forge appoints administrators, page-112

I consider myself an experienced trader, after many years of education, experience and hard work in the markets. But I would expect every successful trader to have blown up their account at some point on their journey and possibly a number of times before they developed a successful approach.

For me I lost $100k in the HIH collapse and I’m still involved in a class action some 14yrs later. People went to goal for that one. I also dropped big money on ERG when it went under, NLG went it under, Burns Philp and others. It’s hard to take but for me it was the journey I had to go through to learn hard lessons and to seek out the right knowledge and approach.

You can all come back from this if you apply yourself, reflect on it and learn its lessons and keep developing your skills. Most who lost big today will need to change the way they approach markets or they will lose big again.

The key thing is to understand is that risk management is not only what protects you, but it’s how you make your money. It’s far more important to your success than actual trade selection. The market is volatile enough, the key is to learn how to safely harness that volatility so that you can absorb the normal losses, the occasional unexpected hit and let the winners run and cover these. Position size is most important, split your money into 5-12 stocks such that no one trade can take you out of the game. Stops are also critical, although don’t help you in a collapse.

Also understand the business risk in the stocks you are trading. Forge didn’t collapse suddenly. They were going through their death throes for 2 or 3 months and the ANZ actions allowed a buffer period for those who understood the risks to get out. I looked at trading FGE recently but just felt it was too much risk of collapse to get involved with and thankfully stayed out and as much as I was tempted to trade, the hard learnt lessons from my past kept me safe.

Think Discipline; Patience; Preparation (Hard Work); and Risk Management.

This Forge experience will be an expensive education for many of you and you have my empathy, but it contains many lessons about business and the markets nonetheless that can keep you safe and help rebuild capital in the future.

Some other thoughts:

Shareholders equity in Forge is almost certainly worth zero, the nature of the business as a contractor means there is likely insufficient capital to pay out the creditors.

I've heard CFD providers have a rate of about 70 to 90% closure of new accounts. i.e .CFD traders have a failure rate of up to 90%. I think the average new account holder lasts about 9 months from what I’ve heard but that may be incorrect. These products are for experienced traders only. By that I don’t mean people who’s ego’s make them think they are experienced, but traders who have proven over time that they can trade with consistent profits and can manage risks. Don’t underestimate how hard that is to do.

Good luck.