, you can’t tell Etoro, listen I want my 10,000 back, the full amount not 4,000 because the 6,0000 draw down is not lost etc…

I’m sure excuses are flying such as blaming the “big boys” and saying all is under control etc, but the fact of the matter is these people have their copiers trapped. If they exit now, they lose most of their equity and so they are tied to these people most of whom enticed them with lies. I feel sorry for these guys but at the same time their is a lesson to be learned in all of this. If people don’t respect you enough to be straight with you and give you the truth, then you deserve to learn the hard way when you invest in them.

Please do not make it too expensive a lesson,

Mohammed

P.S. Watch out for my next post. It will be a real eye opener in explaining to you the primary factor behind what determines FX rates.

9 Comments

  1. You are right.
    Buy EUR-USD now is only reliable in a very long term, for investment and not for day trading.

    You talk about money management, but your money management is very agressive, I can look a 4-5% of total account drawdown in each trade for moments, and after you close it with a 3% total account profit, this is a bad profit/loss ratio and a high risk of ruin.

    I´m curious if you has calculated all scenarios and analized your stadistics, not the profits, I´m talking about risks.

    Thanks.

    1. Thanks for the comments. Firstly, it was 3.5% profit only due to Etoro technical issues. On my other platform which didn’t lag for 4 seconds when I closed in was 8%. Furthermore I actually plan my trades, I do not just move in. In addition the maximum the account was down by overall was 2.2% during the day, not 5%. If we are going to quote numbers, let us quote them correctly and be fair.

      In regards to money management, you are 100% correct I am aggressive. But that is why we see high returns and we see them fast. You can not expect to never have a negative period and yet have triple or quadruple figure returns. I make that very clear about my approach. I feel that my approach is better than some of the others where people are drawn down 60% for months on end and then close to break even. For those who do not like risk, they can always buy government bonds and collect their 3% annually. My style of trading is for aggressive generation of wealth, not for generating profits at the risk free rate (i.e. T-bills and AAA rated fixed income securities.)

      My definition of money management is set a loss you are comfortable with taking and leave it at that. Do not extend forever and do not over commit to positions. Of course if you feel my profit/loss ratios are bad, then please feel free to get better returns. It is very easy to sit and criticize yet I prefer to let the results speak for themselves.

      Thanks for your time,
      Mohammed

      P.s. Also please use your real Etoro account name when you comment, it makes it easier to understand who I am talking to and where they are coming from.

    1. Thanks for the vote of confidence. But I’m really curious to know who you are. I take all copiers concerns seriously and want to address them. I want you to be comfortable knowing how your money is being handled,

      Regards,

      Mohammed

  2. Thanks for the information and thoughts on the matter,
    I unfortunately was one of these people who lost big on the fall of GBP I’m sure there are many others on here who are in similar possitions as me, perhaps we could open a new thread to bounce ideas of each other about how to get out of this mess, be it hedging, holding on to trades untill they come back into profit, (like you said it could be February)
    It would certainly be interesting to see, learn and pickup hints and tips about how others are approaching this drawdown,
    Thanks again Ohemgee your thoughts, ideas, trades and this forum are very much appreciated

  3. I started copying you 4 days ago. I started with 5% of my equity just to see how it would turn out. As of today, you are a trader, where I feel save and hassle free. Trades are well thought about before executing them, portfolio is kept clean (so far no trades over night, days, weeks). I’m following one trader, who has trades in his portfolio for weeks now, 2 of them -120%. Luckily he has only 0,5% of my equity, but what if someone has 30-50%?!

    The way you inform your copiers is remarkable, keep up the good work!

    1. Thanks for the compliment. Sometimes I do have trades open for a day or a week. But I try to avoid long periods. If I see the funds are better put to use elsewhere, I close and re-invest. After all if money is tied up and doing nothing, it is effectively useless.

      Regards,

      Mohammed

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