Position Size – Trading Too Large

If a day like today ( regardless of being bullish or bearish) scared the bejesus out of you – you are trading too large!

Volatility is the foe you don’t really know – until he’s got you so deep in a peruvian neck tie (please google it) that you’re seeing stars! In order to “trade another day” you need to take heed of  current market conditions and take volatility very, very seriously. Not unlike ultimate fighting – one wrong move and you are truly – hooooooooped!

There is no “explanation”……no cute little “technical analysis” to put your mind at rest, no “CNBC commentary” to make it all go away – THE MARKETS ARE DESIGNED TO TAKE YOUR EVERY PENNY!

Days like today are a drop in the bucket (  in comparison to the -1000 Dow days we’ve seen in the past – remember? ) as the Fed’s printing scheme nears closer and closer to the cliff, you can only look forward to further assaults on your account ( let alone your “psychological being”) as the fleecing process gathers steam.

I’m a friend….and I’m a guy you can trust.

Seriously…….did you really think you could trade this?

Please………bide your time and find something else to do for now. Sitting across the table from guys with 85 billion dollar chip stacks ( and some pretty mean lookin buddies waiting outside) is no place for someone lookin to “have a little fun”.

The sun is comin out, and the fish are biting. If you’re stressed about today – you are trading “far beyond your means”.

You will be liquidated.


13 Responses

  1. Deano May 9, 2013 / 4:33 pm

    Good post. Reminds of Star Trek – We are the Borg, resistance is futile! Sometimes the market feels like that.

    • Forex Kong May 9, 2013 / 4:57 pm

      I hear ya…and loved those episodes.

      Just that….depending on one’s experience and “when” they got involved with trading etc – it’s really difficult to put the larger picture in context ( as I recall in my earlier days ) – and it’s easy to imagine “you know everything” and “it’s no big deal”.

      I could go on and on – and it’s just as likely that a relative newcomer sits at home thinking “this Kong guy is full of sh”t.

      Well……..fair enough.

      We all learn our own lessons….on our own time. I can only speak of my own experience.

  2. Drew May 9, 2013 / 8:56 pm

    Hey Kong, how long did it take you to “get” this so that you were able to support yourself doing this? If you have a post that discusses, I’d like to read your story. Just started following you on IBC. Are you south of the border to save cash on living expenses or do you just like it? Best, Drew

    • Forex Kong May 9, 2013 / 10:25 pm

      It’s a long story Drew – and a long hard road to say the least but…..

      Originally I got involved with the Internet and “SEO” – back before the Internet really “was” the Internet.

      I’d been using computers for many years prior ( as I am a musician by trade – and had been involved with “electro acoustics” and midi etc…back in the late 80´s).

      Ended up out in the West Indies, then back thru Canada and then some 7 years in Costa Rica /Colombia/ Spain – as……realizing I could make a living over the Internet – everything changed.

      I’m a culture / nature fanatic – and some 15 years later, the computer and “whatever” still comes in second….but does pay the bills.

      I find foreign exchange – much like a number of other puzzles I’ve tackled, and love a good challenge.

      • Drew May 10, 2013 / 9:37 am

        Excellent. Thanks for the reply.

  3. Superpositron (@superpositron) May 10, 2013 / 5:19 am

    I think many aspiring forex traders believe that once you ‘master’ trading or rather achieve a pretty consistent trade record, that its just a matter of time before you are rolling in cash and driving chrome plated Bentleys. Could you say something about this? What does it mean to be a a successful retail forex trader in reality?

    • Forex Kong May 10, 2013 / 7:19 am

      Great point man…..

      Chrome plated Bentleys? – ya…maybe in the movies.

      I live a very normal lifestyle, and need to watch my money just like everyone else. It took several years before I could say with confidence that I was “successful” and even at that – still encounter many bumps in the road. For me it’s always been about “the freedom” and not about “fancy things”. I guess it’s different for everyone.

      With proper money managments plans and not “gambling” the only way you’d be rolling in cash would be to have had a considerable amount of cash to start. Anyone thinking they can turn 20k into a fortune is in for a big surprise unfortunately….as with just some simple math you realize – that can’t happen without the use of “insane leverage” and that only leads to account liquidation.

      In reality I have a job just like anyone else…and I have to go to work , and I have to work hard. My success is in the freedom it affords me – not the material things.

      • Superpositron (@superpositron) May 10, 2013 / 12:24 pm

        Thanks Kong. Sober stuff. This stuff is difficult to start with. And difficult made impossible by unrealistic expectations.

        • Forex Kong May 10, 2013 / 12:43 pm

          Its tough – real tough, but most importantly – survival of those first crucial years where it’s more important to just “stay afloat” than to concern yourself with getting rich. And as far as expectations go – crunch this:

          Round numbers: 10k account with max risk per trade of 2% = 200.00 ok…….now consider that you are really good at this and hit 7 outta 10 at a 1:1 ratio. 1400.00 in wins – 600.00 in loss for a net of 800.00

          Now – something that is commonly overlooked – “frequency of trade”. If you can only find your “set up” 5 times a week – thats at best 400.00 / per week = 1600.00 per month profit. If your set up “presents itself” like 20 times a week – I’ve got news for you..you’re trading such small time frames and likely zero fundamentals – and your win / loss ratio is out the window as you will likely be destroyed.

          Anything under 1H time frame is truly noise so……I get in and around a 15 min chart – BUT ONLY after many other criteria (on much larger time frames) is met. And with consideration to “frequency of trade” – at times I sit idle for literally MONTHS!

          So…..all things considered, it’s an extremely difficult way to make a living starting with account size so small.

          Hope it helps.

  4. schmederling May 10, 2013 / 11:14 am

    Kong – you still confident the wash is in – I am very close on those short Aussie positions there are on the cliff with this long squeeze of some 26 weeks…. I am loaded & ready to fire – we have a littl bounce here but I think it’s setting up for the next move lower.

    Cheers Schmed,

    • Forex Kong May 10, 2013 / 12:03 pm

      This two day “blast” out of the USD has made any immediate decisions very difficult but…..at these levels – getting “further” short AUD certainly isn’t for me. I’m still perplexed as to how your trade indicators / system produces signals based in a period of time such as 26 weeks – and would like to get into it with you more (just been kinda busy).

      AUD looks super oversold here and could just as likely pop a couple hundred pips. The rate cut is over, and the next one is likely already priced in – in my view.

      I read that Soros “did” short AUD and made a buck or two prior to the rate cut decision. He’s just one man….and I don’t see him holding a candle to the amount of AUD held in Carry trade across the planet.

      It will be interesting to watch.

      • schmederling May 10, 2013 / 4:57 pm

        Hey Kong – I hear you & your much more seasoned then me in the currency trade – agree the sell-off should produce a bounce which is has. Will this hold in these oversold conditions – for the short-term one would think so.

        I ‘ll be more than happy to go over the system with you – you have my email contact info. It’s a simple set-up which I have used for trading stocks & commod’s. Trying to apply to currencies – it’s not some well-kept system & has been around for a long time.

        As mentioned before it involves 3 type of indicators – BB, KC & a momentum – after that it’s pretty simple.

        Shoot me a note when you have time & we can review – no reason to be perplexed…. this system provides all timeframe fires of positive & negative moves in the market. Nothing is 100% accurate but this can produce results in the 80% range from what I have seen in currencies & 90% in other sectors as mentioned stocks & commod’s.

        Have a great weekend & we will catch up later.

        Cheers Schmed,

  5. schmederling May 10, 2013 / 5:02 pm

    correction we are on week 28 of this squeeze in the AUD/USD pair – we will get into detials in our chat.

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