It's easy to see successful traders and to think, "Well they must have always been a success." In fact, many trading careers start off with big losses – financial, professional and personal – and it's the motivation to turn things around that drives them to become successful.
No one embodies this truth more than Markus Gabel.
Markus has been working in the financial sector since 2000 as a trainer and analyst. He has also been a trader with the asset management firm Born Stahlberg & Partner for five years, and manages his own trading and education service called DowHow Trading. He is also one of the hosts of our new webinar series, Trading Spotlight.
Today, Markus is a very successful trader, trading based on "Dow Theory" principles, supported by the nature numbers of Fibonacci. However, this wasn't always the case.
In this interview, we discuss Markus's trading journey, including how he turned things around when he hit rock bottom.
What did you do before you became a trader?
Unlike many traders, I don't have a 'typical' background in business or finance. Instead, when I was 16 years old I trained to become a baker in a small bakery and I loved it! Unfortunately it didn't pay enough money to survive, and I started looking for something else.
When I was around 20 years old I started a new path by getting educated as a financial adviser. Money was always an interesting topic for me, and I thought I could become good at talking to people about money and to help them manage their finances in a better way. The jump from that kind of job to trading was then a very short one.
How did you first get into trading?
It was in the year 2001 when we had the dot-com financial crisis. A lot of my clients lost their money with funds, and at that time I couldn't understand why they were losing or how the market really works - even though I was a trained financial adviser!
The only thing I knew was that the money didn't just disappear - it was always flowing, and someone must be picking up the money that others were losing. So I tried to figure out what was really happening in the markets and how I could use it.
How did you do? Were you an instant success?
Definitely not. This was my first step down a very dark path that almost ended in tragedy.
When I started trading I made some money and I felt great - like the king of the world. But I made the big mistake of starting my trading journey with real money (not a demo account) so I was a very emotional trader. When, after a couple of winners, I lost more money than I had made, I didn't understand why. Because it was real money, I was emotionally attached to the loss and I tried to make it back as quickly as possible.
So I increased the risk, switched the timeframes and by the end I was trading on 1-minute charts during my day job. I won, and then I lost, and ultimately I lost more than I won.
Before long, I was addicted to trading. I tried to get back my money in every single minute of every single day – soon, I had no more time for my wife, family or friends. I even started getting up in the middle of the night to check my positions. I was on an emotional roller coaster – I was happy when I won but I was very angry when I lost. It was a terrible time, and I felt like I couldn't change anything because I needed to get back the money I'd lost.
Unfortunately, this had a big impact on my private life and relationship, and one day my former wife told me that she couldn't live with me anymore. She told me that my trading had changed me for the worse, and it wasn't possible for her to live with me anymore. Then she left the house and never came back.
I never told her what happened to the money because I was so ashamed.
How did you turn things around?
At first, I didn't. At first I was happy because now I was alone, and I thought that I could do whatever I wanted. I could trade as long as I wanted, as often as I wanted and whenever I wanted. But a couple of days went by and I got used to coming home to an empty house, and I started to get lonely.
Around two weeks later it was a dark, cold and rainy winter's day. I sat in my house and lost the last money on the account on a trade in the Dow Jones index. Everything was gone – my money, my family and my self-awareness, too. I realised that I had failed – I hadn't been able to trade successfully. I saw no more sense in my life.
I closed my laptop, took my car and drove to the river near my home. I got out of my car and walked to the edge of that river. I stood there and was thinking by myself: If I jump now, I could leave everything behind me.
At that moment I was ready to end my life.
In the final second before I jumped, I thought, How could it be that red and green candles were able to bring me to the worst point in my life?
I stepped back from the edge of the river, sat in the snow and broke completely down. And I vowed that if I could find a solution – if I could find a way to cope with this challenge – it would be my mission to help others as well.
I decided to stop actively trading for a while and instead began to educate myself. For three months I read books, watched webinars and tried to find a coach. Fortunately I found one of the best coaches ever and over the next three years I learnt how to trade successfully.
If someone had told me how hard this journey would be, I am sure I had never started trading. But in retrospect I am very happy that I had the power to take this path. And on that way I found my purpose – to help traders avoid the same mistakes and achieve success faster.
What is your inspiration to trade today?
Once my mentor said: We come to trading for the money but we stay for the insights.
Trading is so much more than going long and short and watching red and green candles. If you look behind the scenes you take a journey within yourself. If you find your real WHY, trading becomes successful. Trading can change your entire life. My inspiration to trade is to show interesting people how they can become successful as well.
How do you cope with good investment turns bad?
That is one of the hardest challenges ever. You have to accept the inevitable things in trading.
You can stick to your rules, you can be disciplined and you can still lose money. Why? Because the market decides otherwise. Once you accept this and you trust your rules and you switch your point of view from the money to your real WHY, you can to cope with that challenge.
How do you find the time to trade at all?
When I started trading I thought I needed to be a day trader on 5-minute or 1-minute charts. That was extremely exhausting and absolutely not successful.
A couple of years later, I switched to swing trading in hourly charts and then my trading became successful. It is so much easier to make money in higher time frames than it is in day trading. But it takes time to figure out in which timeframe you feel comfortable. Today, trading is a part of my life – no more and no less. I have my rules and my own workstyle.
I need around two or three hours a week for my own trading. That is comfortable, is plenty of time to be successful, and it leaves me time to focus on other things.
What are some of the early mistakes you made?
My biggest mistake was that I thought I could make a lot of money very quickly and to do it without any education or experience. It looked so easy. If you see a green candle, go long and if you see a red candle, go short. Or follow some advisers on the internet or TV. I also thought there must be a Holy Grail for making money, and I did everything to figure out what I would have to do to make money every time and with every trade.
Once I made a trade in Forex with the RSI indicator. The theory says you must buy in the oversold area and sell in the overbought area. I bought when the RSI indicator was in the oversold area but I had no chance to sell because the price didn't come in the overbought area. Too late I realised that the trend was short but I wasn't able to close the trade because I was very convinced that the theory must work. But it didn't, and my broker closed my trade with more than a 25% loss of my account balance.
What are the biggest lessons you've learnt?
When I came to trading I thought it would be really easy. My assumption was very naive, because when I watched traders on the internet or in webinars they made it look so easy, and no one talked about any problems or challenges. But it was a great mistake to think in that way. My assumption was completely wrong. Trading was never easy, is never easy and will never be easy. But it is absolutely possible to develop successful strategies.
The biggest lesson I learnt was to understand that trading is like a normal job. No one expects to become a lawyer, a doctor or a flight captain by watching a webinar, reading a book or visiting a seminar. Everybody knows that it takes a lot of effort, time and money to learn such jobs, or even normal jobs.
But in trading we think it works differently and we can learn it very fast and we get rich quickly. But that doesn't work. I learnt that I had to get an education to develop a strategy to become successful in trading.
To make money in the markets takes time, patience and personal development. If you are willing to do that, you are able to make money on a long run.
The statistics show that 84% of CFD traders lose money - do you have any thoughts on why this might be?
Yes, of course. They make the same mistakes as me. They trust the marketing that you can become rich very fast with small amounts of money. They think they can do it without a coach, education, rules or discipline.
It is absolutely possible to trade with a small account. But a successful trader is a risk manager first of all. Most beginners increase their risk per trade to make money very fast. Sometimes it works, but the high risk works in both directions. If you have to much risk in your trades you will lose too much money and your small account is destroyed.
Additionally, beginners have the wrong expectations. They think every trade must be a winner. Or if you had a winner and you make the same thing again you think it must be a winner again. But this assumption is wrong because trading is just a thing of probabilities.
How much capital you have on your account is not the crucial point. Beginners have to understand that it is not possible to get rich with a small account but it is possible to learn trading with less capital and increase your account in a very stable way.
What advice do you have for new traders?
Trading is like a new job you have to learn. Take your time with it and you will have a great chance of becoming successful in trading. Based on my experiences with my own clients, it will take around one year to develop a strategy and become successful. During that year you can learn to manage your software, to learn how the market works and how you can manage your trades. Beyond that, you can learn to become a stable trader.
What sorts of things will people learn from your webinars?
In my webinars, people will learn how you can trade with rules and discipline. They will learn the basics like how to identify a trend or how to build a business plan or what is really important for a trader. I will show them how to manage their trades and money, how they can reach their goals and how to find their trading WHY.
Disclaimer: The opinions expressed herein are those of the interviewee and do not necessarily reflect the views of Admiral Markets investment firms.
Trading with financial instruments (CFDs, Stocks, ETFs) offered by Admiral Markets carries a high level of risk which is not suitable for all investors due to their complex nature. Before entering into client agreement or making a transaction, please make sure to read the terms and conditions of our service. Consult a specialist if necessary to ensure you understand the risks involved in trading.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider.You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.