Account Blow Ups

The Account Blow Up is a dramatic and devastating event that most likely every trader will experience before they develop an effective strategy for success.

The Account Blow Up on an equity curve Looks Similar to a stock chart of a Stock in decline like Fannie, Freddie, or Lehman. I am willing to bet most Traders who have Blow ups do not actively use equity curves. I blew up before I used an equity curve.

The Pressure of Trying to Make Returns can be too much for some Traders. They always feel pressured to work hard and they end up trading too often. They feel the need to trade all of the time. Traders will always develop elaborate reasons on why the market should move their way. They will also likely look for guidance from the Media such as CNBC and Bloomberg. They trade without a plan. Their attempts at success become more desperate and hopeless. They do not take any time off from losing money. They Take on Too Many low quality positions. They only focus on How they need to make money, and How much money they can make. They Hold onto Losing Trades and Add more money into them. They Sell Winners too soon, over and over again. They look back at all of the Trades they missed, and the money they lost and feel sorry for themselves.

They literally cannot stop themselves from account destruction. The Reason is because they do not follow any type of Risk Management.